Any benefit to budgeting future months rather than a buffer?

Hi there

I know Age of Money has been covered at length and I believe I completely understand the concept. But I still don't get why I would actually get rid of my emergency fund category and budget that money for the next several months?

Is it not extra work, where do I budget the latest pay then?

Would it be at the next month that is missing funds allocated to categories? That might be several months down the line if I start budgeting all my of my emergency fund?

It just seems like a lot of work and possible confusion rather then just having a nice fat category called emergency or whatever and then having to budget as per usual when I'm paid.

Am I missing something here?

Thanks to all who offer advice

29replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • I agree with you 💯%.

    The only piece of advice about budgeting ahead that I would give is for people with more than one major income event per month. And that is to use the Classic YNAB Rule 4 (live on last month's income). In fact the previous version of YNAB4 had functionality where you could assign income either to the current month or the next month. By assigning it all to the next month, it allowed you to get the money out of the way in the current month and then budget next month all in a single pass.

    This buffer was administrative, and separate from the emergency funds. The current Rule 4 (Age your money) does not replace it in any actionable or functional way.

    To me, that functionality was the genius of YNAB because it made everything more clear. You can still do it in nYNAB, but it requires hacks and workarounds. They should bring back the functionality so that the people who want to continue to use it don't have to develop the workarounds.

    Reply Like 12
  • I live on last months income and I miss the function of being able to assign my money to be budgeted for next month.  I find it to be a pain to work around this.

    Reply Like 7
  • I'd like to understand more about this too. Budgeting future months (that I can't see when I glance at this month's view) seems confusing. I have enough trouble figuring out where my money is, spread across all these categories. 

    For a category like "oil" or "car maintenance", for instance, where clearly I need to let money build up because it is "lumpy", I am keeping unspent funds in this month's category. I assume that when the month rolls over, so will those funds? I have set target goals so I know how much to add each month. In the long run, I'd like enough money in oil to buy the next few tankfuls (basically, I'd be one year ahead, because this is such an unpredictable expense). Ditto with care maintenance.

    I also have a "buffer" category, which is just  extra money that sits in my checking account. I figure that this could be dispensed to categories for which I forgot to budget, particularly as I'm getting started. Over the long run, I'd like this to be about a month's worth of expenses, so I'm not waiting for the next paycheck to fill the categories. 

    I realize that I should probably do one or the other of these strategies, not both. However, I like the buffer because I can see at a glance how much extra I have. It's also necessary for operational purposes, since some of the money I have is sitting in other accounts, and while it is available for me to spend, it can't be as easily used to pay bills or credit cards as my primary checking account.

    Because I don't trust any of the metrics (Age of Money, or the one the toolkit offers), I'm trying to develop my own goals so that I can know if I'm comfortable with my situation. Mostly these are target amounts for all the categories, which I'm developing as I go. That includes the "buffer", which in my system is just another category.

    Reply Like 4
    • MsTJ
    • Gray_Nomad_f6eeb59e1a1c
    • 1 yr ago
    • 2
    • Reported - view

    I don't fully understand this either.  My guess is YNAB has given us the freedom to decide how we become buffered.  According to my AoM (74 days) I'm officially buffered.  But, it isn't sitting in next month, or a buffer category.  The categories I want buffered have some extra money in them and my savings categories are growing nicely.  

    Think I would like to have a specific "buffer" category to put enough money to fully fund the next month but always have a savings place to put any extra income this month. Guess  I love watching my savings categories grow more than I want to see a buffer category grow.  

    In my opinion, t's another choice YNAB allows it's users to make for themselves.  

    Reply Like 2
  • Glad I'm not the only one that feels this way then. Living on last month's income seems to be  a more functional way of budgeting with the software.

    Reply Like
    • HappyDance
    • YNABing consistently since 2014
    • HappyDance
    • 1 yr ago
    • 6
    • Reported - view

    I will budget to next month, but I don't bother budgeting further out than that.  I could quite easily budget out three or four months with money on hand. I typically assign the same amount to each category every single month, so that is easy to copy with the quick budget feature.  But the problem is that I would have to reassign my emergency funds to do that with actual dollars.

    I spend differently when I feel impoverished, and seeing a significantly reduced emergency fund category balance would make me feel vulnerable and put me back in scorched earth mode when it came to spending. So it might result in me saving more. That would be a plus, I suppose.  But I'm already a little shy about spending and have a tendency to inflate my anxieties, so I'm glad to be past that phase in my budgeting life.

