Seeing red (in the top line of my budget)

New to YNAB and I've been trying to set up a spreadsheet that makes sense. I understand the YNAB philosophy that you only budget with what's in your bank account, but that's leaving me with a spreadsheet that's constantly in the red. I have a regular, twice-per-month paycheck. However, my spreadsheet shows me being way over budget because it's balancing my entire month's expenses against my first paycheck.  (And yes, I have set up goals/dates for my fixed bills.)

For simplicity's sake, let's say I earn $2,000 on July 1 and $2,000 on July 15. However, when I add up all my categories (fixed and flexible expenses), they come out to $3,800. That's a good thing. But according to the spreadsheet, I'm way over budget b/c it's only accounting for the first $2,000.

I've watched a number of support videos, but feel like I'm missing something basic. Anyone else run into this issue?


Evan in North Carolina

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  • YNAB is an envelope system. If you were to take the money you have now, you have $2000. 

    The budget doesn’t really care that you have $3800 you’ll need to spend. (Although it has tools to help you with that planning, like goals.) It cares that right now, you have $2000 you can set aside toward that spending you’ll need to do. 

    Some categories won’t get money until your second check. Some categories will get part of their money now and part with the second check. Some you’ll find part of now, spend in the meantime, and add to with your second check. But you can’t budget more than you have. 

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  • You have the money that's in your account. Make a plan for those dollars only. To Be Budgeted (TBB) should be $0, NOT negative/red. When you get your check on July 1, prioritize and make a plan for those dollars, taking TBB to $0. 

    You should ask yourself whenever you get more money, "what do I need this money to do before I get more?" Then put it in the relevant categories, reserving it for those purposes.

    The reason you don't just budget the money you expect to receive on the 15th at the beginning of the month, is because you can't spend it until you have it. A Grocery category whose Available amount isn't actually available is of little use when making spending decisions.

  • Thanks for the replies! They're helpful, though I'm still struggling with the entire YNAB budgeting paradigm...

    The challenge I have is that the spreadsheet doesn't let you predict monthly income, yet it requires you to predict monthly expenses. I'm balancing half my monthly income against all my monthly expenses.

    Let's take groceries, for example. I've got $600 budgeted for the entire month for groceries, which is currently breaking my budget. Should I have a category for "Groceries Week 1," "Groceries Week 2," etc.? That seems like the logical way to do it, but in all the tutorials I've watched, none of the instructors have similar set ups.

    Do people just edit categories constantly throughout the month? Like, put $150 in groceries for this week, then put $150 in next week? Instead of putting all $600 in at once?

    • Hi Cornflower Blue Trumpet !

      When funding your categories, ask yourself "What does my money need to pay for before I'm paid again?" If you plan to spend $600 for the entire month, you can budget $300 from your first paycheck and then $300 more when you receive your next paycheck. Some people break down groceries into weekly expenses, but that's up to you and your personal preference - will seeing $150 in separate categories for each week help you stick to that spending target? If so, create those separate categories, if not, budget $300 now and then $300 when you receive your next paycheck.

      If you have a few minutes (five, to be exact!), watch this Whiteboard Wednesday episode or check out this article and video for more information. I also recommend our Video Course on how to Follow the Three Steps Process. :)

    • Faness Helpful resources -- thanks!

  • Cornflower Blue Trumpet said:
    Do people just edit categories constantly throughout the month? Like, put $150 in groceries for this week, then put $150 in next week? Instead of putting all $600 in at once?

     Yes. It might help to stop thinking of YNAB as a “spreadsheet” you fill out. It’s not. It’s an electronic representation of the act of taking paper cash and putting it in paper envelopes. If at a given time, you can only put $150 in groceries because all the rest of the money is needed elsewhere, then that’s all you can budget for groceries for now. When you get more money, you add money to that category. And so on and so on. 

    There’s no place to input income because you can’t make income appear by magic, so the budget waits until there is real income in your accounts. When it arrives, you’ll add it to your budget. 

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  • Cornflower Blue Trumpet said:
    the spreadsheet doesn't let you predict monthly income, yet it requires you to predict monthly expenses

    No, the idea is that you should not *allocate* funds you don't have to categories. Yes, when you do allocate, you take into account that you will receive income in the future. You still need to make spending decisions now, though, and future money is useless until it's actually in your hands.

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  • Cornflower Blue Trumpet said:
    I've been trying to set up a spreadsheet

    Side note: most people call this a budget and use "spreadsheet" to refer to something they setup with formulas of their own.

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  • If you're seeing red, first of all, relax 😉, then fix it. You don't ever want a negative TBB. Only budget funds you have on hand.

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  • Have you customized your budget and reordered categories in importance from top down? When I first started using YNAB, I was in the red in many categories because I was used to trying to spend money I didn't have yet. I sat down and asked myself, "What do I need to do with my money now so that I can 1) stay alive for the week and then 2) not be homeless for a couple weeks?" That helped me figure out which categories to place at the top and fund first. You can set goals for the rest, but they can be left un-budgeted until the next batch of cash comes in.

    For a while I was funding stuff at random times and moving money around, but after a few months of habit building and better spending awareness, I got buffered a little further ahead with my money. Nowadays I rarely have to tinker in my budget.

  • Thanks for the replies! I got it figured out, thanks to these comments and a helpful video from the bearded YouTube guy (Mapped Out Money). Basically, I was just putting items in the wrong column. I figured out that GOALS = entire month spending, whereas BUDGETED = for this pay cycle. I was putting in "budgeted" what should have gone in "goals" -- hence the redness.  My spreadsheet (er... budget 🙂) is green now and makes total sense. 

    As a newbie to this process, I'm still on the learning curve, but it's starting to click more and more. 

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