Should I pay rent at the beginning or end of the month?
Right now, I pay rent at the beginning of the month, but I just signed up for YNAB, and it seems like paying it at the end of the month would make more sense.
If I pay at the beginning of the month, I could see myself potentially forgetting to budget for that, and if I pay at the end of the month, then I’d have a month to budget for that category.
Thoughts? Curious what you all do
I usually budget for rent on the budget of the preceding month - for example, budget for rent due on September 1st with money that comes in during the month of August. I keep the running balance on the August budget just so that I can see what has/has not been budgeted whenever I'm assigning my TBB funds - this keeps it top of mind for me. I have seen where other people will assign rent dollars to the month in which it is paid. It's really personal choice since you'll be assigning the actual transaction to the Rent category and, essentially, it doesn't matter where the money was assigned as long as the transaction is assigned to a funded Rent category. Like Coral J Hammerhead says, once you're able to buffer (increase your Age of Money), this will be less of a consideration.
Once you've funded the category, it doesn't matter when you pay it, other than the due date of course, to avoid late fees. So you can, for example, fund in August and pay in August, or fund in Agust and pay in September. There's no right or wrong.
Use a Monthly Funding goal to remind you to budget it if you think you'll have trouble remembering. This goal type measures your Budgeted amount.
Most people in Sweden get their salary once a month. It either occurs in the middle if you have a pension or late in the month if you have a salary. Most bills needs to be payed at the end of the months. For most people this means paying the bills with your new salary. There is really no need for a buffer. When the salary arrives just pay the bills. Now you have more expenses than bills and here it can become tricky. If you get salary in the middle of the month you might start eating too much money so you can't pay the bills. This is why my august income covers september. So the salary is in play first next month. I leave bills unbudgeted so they are actually payed with money meant for september which in this case is the salary arriving in august. With a pension payed the 18th you will have significant amount of money on your account every time the salary arrives. Getting your salary at the end of the month along with the bills leaves less money on the account when the salary comes.
Orchid Keyboard said:
This is why my august income covers september. So the salary is in play first next month. I leave bills unbudgeted so they are actually payed with money meant for september which in this case is the salary arriving in august.
Just to be clear, this is being buffered. When you direct this month's salary at next month's spending, that is the classic YNAB buffer. While the web app has tried to push people toward being a full 30 days ahead of all their expenses, it has done so at the expense of clarity about what it means to budget this month with last month's money. How much financial security you have as the result of pushing your salary forward is a factor to consider--someone paid on the 15th and waiting until the first to begin using those funds is more secure than someone paid on the 31st, as I am. At the same time, the administrative purpose of becoming buffered is to decouple paydates from expenditures, and once you've achieved this goal, whether by the nature of your pay cycle or by carefully saving up to budget ahead, it is time to focus on building your reserves for purposes other than smoothing out your pay.
Just to be clear, this is being buffered
Agreed. The mantra, "Live on Last Month's Income" was always misleading. It was really about "Budgeting with Last Month's Income," but that's not as catchy.
(If Age of Money is accurate, I'm actually living on last year's income, but I certainly don't explicitly budget income that far ahead!)
Let's for a second assume that you are payed once a year. The age of money will keep increasing but does the age of the money offer any help at all? If all this is true you will need to carefully budget your money to last until the next paycheck. You would start with the known costs even if you don't know the exact amount you can estimate costs in advance. You'll add all the yearly costs you are aware of. As this is complex you might pretend you are payed monthly to make it easier to wrap your head around. You really don't want to end up one month short. If you get payed yearly you do live paycheck to paycheck as you do need to make sure everything is on track. Live on last month income is inherently true if payed yearly.
Having a month that costs 2x your monthly income is also difficult to handle. This is personally the first time my budget failed.