    On the pro side, I have seen posts from people who live on lump-sum income -- commission sales, students, seniors, researchers, teachers on summer break -- and some of them have explained how essential it was to take the lump sum and budget out the months ahead that they want that lump sum to cover. This also helps them to recognize that there is no extra in the large account balance, that it is all needed to cover essentials and basics until the next income is received (months away).

    Reply Like 6
      • Simon
      • tight_scotsman
      • 1 yr ago
      • 1
      • Reported - view

      Michele good point, I can see why it's very useful for lump sums so you don't feel rich at waste it.

      Reply Like 1
    • WordTenor
    • Arranged the menu, the venue, the seating.
    • WordTenor
    • 1 yr ago
    • 6
    • Reported - view

    I budget one month in the future and no more. According to what I've seen from the book, Jesse himself now budgets money far in the future but I think that's so much more work than it's worth.  With money one month in the future, you have smoothed income events. But beyond that, you're likely just creating extra work. 

    Reply Like 6
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 2
      • Reported - view

      WordTenor Agreed.

      The farther out you budget, the more places you have to make a change every time you decide to adjust your "template".

      Reply Like 2
  • Hi Simon

    i am still on classic Ynab4 so don't have Age of money. However, should I switch, I would largely ignore it. I keep my spare buffer money in my emergency fund and some other reserve categories. I don't budget it  beyond the next month. I have been doing it this way for 3.5 years and won't change it. As Nolesrule has said below, i just use the Rule 4. I am paid at the end of the month and all of that goes to the next month

    Reply Like 3
  • I am not a fan of budgeting into the future either.  I do admit that though old me, would have wanted to, but now I just want to reduce my workload.  

    I came from a cashflow style budget where I would have the whole year plotted out and then over type each week with the actuals. It did not work well for me, hence coming across to Ynab.😉

    Much more comfortable using goals and the scheduled transactions to top up categories, then using what is left over to top up our emergency fund or a buffer category.

    I may change my mind in the future on this. 

    Reply Like 2
    • Simon
    • tight_scotsman
    • 1 yr ago
    • 2
    • Reported - view

    I agree with the crowd that going beyond one month ahead is probably too much for someone who gets paid regularly. To me it just seems confusing to look too far ahead when I'd rather just see that lump of cash sitting in a category. 

    Reply Like 2
  • I just switched over from YNAB 4 and am really missing this feature of telling it that income is for next month. While I'm sure I'll get used to the new YNAB, I really miss the overall look of the categories and being able to see several months at at time. 

    Reply Like 3
  • I'm still "officially" still on YNAB4, just giving nYNAB a test drive.

    I too miss rule 4 and how this was implemented in YNAB4.  Here's my "workaround":

    I created a master category labeled "Income" with a single category labeled "Paycheck".  When my paycheck arrives, I go to next month and budget 100% of this paycheck to this category.

    When I have all my income for next month, I can move that money OUT of the Paycheck category back into To Be Budgeted and proceed as usual.

    I'm still experimenting, so who knows where I'll end up next.  But that's what I'm doing for now.

    Hope it helps!

    Em

    Reply Like 1
  • I'm not sure if this is right or not, but I'm actually doing both: Having a lump sum of money saved for emergencies (the car broke down, hospital bill, the roof fell off etc.), and then am also aiming to increase my AOM. I'm hoping this means i'm both prepared for the unexpected, and can start building up 6 months expenses that are paid for incase of job loss :). 

    Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      Gray Pony Increasing of AOM is a natural result of building up your emergency funds and other buildup of categories. To be honest there's no need to make it an active goal if you are using YNAB correctly. It'll just happen.

      Reply Like 1
    • Beige Banjo
    • Sailor of topographic oceans
    • Beige_Banjo.1
    • 1 yr ago
    • 2
    • Reported - view

    I’m a freelancer with very irregular income. Projects I’ve billed for can sit in my business’ accounts receivable account for 2 months before I receive payment so my buffer reflects this.  I budget-out 3 months ahead (2 months + 1 month “just in case”) directly into the budget categories.  To deal with the possibility of inadvertently stealing money from the future I use a widget in the YNAB toolkit to warn me if a transaction is short-changing me in a future month  (it shows in red what month I’m short in and by how much). That way I don’t get caught holding the bag before next “pay day”. 

    Reply Like 2
  • Like Beige Banjo  said, main reason for budgeting for future months is to figure out how much you need to cover for your consistent, known expenses before the next time you'll receive income.

    So, if you're paid regularly, there's not a pressing need for it.

