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?
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.
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.