Budgeting for future transactions

I have yearly subscriptions (e.g dropbox, evernote, ynab) which are scheduled transactions in my ynab account.

The problem though is this: I have to manually make sure that the category always has "X" amount of money in it, otherwise i'd wake up at the end of the year having to pay e.g 200$ for dropbox and not having the money.

 

How can I make ynab tell me to have as 'available cash' for a category X amount of money which will cover all scheduled transactions for the next year?

 

Thanks

 

P.S I am using nYNAB, not the old software.

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  • Use the Category Balance by Date Goal. It will tell you how much you need to budget between "now" and "then" to get to the balance you need. However, you can't set a specific date, I believe the "date" of the goal will be the first of the month.

    I personally don't use goals, if my subscription is $200/year, I just budget $16.67/month to the category every month.

    Like
      • mamster
      • mamster
      • 2 yrs ago
      • 1
      • Reported - view

      jenmas In addition to this, I'd add: if you're combining multiple subscriptions into the same category, make it a category group with individual categories for Netflix, Dropbox, etc. Otherwise you just end up having to do a bunch of math outside of YNAB, and then doing it again when a subscription changes.

      Like 1
    • mamster This is exactly my problem! The 'math outside ynab' is what I hate. I currently have a "Software Subscriptions" category, which makes sense to put dropbox / ynab etc. in it. Wouldn't per-payee category be too verbose?

      Like
      • dakinemaui
      • dakinemaui
      • 2 yrs ago
      • 6
      • Reported - view

      Powder Blue Octopus Either be verbose or do the math elsewhere. Pick your poison.

      You might suggest to YNAB that they code up a smarter goal that understands multiple outflows throughout the year. The example I've used in my feedback is a Birthday category. All the user needs to provide is a list of the planned amounts and dates. (Ideally they would handle any recurrence, but I'd settle for assuming yearly.)

      It also turns out that you will almost certainly tie up less money than when using separate categories. For that reason, I will continue to do the math outside of YNAB.

      Like 6
      • mamster
      • mamster
      • 2 yrs ago
      • Reported - view

      dakinemaui I don't understand how you tie up less money that way. Could you explain? Curious!

      Like
      • dakinemaui
      • dakinemaui
      • 2 yrs ago
      • 1
      • Reported - view

      mamster Think about it... When you have 10 categories all coming due at different times, there will always be money in at least 9 of them. If it's a single category, then there is at least one time during the year when the category will be $0.

      Like 1
      • mamster
      • mamster
      • 2 yrs ago
      • Reported - view

      dakinemaui It sounds like maybe you mean using a single category to save for goals sequentially rather than simultaneously. But that doesn't make sense. Say I have two annual bills due in November and December. Are you suggesting that I save for the November bill throughout the year, pay it in November, and have zero in the category, then have to budget the entire December bill in December?

      Assuming you want to use goals to consumption-smooth as much as possible, you'll tie up exactly the same amount of money saving for annual expenses in multiple categories vs one, unless I'm really missing something. Back before I used YNAB, I had an "Annual bills" checking account that I used to accumulate money for annual expenses; it was never anywhere near empty.

      Like
      • dakinemaui
      • dakinemaui
      • 2 yrs ago
      • 1
      • Reported - view

      mamster We are definitely talking about the same thing: multiple, irregular outflows throughout the year. What do you budget so money is available when each expense occurs? Make things as "smooth" as possible.

      Example: $200 expense A due in Jan each year, $200 expense B due in July each year, and $100 expense C due in Feb. each year. You start YNAB at the end of Nov, balances are $0. What to budget in Dec? The separate category approach (Target Amount By Date Goal or old-school "Amount / # Months"):

      Category A: Budget $100 through January, then $16.67 thereafter.

      Category B: Budget $25 through July, then $16.67 thereafter.

      Category C: Budget $33.33 through Feb, then $8.33 thereafter.

      Total Budgeted for the Group:

      Dec Jan Feb Mar Apr May Jun Jul Aug
      $158.33 $158.33 $75.00 $50.00 $50.00 $50.00 $50.00 $50.00 $41.67

      Cumulate contributions through Aug: $683.33.

