Tips on Handling Future Expenses?
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.
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?
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.
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.)
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.
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.)
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).
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.