Tips on Handling Future Expenses?

Hi All,

I have a number of fixed-cost expenses (specifically, I'm taking classes) that recur, but not on a regular schedule. I also only get paid on the 15th of each month, and I don't know what that paycheque will be until the 1st of that month.

 

I want to make sure I cover necessary expenses, so I try to cover my classes, and other such expenses, a month or two out. However, since my income is variable and only once/month, I often get into situations where I need to budget that money for earlier use instead.

 

After that, all budgeting I do involves trying to keep track in my head of the extra expenses I'll need to pay the following month. Needless to say, that is neither fun, nor helpful. Does anyone have any advice on how to handle this? I'm stumped.

 

Thanks!

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  • I am not sure I understand.   You're trying to keep track of expenses in your head?  Why?  Make a category  in YNAB for these expenses, set a goal and put money towards them every month.   Same with your classes.  Instead of trying to cover them a month or two out and having to budget a larger amount can you not start saving earlier and put a smaller monthly value towards your expected total?  

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  • Budgeting a variable amount each month makes for a confusing and error prone process. I suggest that you take steps to normalize the amount you budget so you can have a consistent set of priorities. The idea is that you target your average income level in your budget, avoiding the feast & famine mental rollercoaster. Create a category called Deferred Income (DI for short). When you get a paycheck that is higher than average (yearly total / 12), put the amount above the average in that DI category. When you get a check that is less than average, pull the shortage back from the category. This isolates the variable income to a single category, so lots easier.

    You will also develop a single set of priorities that you can fund from highest to lowest. You will not be able to fund everything you want -- everyone has that problem! However, the things that don't get funded should be the things that are least important to you. Working from that average income level will highlight what you can really afford on an ongoing basis.

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  • Purple Song said:
    I try to cover my classes, and other such expenses, a month or two out.

    This may be part of the trouble. Chronically pulling money back from a category is a sign that you shouldn't keep putting it there in the first place. Most experienced users do not budget past next month's area. Using the DI category, your "effective" income will be consistent, and there is no need to budget further out.

     

    Purple Song said:
    I often get into situations where I need to budget that money for earlier use instead.

    Why are you in these situations? Are these unanticipated expenses? (If so, then it should only happen once, because you make a category and plan for future occurrences.)  Is it caused by a failure to check category balances before the purchase? (If so, then you can do better. The mobile app is a huge help if you let it.)

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    • dakinemaui Thanks for your response! Basically, I'm trying to account for the uncertain size of my paycheque by budgeting ahead.. If I were using, say, a spreadsheet, I could make an estimate of how much money I'd be getting in the next month and use that to help me better split my money between immediate and future expenses. If I want to do that in YNAB, I have to add a fake deposit into my account page, and that's obviously all kinds of bad, so I don't do that.

      After seeing what you and others have said, I'm thinking that the problem is simpler than I'm making it: it's just that I don't have enough on hand at this point to cover a full month ahead. Combine that with unknown paycheque size and you get a lot of uncertainty, which is what I'm seeing. Does that sound right to you?

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    • Purple Song It does sound like your budget is tight, and variable income does make that even more difficult. The lack of consistent budget entries make it difficult to understand what you can really afford. Translated: you don't make enough to afford everything. (Ha, few people do!)

       

      Purple Song said:
      help me better split my money between immediate and future expenses

      Rule 2 removes the distinction between those, simplifying things a great deal. Make sure you apply it. Normalizing income completes the picture, meaning a single month is a proportional snapshot of everything you want to do with your money.

      A spreadsheet would be unnecessary busywork in my view. All it would do is copy the same values forward each month. Since you got those values by looking at the endpoints, it's hardly going to be a surprise that the total on various due dates would be exactly what you needed for the various non-monthly expenses.

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    • dakinemaui 

      😂😂😂

      Few people, indeed. Thanks!

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  • Purple Song said:
    After that, all budgeting I do involves trying to keep track in my head of the extra expenses I'll need to pay the following month.

    Shouldn't have to do that. Rule 1 is give every dollar a job in the budget, most important to least important things. Nothing is kept track of in your head. If you can't fund it in the budget, you don't buy it. It really is that simple.

    It's a really good idea to plan ahead of time how much each category will get when you are paid. (Again, because of the Deferred Income category, the budget outlay is now consistent at your average income level.) Old-school is to simply put the amount you'll budget right in the category name (e.g., "Groceries ($500 per month)"). Or you can set a Goal to help remember and populate budget entries with a couple clicks.

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  • One last comment is that I think it is much easier to understand what's going on if you budget all income in the same month's area. Right now, it would seem that should be in the month of receipt. Obviously, your categories will need to take you from the 15th of this month to the 14th of next month. Money not spent in the latter half of this month will carryover and be waiting to handle spending in the first part of next month.

    When you switch to doing this, the current month will look a little weird (having 1.5-2x budget entries), but don't worry about that. All subsequent months will be neat and tidy.

    Budgeting all income to the current month makes it much easier to allocate (with Goals and scheduled transactions, it's a one-click endeavor) as well as reallocate when "life happens".

