Age of Money and Emergency Fund

I just started using YNAB on May 1st, and just got my first notice that the age of my money is a mere 3 days. Clearly, that's bogus, as my initial balance was from 5/1, and couldn't reflect the actual age of that money, so it seems like all spending so far is coming out of that initial balance bucket. I generally have no problem with that, but it does raise a question about my emergency fund.

When I started, my emergency fund was fully funded, and I'm keeping it on budget, with a one-time budget category for the first month. The problem, as I see it, is that this approach will skew the "age of money" metric to being WAY too large, over time. Let's say my EF is $24k, and my normal spending is 4k per month. It will take 6 months to churn through that initial balance, and the age of money will settle in to the 6 months range. To my mind, that doesn't tell me anything useful, other than that I have 6 month emergency fund, which is obvious. If I'm trying to organize my budget and cash flow so I'm living on last month's money, I need to do mental arithmetic every time I look at that figure to subtract out the allocated emergency fund.

How do I tell YNAB that that money should be walled off and removed from age calculations, other than putting it off budget completely?

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  • You can't.

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      • Walrus 44
      • walrus44
      • 11 days ago
      • 2
      • Reported - view

      Herman So it seems like the AOM figure will be progressively more useless as I save more, both in the emergency fund and for long-term budgeted items. For example, my property tax is paid twice a year, so I need to self-escrow enough to cover it. 

      Like 2
      • Herman
      • herman
      • 11 days ago
      • 1
      • Reported - view

      Walrus 44 what AOM is and isn't and how much value it has is covered at length in this forum.  I don't personally have an opinion on its meaningfulness to you.  I just wanted to give you the short and to the point answer to your question before the philosophers get started.

      Like 1
      • Walrus 44
      • walrus44
      • 11 days ago
      • 1
      • Reported - view

      Herman Thanks. I appreciate your response. As I mentioned, I'm new here.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 11 days ago
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      Walrus 44 Useless is a binary state. Since AOM starts useless, it can't get progressively more useless.

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      • Walrus 44
      • walrus44
      • 11 days ago
      • Reported - view

      nolesrule Not always. I get your point, though, that you find AOM to be of little value. I'm starting to see why.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 11 days ago
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      • Reported - view

      Walrus 44 It's of no value. Anyone who attributes value to it doesn't actually understand it.

      Like 1
  • If you are using the toolkit, you can hide AOM. It doesn't sound like you have any need for it. From what I've seen on this forum, many longtime YNABers see AOM as little more than a marketing gimmick that doesn't help anyone understand their financial picture and is often misunderstood.

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      • Walrus 44
      • walrus44
      • 11 days ago
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      Magenta Camera I can just ignore it. I just (originally) wanted to know if there was a secret way to make it more accurately represent cash flow. It doesn't sound like there is.

      Like 1
  • Your Net Worth report is a better metric for how you’re doing overall.

    Like 1
  • Search the forum for "living on last month's income" or using an "income for next month" category or the Classic YNAB Temporal "Buffer" that used to be part of the 4 Rules. 

    Those will be more instructive about maximizing budgeting workflows and managing budgetary cash-flow.

    Oh, and make sure your running balance is turned on for your accounts. That is invaluable for managing actual cash-flow.

    Like 1
  • Walrus 44 said:
    I just started using YNAB on May 1st, and just got my first notice that the age of my money is a mere 3 days. Clearly, that's bogus

    FWIW, AoM is an average of the ages of the last 10 cash transactions. Some of those early transactions were less than 3 days "old", and the recent ones are more than 3 days old. If you made one today, it would likely be 12 days old, but that is tempered by averaging with 9 other ages that are less than 12 days. So not technically bogus, but definitely not what you think it is.

    AoM is a great marketing gimmick as it invariably goes up for the new user -- regardless of what they do!

    If you're looking for a "high score", just charge everything to a CC and only make minimum payments. AoM will skyrocket -- as will your debt and interest incurred. I leave it to you to evaluate the utility of such a metric.

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