Negative budgeting

Does anyone else do negative budgeting? My wife and I get paid the same amount every week (her) and every other week (me). We have always found it easiest to count the pay periods in the next month and then set our budget accordingly. We have met many of our financial goals doing this and are currently 78 days in our age of money. The only frustration is always seeing a negative balance until we reach a $0 balance at the end of the month. Is there any benefit in changing how we are currently using YNAB? 

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  • I believe there are numerous advantages. At the least it shows you that you are not as "ahead" as you think you are. 

    Also, Age of Money isn't a measure of how ahead you are because it includes True Expense money -- which merely keeps you even.

    You're probably going to have to try it yourself so you can make an educated decision for your particular situation. The fact you even ask the question indicates you may be open to improvements.

    Like 2
    • Further thoughts...  

      Operating "in the red" implicitly steals money from other categories, and you're hoping not to get caught short. If the amount of reserves/True Expense balances and timing of outflows is such that you won't get caught, then it is a simple matter to reallocate, switching to "operating in the green", and still continue to meet your obligations.

      OTOH, if you cannot reallocate and still plan to meet your obligations, that's a sign that you likely will get caught short. It's just a question of when.

      Personally, I would want to know which of those is the case!

      Like 3
    • dakinemaui thank you and I see your point. 

      Like 1
  • The HUGE advantage of using the YNAB method, instead of using YNAB to track expenses/set a budget backwards is peace. 

    There is tremendous peace in looking at a category and knowing it is cold hard cash. Even if everything was absolutely the same (which it wouldn't be, but lets just say it would), and you spent exactly the same amounts at the same times throughout the month on the same categories, you still can find yourself  standing in line at the gourmet grocery store thinking, "Gosh this is a great deal on wild-caught salmon, and it should fit in my grocery budget," and having your brain go, "Yeah, but the account balance, and...what else is happening between now and when my wife's check comes in, and if I do this, technically I can't also take my friend up on the opportunity to go out to that awesome restaurant this weekend...or maybe I can, I'm not sure, there's a big pile in vacation and I guess that will cover us as long as the month all turns out okay."  

    With a cash-backed, zero-based, Rule 1 YNAB budget, you go, "Yep, there is money for wild-caught salmon." Swipe your credit card and off you go. 

    The difference is peace. It also creates different spending habits which usually cause you to get ahead faster, but that's a positive externality of the peace. 

    Like 10
    • WordTenor thank you. I see that there’s more peace in seeing the numbers as true as possible.

  • If you are doing this with next month's budget, you are fine, because your current month categories aren't filled with fake money. But if you are doing this in the current month, then your budget is a house of cards.

    Like 6
    • nolesrule 

      Is it a house of cards if I have a 6 month emergency fund and almost 2 months ahead on all categories?

      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 wk ago
      • 3
      • Reported - view

      Green Pilot If that's the case then you aren't doing this negative in the current month, are you?

      In that position I would keep the 6 month emergency fund and just budget the next month using the current month income. Don't see the point in being 2 months ahead and having a 6 month EF.... especially if you have categories for spending that would constitute emergencies for most people that don't have a strong budget (home repair, auto repair, medical costs).

      Like 3
      • MXMOM
      • MXMOM
      • 2 wk ago
      • Reported - view

      Green Pilot so where are you negative?

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