      The optimal contributions (calculations not shown) simply considering cash flow for the group (i.e., a single category):

      Dec Jan Feb Mar Apr May Jun Jul Aug
      $100.00 $100.00 $100.00 $41.67 $41.67 $41.67 $41.67 $41.67 $41.67

      Total contributions through Aug: $683.33 (multi-category) vs $550 (single category).

      The multi-category approach, while simple to calculate, ties up 24% more money -- forever -- in this example. Moreover, it ties up 58% more in just the first 2 months!

      Like 1
      • dakinemaui
      • dakinemaui
      • 2 yrs ago
      • 1
      • Reported - view

      Actually, I just realize that being "smooth" as possible isn't as good as it could be. The following schedule would be even better. The multi-category approach ties up 52% more money (forever) for this example.

      Dec Jan Feb Mar Apr May Jun Jul Aug
      $100.00 $100.00 $100.00 $0.00 $0.00 $24.96 $41.67 $41.67 $41.67
      Like 1
      • dakinemaui
      • dakinemaui
      • 2 yrs ago
      • 1
      • Reported - view

      Here are the projections for the category group Available over time. Hopefully now you can see there is indeed a fair chunk of change being tied up unnecessarily with the multi-category approach.

      Like 1
      • mamster
      • mamster
      • 2 yrs ago
      • 1
      • Reported - view

      dakinemaui The math here is fascinating. Thanks for taking the time!

      Like 1
      • jenmas
      • jenmas
      • 2 yrs ago
      • Reported - view

      dakinemaui Is there a formula that I can apply to look at some of my categories? For monthly subscriptions, whether I have a lump category or separate ones, is just six of one, half a dozen of the other, but for say annual home and auto insurance, or annual credit card fees, if there is a more optimal way to budget. . .

      Like
    • jenmas You might start with http://forecast.calcitout.com/ . You'll have to sign up (free) if you want more than about 4 rows (I think). If you hit "Update" and the graph doesn't change, you're over the limit.

      Anyway, enter the various outflows and start with a single inflow equal to the "long term" amount: total outflow / 12. (Row order doesn't matter.) You should be able to see a transition period, then a repeating pattern. Change the initial budget amount until there's no negative in that transition period. You can probably switch to the long-term amount starting at that switching point (cancel the initial amount at that point as well), but there's likely to still be a non-zero floor amount after that. So either refund or budget $0 for one or more months to try to remove the floor. Obviously, the last effective budget entry should be for that long term amount.

      It's not easy to do by hand, thus my desire for YNAB to step up. It's not too bad, however, to adjust when a bill changes slightly because I'm already close to being on track. Working through the numbers in the above example should be instructional for you.

      Like
      • jenmas
      • jenmas
      • 2 yrs ago
      • Reported - view

      dakinemaui Thanks, I'll check it out!

      Like
    • jenmas Upon further thought, this may be very easy for you since you're probably already in the steady-state phase. The graph will immediately show you the floor, and you can probably just do a one-time refund of the floor amount.

      A mouse-over on the graph will give you specific numbers.

      Like
    • Weird, that tool seems to include an extra month after the ending date, so I was off a little on the optimum numbers above. A better schedule would be:

      $100 in Dec-Feb, then start in with the $41.67 contributions in March onward.

      As I said, it's a little tricky to get the absolute best solution by hand (especially with a buggy tool!), but still pretty easy to beat the multi-category approach. 😆

      Like
    •  In light of the bug I just discovered in the tool I've been using to graph things, the original Multi-Category graph is off. Unfortunately, this forum software won't let me make an edit to the above post, so the corrected Multi-Category graph is below. Sorry for any confusion.

      The multi-category numbers previously given were correct, however. Multi-category still requires 58% more money in the first two months and 25% more through the point where both are in steady-state.

      Like
      • casner
      • Now retired, and figuring out transitions
      • casner
      • 1 yr ago
      • Reported - view

      dakinemaui I see that those graphs have now been added to the Toolkit reports! Nice.

      Like
    • casner No doubt, the toolkit devs are on it! 🙂

      Like
      • casner
      • Now retired, and figuring out transitions
      • casner
      • 1 yr ago
      • Reported - view

      dakinemaui So far, just accounts, not categories. Maybe soon?