    If you get a sudden windfall, consider budgeting to the future with a "maximum timeframe."  Any amount past that time, you can dump into a CD, stock, or other "long term off-budget" account -- since you won't need that in the foreseeable future.

    Reply Like
  • I get paid in the middle of the month and have managed to get myself to the position where I don't need this month's paycheque until next month. I guess that puts me two weeks ahead. When my paycheque arrives I budget it all out to next month which then gives me a six week buffer. I then ignore next month until it arrives and live off the money budgeted for this month. I also have an emergency fund, although I am toying with the idea of not having one.

    Reply Like
    • Brandon P
    • YNAB enthusiast since 2014
    • Brandon_thered
    • 1 yr ago
    • 1
    • Reported - view

    I wish there was a better way to budget for future months. I have a buffer category, it is small and is only meant to cover small overspendings. My emergency savings is separate from YNAB, I track it in YNAB but it is not a budgeted account. However, what would be nice is an easy way to start budgeting more of my money for future use. Ideally, then that emergency fund now becomes obsolete (for a lack of a better word) and can be reallocated to something else. The future income budgeted in YNAB would become my new emergency savings, sort of a cyclic savings and future budgeting that allows for large amounts of cash set aside to be reallocated to something fun or something invested. Right now I allow my categories to grow and swell, which is nice and it increases my AoM so I know I am budgeting for the future. BUT, and that's a big but, sometimes it is easy for the wife and me to see the extra money sitting in those categories and reallocate that money for impulse purchases. Thus defeating the purpose.

    Reply Like 1
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 yr ago
      • 1
      • Reported - view

      Brandon P You might peruse the rest of the thread. Generally, what you want to do is budget one month ahead. Lots of people feel all warm and fuzzy from budgeting further than that, but it ultimately makes a lot more work for the budgeter for no gain. 

      “Buffer” has a specific meaning in YNAB and it’s not a pot of money you dip into when you overspend. It is the state of funding next month with money you’ve already earned, so that money you earn next month can go to fund the month after, etc. If you bring your emergency savings on budget, you can use it to buffer your budget. This would also help with the spouse issue, since the categories will only show what is available for use right now, even though next month will already be flush. 

      Reply Like 1
      • Brandon P
      • YNAB enthusiast since 2014
      • Brandon_thered
      • 1 yr ago
      • Reported - view

      WordTenor , I read the rest of the thread. I fully support what others do and how they manage their budget. I am not saying my way is right, simply throwing out my two cents on how I manage my own. 🙂I prefer to have a category of buffer, I understand that it is more of an idea. In the old YNAB, if I remember correctly, it was an example category. It is simply meant to cover any extra spending, which is easy to happen when new to YNAB and budgeting.

      Some people simply don't know how much they spend. Rather than tap into my emergency savings or have to go back and "roll with the punches" to find money in another category I simply pull from the buffer category. With that said some months I have no buffer money left over. That category is at the very bottom of my budget on purpose and that is because if there is anything left over I will throw $100 in there. Again, my two cents.

      Reply Like
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 yr ago
      • 2
      • Reported - view

      Brandon P I’m not arguing the usefulness of having such a category. In fact, it’s so useful that it’s now included in the stock software: “Stuff I forgot to budget for.” I’m pointing out that “buffer” is not the term YNAB users give to that kind of category. Buffer has a very specific meaning in the YNAB method and so I’m trying to anticipate future confusion and help you understand that when you hear “buffer,” your “pull extra money from it” category is not what people mean, and that when you say “I have a buffer” people are going to assume you mean something else. That will get frustrating, fast. 

      PS I think it’s a bad term precisely because it often causes this exact confusion. But it’s a major part of ynab parlance and so it’s not likely to change. 

      Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      WordTenor Agreed. That's why on the other forum I always referred to it as "Income for Next Month". However, that's really not so easy to understand for the online software as that doesn't exist out of the box.

      Reply Like
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 yr ago
      • Reported - view

      nolesrule One thing I realized is that there is a definition of “buffer” that most people are familiar with now which actually works with the YNAB buffer, and that is the idea of a streaming video being buffered. The buffer is the thing that allows the video to play on uninterrupted even if there is a hiccough in the flow of packets on the network. That’s exactly what a YNAB buffer is, but that’s not most people’s first definition of the word. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      WordTenor Yes, that's true, and I've said as much a couple times on the other forum, though that was years ago.

      Reply Like
Like10 Follow
  • 10 Likes
  • 1 yr agoLast active
  • 29Replies
  • 5752Views
  • 21 Following