    (Something to work toward is to be able to push all income into next month's area, but that's less important right now. The easiest way to do this with the "same-month" budgeting approach is to budget to a Transition category, just like any other savings category. When it has enough to cover expenses between the 15th and the end of the month, you use those funds to cover the remainder of the month and budget all of your check in next month's area from then on.)

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    • dakinemaui That's perfect. Yeah, a bit of a weird transition, but I can make it work. Thanks so much! :)

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  • dakinemaui said:
    Obviously, your categories will need to take you from the 15th of this month to the 14th of next month. Money not spent in the latter half of this month will carryover and be waiting to handle spending in the first part of next month.

     A recommendation here: 

    Don't do this with groceries, or anything similar - there were often times that I would look at my category balance and see nearly half a month's money available at the end of the month, forget that that was needed for the first half of next month, and buy fancier groceries than I really should have. 

    My solution was to have a Groceries for Next Month category, which worked as follows. I'd fund $200 to Groceries and $200 to Groceries Next Month. When the month rolled over, I'd move the money from the GNM to that new month's Groceries. On the following 15th, I'd add another $200 to that month's Groceries and replenish the $200 in the GMN. That way, I could always trust my categories without keeping it all in my head.

    After a while, I realized Groceries wasn't the only category that functioned as variable spending for me, so I budgeted half to each similar category on the 15th. I changed the name of my Groceries for Next Month category to Next Month Variable, and budgeted the sum of the other halves of the pertinent categories. I then followed the same process as above to redistribute the money on the first of the new month. 

    This was very helpful in providing category available amounts that made sense for me, and it was also my solution for dealing with Stealing From The Future (a bug that can leave you unexpectedly short funds).

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    • Move Light Sound Life Interesting that you focused on the month boundary rather than your paycheck boundary. Had you been "oriented" to the calendar boundaries before YNAB?

      OP, I'd try the simpler approach first, as I suspect that's how you've operated before coming to YNAB. The secondary category suggestion is an effective alternate if you find yourself forgetting the boundaries.

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    • Move Light Sound Life Much appreciated! I'm getting a much better picture of how YNAB can be used for "future" budgeting reading through this :)

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    • Move Light Sound Life 

      Move Light Sound Life said:
      Don't do this with groceries, or anything similar - there were often times that I would look at my category balance and see nearly half a month's money available at the end of the month, forget that that was needed for the first half of next month, and buy fancier groceries than I really should have. 

       YNAB just released an update to their goals that you can say how much to save/spend per month and by when. As an example, if you budget $500 a month on groceries and you also need to budget for next month, at least until the 15th, you can tell the goal, "Only budget $XX till the end of the month" and if you have more money in the budget for next month (since we're only getting paid once a month) the current month will not display the extra amount. Using the app when purchasing should help stay within budget and not eat into next month's. 

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    • Spring Green Griffin 

      The reason I used the Next Month Variable category was because I had gotten bit by the Stealing From The Future bug (3 times, before I figured out what was happening). Unfortunately, the new goals don't change anything about that issue. I never budget into next month until it's here (or all discretionary categories for this month are done and I've received my last paycheck - usually the weekend prior). 

      dakinemaui , before YNAB, I operated 15th to 15th. When I started YNAB, it was obvious that categories were working with the calendar, so I attempted to split my budgeting in the calendar, too. This worked for a few months and I got used to it. I thought I was using YNAB as intended. Then, SFTF happened to the tune of a few hundred dollars, multiple times (I was furious, and when support helped me, they didn't explain - just said I had over budgeted or I must have miscalculated my starting debt). I had gotten to where I was triple cross-checking Every. Single. Move. I made in YNAB, and I eventually figured it out. My solution was the NMV category. Several months later, I found the forum and learned of SFTF and, later, INM.

      It was a very stressful time, and I'm thankful my husband was so patient - we were trying to get this working so we were on the same page, and the numbers kept changing. I wouldn't wish that on anyone. There were many hours spent. 

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    • Move Light Sound Life I wish YNAB would pay attention when new users describe their frustration with SFTF. Years later it's still biting newbies on a regular basis.

      They have smart developers. They were handed a prototype spreadsheet (on multiple occasions) that doesn't obscure being double-booked. Even a stop-gap solution like the Toolkit has would be sufficient.

      It is clearly a question of corporate priorities, not technical difficulty or ability.

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  • Spring Green Griffin said:
    if you budget $500 a month on groceries and you also need to budget for next month, at least until the 15th, you can tell the goal, "Only budget $XX till the end of the month"

     Seems like a lot of work to change the goal every half month. I'd just type it in.

     

    Spring Green Griffin said:
    if you have more money in the budget for next month

     To get money in the next month, I'd have to go to the next month and change the goal during the same budget session. Again, I'd just type it in. 

    If they had a goal type that allowed me to add X of Y, where X=a fraction like .5 and Y=the total monthly amount, and it truly added every time I pushed the button, then the goal would save work in this situation. 

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