      Like
      • Sarah Green
      • Turquoise_Hammer.6
      • 11 mths ago
      • Reported - view

      dakinemaui how were you able to figure out months were you didn't need to contribute in this comment? https://support.youneedabudget.com/t/y727d8?r=x12scx

      I was able to follow your example above and I applied it to my own scenario. For ease of calculation, I had started with multiple categories a few months ago. I'm now going back to see how I could consolidate to a single category. When I factor in the total amount I already saved across the separate categories, it looks like I actually have more free money when I convert the separate categories to a single category and follow your math. (Spreadsheet attached if you're curious in the math.)

      Just trying to see if I can free up some more money if possible!

      Like
      • dakinemaui
      • dakinemaui
      • 11 mths ago
      • Reported - view

      Sarah Green the budget schedule that had zero for some contributions was in error. Please ignore that one. (It was too late to edit the post after discovering the error.) The schedule that had a $41 contribution in March is the correct one.

      Like
      • dakinemaui
      • dakinemaui
      • 11 mths ago
      • Reported - view

      Sarah Green I can confirm your figures: $49.75 through Nov, then $31.17 thereafter is optimal for the $0 initial balance.

      For the "Include Previously Saved" case where you have $159.90 initial balance, the optimal schedule is $9.78 until Nov, then $31.17 thereafter. Alternatively, you could budget -$54.41 in August (removing the excess and skipping a month) and start the long-term $31.17 next month (Sept).

      Like
    • dakinemaui Does this also help for known, regular outflows throughout the year? 

      For example, bunching up my digital subscriptions together under one category versus the annual categories and monthly for each? 

      Like
    • casner I think it is much harder, like @dakinemaui says, to consider everyone's categories. 

      Like
  • A totally different approach—every software subscription I have is small enough that I just categorize it to “shopping.” Shopping gets funded every month.  In Evernote month and YNAB month, I just have less to shop with for other things. 

    Admittedly, this does not force me to confront my software spending monthly. But I am pretty good about reviewing subscriptions regularly to be sure I still want them. 

    Like 1
  • WordTenor said:
    Admittedly, this does not force me to confront my software spending monthly. But I am pretty good about reviewing subscriptions regularly to be sure I still want them. 

     Indeed, at first I had everything in 1 bigger category, but now I want to know exactly how much I'm spending on software VS other things 🙂

    Like
  • Powder Blue Octopus said:
    mamster This is exactly my problem! The 'math outside ynab' is what I hate. I currently have a "Software Subscriptions" category, which makes sense to put dropbox / ynab etc. in it. Wouldn't per-payee category be too verbose?

    I take this back. I just created a master category "SW Subscriptions" and inside of it I have each service with it's by-date funding goal. This solution is actually pretty neat, thanks! 

    Like
  • I really don't want a long list of individual categories, each getting $2.50 and $4.75.  I prefer a consolidated category (I'm a lumper), but I do agree that knowing how much is due and on what date is valuable information. I keep a list of dates and amounts in the note area for the category. The  software is listed by renewal date in the calendar year and the amount needed for renewal. Since I also need to account for currency fluctuation at time of renewal, I estimate a little high.

    I budgeted an entire  year's worth to the category and continue budgeting the total of all subscriptions divided by 12 (rounded up to the closest $5).  There's always an extra couple of hundred or so in my category for flexibility,  which means I can easily deal with an increase in cost, large currency fluctuation, or buying a new software/subscription without having to find new dollars in my budget today; a new software/subscription purchased today just means I need to adjust the monthly amount going forward for the renewal.

    Edited to add:  I also have a scheduled transaction for the renewal entered for the 1st of the month in which it renews.

    Like 5
    •  HappyDance this is pretty much how I handle mine as well.

      I, too, am a "lumper" and prefer not to have a "category-per-payee". When I first started using YNAB that is what I was doing but once I got into the flow of budgeting and got past a few of my initial financial milestones (including learning how to properly plan vs just tracking expenses) I found having all those categories were cumbersome and unnecessary.

      I have far fewer categories (and category groups) then I had at the beginning, am using schedule transactions properly, and make extensive use of the "Notes" section of each of the categories where necessary.

      I am glad  dakinemaui decided to back up those statements with tables/graphs because I was about to co-sign everything that was said. I have definitely noticed a difference in our cash flow by just having a Monthly Funding Goal that is 1/12th of the sum of all the annual expenses for that category versus making each payee is own category and funding them separately.

