Next month holding or budget it into next month

Im curious what people do, I see some people say they use a next months holding category and some people budget straight into the following month. What do you do and why? 

 

Im trying to see what the best way to allocate funds are when you're a month ahead

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  • Hello, Nicellla !

    I do a mix. Our family income is pretty variable. I like the feeling of having next month budgeted, but if I have any extra beyond that, it goes into a "Income for future months" category. I did try just using the holding category and releasing it on the last day of the month, but psychologically, I just preferred having that money already sitting in its categories.

    Like 3
    • Melissa
    • Routinely questioning every assumption I have about my budget, my spending, and my savings habits.
    • todays_mel
    • 6 mths ago
    • 3
    • Reported - view

    I keep mine in the INM holding category until the last week of each month, usually because I just can't wait to budget my money anymore and I want to fill those categories with green!!  My current month's expenses are covered by that time, I know exactly how much income I earned in the current month that I have to work with in the new month, and I don't have to deal with the 'stealing from the future' issue at that point either. Unless something truly unexpected happened, which would then make me reverse whatever I'd done with those funds and reevaluate as necessary. 

    Like 3
    • Abby
    • Toolkit for YNAB Designer & Developer
    • abbydawn
    • 6 mths ago
    • 2
    • Reported - view

    I'm self employed, so it depends in part on how I'm doing financially. If I'm struggling, and suspect there will be overspending in the current month, I usually do all financial planning in the current month and put any extra money in a holding category. This helps reduce the "stealing from the future" issue -- where changes to your budget in the current month results in a negatived To Be Budgeted number in the next month.

    If I'm doing well and have plenty of money to budget, I'll budget directly to next month.

    Like 2
  • Also self employed but I don't use a holding category. My "month" is more like 5th to 5th because almost every critical obligation hit before the 5th. For that reason I am technically one month ahead but it is only those immediate expenses. My transfer from business is fairly set at the beginning of the month and then the middle of the month I schedule one for a variable amount. That variable amount was good for my sanity last year when I had no work for 3 months but I also wasn't spending much.

    Like 1
  • I use the holding category.  I was fully one month ahead earlier last year.  A couple things happened which put me back a bit, but I'm working my way back to being fully buffered.  I put all the income into the INM category and then release it to budget towards the end of the month.  To me, it's just easier to do it all at once than to try to decide what to budget with each little chunk of income.  I'm looking forward to getting back to fully buffered.  My tax return should ALMOST get me there!

    Like 4
  • I use a holding category.  What I loved about YNAB when I found it 6.5+ years ago was how it enabled me to not have to live paycheque to paycheque.  Rule 4 back then was to "live on last month's income".  Having to flip into next month to allocate every nickel as it arrives only serves to make me feel anxious again, like I'm living P2P. I prefer to focus on this month's expenses and decisions all month. When next month appears on the horizon, I will have the funds pooled and waiting, and this enables me to fully fund all my categories and budget my entire month in one sitting with the actual knowledge of the total I have available for the month.

    Plus: All my inflow dribbles in by small amounts until I get my once-a-month salary deposit a couple days before the end of the month. I have zero interest in trying to assign $5.31, $297.57, $25, $37.12, etc. as each inflow is received. What a time waster.

    Like 7
  • Holding category here too.  It greatly simplifies budgeting and helps to avoid stealing from the future.

    Like 2
  • Holding category. Got bit by SFTF early on, and I like the convenience/clear picture that budgeting a month at a time provides.

    Plus, I know ahead of time when I'll have less money to work with for the next month. This relieved a lot of stress because I had more time to figure out how to cut the budget when I needed to.

    Like 2
  • I kind of like the budgeting right into next month because then my brain acknowledges the money as spent. I worry I will "roll with the punches" too much if I have that other money sitting there.  I think I might fund 1 month ahead and if I can get beyond that use a holding category. I have the toolkit so it tells my when Im stealing from the future. I almost never use the mobile app.

    Like 2
  • Holding category. Otherwise you have to partially budget every time you get paid. I prefer to budget the whole month at once after all income has come in for the month. A couple clicks and I'm done. I never touch the funds in my holding category until I release them to budget next month.

    Like 6
    • nolesrule
    • Stealing From the Future fix is an improvement but is incomplete....
    • nolesrule
    • 6 mths ago
    • 11
    • Reported - view

    If you are still budgeting money to your categories with every paycheck or income event, you are still budgeting paycheck to paycheck. It's not just a matter of convenience. Paycheck to paycheck budgeting is a different mentality from whole month budgeting. Paycheck to paycheck budgeting ultimately slows your progress and makes decision making more difficult.

    Like 11
      • Nicellla
      • Nicellla
      • 6 mths ago
      • Reported - view

      nolesrule Isnt everyone budgeting with every paycheque?  Isnt that what you are supposed to do? If I'm a month ahead I still have that buffer YNAB talks about, no?

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 6 mths ago
      • 1
      • Reported - view

      Nicellla No. I budget a calendar month using all the income received in the previous calendar month. I don't budget until all the income has arrived. That's 4-5 paychecks in our household, maybe some other things like bank interest.

      it makes less of a difference of your income in a month is a single paycheck though.

      Like 1
      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 6 mths ago
      • 7
      • Reported - view

      Nicellla it's the difference between *living* paycheck to paycheck and *budgeting* paycheck to paycheck. Once you have the buffer of one month's worth of income, switching to budgeting at the beginning of the month with a full month's income is truly revelatory.

