Another newbie budgeting question - when to complete the month and start a new one?
When do you review, reconcile and close the month to then budget the next month?
Sorry if this seems a really dumb question with an obvious answer, but I am trying to get my head around real budgeting and working towards getting away from budgeting paycheque to paycheque etc.
We have 3 incomes for the family at the end of each month with fixed bills starting to come out from the 1st of the month.
A small £150 comes in on the 20th of the month, but then I get paid on the 28th of the month (unless it falls on the weekend) then I get paid on the Friday before, and then my wife gets paid on the last working day of the month.
All but 1 bill comes out between 1st and 19th, but we have one final bill come out on the 22nd for a personal loan (which we are going to focus an clearing asap), so this comes out after the £150 income on the 20th.
The main salaried income is on the 28th and 30th/31st of which then all our bills start coming out on the 1st of the month and beyond.
Whilst there are no known bills after the load on the 22nd, there still may be small expenditure on food, fuel or something else between the 20th and 28th.
So, based on the above when would you suggest closing off the month and budgeting the coming month?
Thanks for your advice, suggestions on how to learn to budget properly.
My income dates are the same as yours. I get paid on the last day of the month. Prior to starting YNAB, I had all my credit cards synced to come due on the 20th of the month. Let us assume that sorta kinda replicates when your bills come due.
I do everything that you asked about on the day I get paid, which is the last day of the month. It will be a bit hard for the first couple of months, especially the first, when you start and things seem out of sync, but if you stick to it and budget properly, clear out your CC debt (if any and are not riding the float), you should see things sync up and fall in place pretty soon.
After month 2, I stopped caring when my credit cards were even due because they were always paid out before the due date, accounts reconciled and ready for the next month etc., on the day I got paid. After month 6, when I cleared out all my CC debt, it takes me about 10 minutes to budget for the next month, another ten to reconcile things (if I have a missing transaction somewhere) and I am all set for another 30 days. :)
Thank you for your feedback, that all make sense.
My CC are currently on totally £474 and change and I have savings so I am going to clear them before pay day so we go into May with no credit card debt. We have a personal loan which is why we need to do the budget for a few months of we can get into a position to over pay and clear early.
Our CC we have 95% of the time cleared the month they are due, only a few times have we run over debt to the following month. We want to work to eliminate this completely and only use the CC for online payments for the purchase protection they have under Section 75 in the UK (sorry if you are UK based and know this).
The plan being that we have already budget or have fund available to pay the CC in advance and only use it for the purchase protect we get by using them.
I want to get to the point where there £150 on the 20th just goes in to be allocated, and not need to support the load payment on the 22nd. This can happen from next month as we can budget for it after we get paid our salaries on the 28th and 30th.
I think what I will do is to a budget close on the evening of the 27th that way when we get our first salary income on the 28th I can do a quick budget (eventually) on pay day, and then another update on the 30th with our second salary income.
I guess it is just going to take a few months of working to get the hang of it and see what works best.
I have not factored our loan account into the budget to avoid muddying my understanding, I have just factored it in as a bill payment in the budget page so it gets money allocated to it.
One thing to keep in mind also is if you have any CC purchases at the end of the month, and you either forget to put it in, or you're doing file based import, there's a situation that might occur. If it's the beginning of the month, and you remember, "Oh yeah, I have to put in that purchase from the end of last month." (or you do a file based import, and it brings in the transaction for you to approve.) then there might be a reason to look at last month's budget, just to make sure there wasn't anything overspent (or underbudgeted).
So it's not a bad idea on the 2nd or 3rd of the month, to go back and check for any red or yellow negative "available" amounts, and cover that overspending in that month. Otherwise, your CC payment category will be affected, and you'll start to notice you have less money to pay back the card. YNAB will assume that you intended for the unbudgeted spending to become debt, and therefore will not move the money into the CC payment category.
Hope that makes sense.
Yes, that makes total sense.
My wife and I will be discussing how we use our credit cards once we have got to grips with the system. We have lots to sit down with this money to go through to start to budget properly as it is going to take a while.
Thankfully we are not worried about money. Yes we have a large loan, but that was planned is covered current with monthly payments, but going forward we want to clear that much quicker, but for now it is ok to run for a few more payments at the standard amount whilst we get to grips.
It is the annual bills that have shocked me. We have ignored those in the past and taken them from savings then got annoyed we had to raid our savings even though we should have known, and planned for them :-).
Lots to do, lots to learn, but I can already see a better light at the end of the tunnel.