      Like 7
      • Nicellla
      • Nicellla
      • 6 mths ago
      • Reported - view

      nolesrule I kind of like the sound of that! I might give the holding category a try once I'm fully a month ahead. Im hoping to make that happen this month!!

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    • nolesrule that is really interesting. Can you say more on the mentality shift?
       

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 6 mths ago
      • 1
      • Reported - view

      Ivory Storm all the money you have for your budget in the month you have all at once. No deciding what to fund with each check, which is something you have to do when you budget paycheck to paycheck. It's hard to put into words, but it's a mental shift.

      Like 1
    • nolesrule does this suggest that lots of WAMing undermines that kind of mental cohesion?

      Most all of my income is in one single paycheck, with small reimbursements & interest income, and then some summer money from contract work that is highly variable year to year (between $700 to $18K and many landing places in between). I don't see myself normalizing my monthly income with that kind of structure, also because my regular paycheck pays for all my needs and many of my wants.

      But I have been thinking about things like - is it better with my 'extra' money each month to just fund all my discretionary categories at their averages and let balances build, or alternatively let myself WAM to fund a big discretionary expense here this month, a big expense somewhere else another month.

      In other words if there are ways I can approach the flow of money through my budget that will create even more clarity and perspective . . . I hear a lot of good budgeters saying things like what you say and wondering how I can apply that . . 

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 6 mths ago
      • 4
      • Reported - view
      Ivory Storm said:
      does this suggest that lots of WAMing undermines that kind of mental cohesion?

       I don't think so. What you originally budget is just a best guess. Sometimes you guess wrong. Predictions are hard, especially about the future. 

      Like 4
  • I use the Next Months Money Category. I have money coming from all over the place, from spousal support 2x a month, my job 2x a month and a small troop of athletes I coach paying me all over the month. Im new at this concept but its fun to throw all the bits and pieces in there and watch it grow through the month. Once it hits 7k i send the rest to my emergency fund bc I dont want to get all richy rich feeling when i budget the following month. Haha! 

    Like 4
  • I receive a salary toward the end of each month and when I get paid, I budget for the following 2 months e.g. this year when I was paid on Feb 25th I budgeted ahead for all of March and April. This works really well for me and I was influenced to do this after watching this YouTube from Hannah - https://m.youtube.com/watch?v=gUYd2B5Q8es

    Like 1
  • Ivory Storm said:
    is it better with my 'extra' money each month to just fund all my discretionary categories at their averages and let balances build, or alternatively let myself WAM to fund a big discretionary expense here this month, a big expense somewhere else another month.

     There are suggestions on how to deal with variable income.  It sounds like all your needs are met with a consistent paycheck, so that's fairly simple.  Set an "average" amount for your extra income, and if more than that comes in, set it aside in a "deferred income" category.  Then when a month comes along that you get less than average of your variable income, you steal some from the deferred income category, and it smooths out the ups and downs.

    Another alternative is budget all your needs with your consistent paycheck, and use the variable income to fill up your TEs and Income Replacement, and other long term savings goals.

    Like 1
  • So I heard so many people talking about putting all their money not for the current month into a "future months" category and I tried to do the same thing. I made a category and put my inflows in there for the upcoming month. Then when the new month arrived, I moved all that money to To Be Budgeted and budgeted all of it to categories. But now, the month summary at the upper right corner (desktop version) says I only have $271 budgeted, when the amount that I budgeted out from the next month - to - TBB was over $3000. It looks like that future months category shows -$3000+ budgeted and so it's reducing the total amount budgeted. This feels wrong and gives an overall incorrect impression of what I've budgeted for the month. I haven't budgeted $271 this month, I've budgeted over $3000. How can I fix this? I know I can select every category and then deselect the future months category to show what I've really budgeted, but this doesn't seem like a true fix.

     

    Thanks.

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      • Tulip OHare
      • Eating a lot of peaches
      • tulip_ohare
      • 3 mths ago
      • Reported - view

      Hot Pink Dragon I hit the same when I first started. Technically it’s correct; you have only budgeted 217 “new” money this month. The allocation from category to TBB is just a shuffle and not “new money”. It’s not wrong, just a mind set. As money comes in this month you will allocate it to next month category, and your “budgeted this month” will increase. You’ve essentially just shifted the metric so it corresponds with the reports like income vs expense. 

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      • jenmas
      • jenmas
      • 3 mths ago
      • 1
      • Reported - view

      Hot Pink Dragon I have my 2 paychecks as scheduled transactions with the category as Income for Next Month. Then when I am ready to budget that next month, I go back into my account register and change the category for those transactions to Inflow: TBB.

      Like 1
    • Hot Pink Dragon Make sure you release the funds to TBB in the month you put them in holding. For example, money for June was income in May. If I go forward to June and release the funds, I get what you describe. If I stay in May and release the funds, then go forward to June, the numbers show the appropriate amount, and you don't have that negative budgeted in the holding category.

      Like 2
    • Fuzzball Meows  Thank you. I like this solution best. It makes the most sense to me, and produces the most informative result.

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  • I use a holding category though technically the money is only there for six days. I get paid once a month on the 25th at which point I’ll allocate it all to INM. On the 1st I release it to TBB in the new month.  I guess this technically means I’m not a month ahead but I have a banana stand fully funded with 5 months worth of immediate and true expenses so I’m not concerned. 

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