      Like 1
      • JollyB
      • jollyb
      • 11 mths ago
      • Reported - view

      HappyDance I'm not a lumper, but this is what I do.  I divide the annual amount by 12 and fund that amount each month. Simple.  Turn it into a monthly bill instead of an annual one.

      Like
      • dakinemaui
      • dakinemaui
      • 11 mths ago
      • Reported - view

      JollyB The startup phase makes it not quite that simple in most cases. (For example, if you start doing this when bills are larger than average.) Generally, budget the larger of the annual/12 or enough to avoid overspending. Still fairly simple. 🙂

      Nerds in the crowd may want to analyze further so as to not have to scramble to cover overspending.

      Like
  • Due to the ongoing interest in this topic (this and other similar threads), Move Light Sound Life talked me into making a spreadsheet that might help with the optimal consolidated calculations. Please see the attached that runs through the above example. Hopefully the instructions will allow you to modify for your particular scenarios.

    Like 4
      • poko
      • poko
      • 5 mths ago
      • Reported - view

      dakinemaui Hi there! I'm a random software engineer that wants to solve this problem too. You have commented on probably every single thread about this mutli-outflow goal topic haha so I thought I'd ask you on your thoughts for the algorithm I'm writing up. Plus I'm using your excel to help me figure out the code.

      I believe we can always budget up front the maximum drawdown at offset 0 to make sure we never tie up too much money but this isn't as "smooth". Thus this is why we decided to amortize the maximum drawdown. However, how do we know when it is optimally smooth? In your second example (starting in July) after the first amortization we have to do another one since we have negative drawdown. But although the drawdown is 0 after the second installment at offset 0 the maximum balance is pretty high aka tying up a lot of money. We then combine the amounts into offset 0 and now the maximum balance is lower. How do we know when to stop combining (technically instead of $1.04 for offset 7 we could just cover it all in offset 0)? How do we know when we reached an optimal maximum balance?

      Let me know if my questions make sense or if I'm conceptualizing something incorrectly. Any thoughts appreciated, thanks in advance.
       

      Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      poko I would suggest a different tact, which you intuitively hit upon with your "optimally smooth" comment. Not possible in a spreadsheet, but I would cast the problem as a multi-variable optimization to minimize the standard deviation of the series of monthly contributions (i.e., smooth) through the transient period while constrained by a nonzero drawdown. (The N unknowns are the set of monthly contributions.)

      Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view
      poko said:
      How do we know when we reached an optimal maximum balance?

      Along the lines of your original train of thought (and what's in the spreadsheet), I think it's easier to look at the optimal *minimum* balance. That will be exactly $0.

      Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      poko if I were writing the goal logic, I would also give the user the option to cover the entire shortfall up front, putting things "on-track" where the steady-state contributions thereafter will result in the $0 minimum balance.

      Like
      • poko
      • poko
      • 5 mths ago
      • 1
      • Reported - view

      dakinemaui Ah I didn't catch that when I was playing around with the numbers but yes that makes sense. Like you said we want to eventually get to a minimum balance of zero at some point which is what happens when you combined the installments into the 0 offset for July. I'm no math or accounting wiz so that first suggestion, I'd need to spend some more thought on but your second observation I feel like I can conceptualize a way to do that a little easier. I'll keep playing around with it but any other tips or suggestions on how the algorithm would do this are more than welcome.

      Appreciate the advice!

      Like 1
      • poko
      • poko
      • 5 mths ago
      • Reported - view

      dakinemaui yeah I was going to give two options when adding a new goal(s). One would be called like "Smooth" or something and the other one would be "Upfront" for example so you can choose how to get to the steady state. Great minds think alike!

      Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      poko if you're serious about things, you might contribute to the YNAB Toolkit Extension, as that has the distribution aspect handled.

      Like
      • poko
      • poko
      • 5 mths ago
      • 1
      • Reported - view

      dakinemaui Oh wow I saw you mention Toolkit somewhere but I didn't know what you were talking about. This is awesome and I'm surprised that someone else hasn't done this feature yet! I'm fairly new to YNAB like a couple months so I'll try this extension out and see if the multi-outflow goal could fit into it.

      Like 1
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      poko there's also lots of other low-hanging fruit on their roadmap if you wanted to get your feet wet first. I made a number of posts on the Extension's development (Trello) site to address common issues I see posted.

      I'm sure they would welcome a capable developer. Good luck!

      Like
    • dakinemaui Can you provide a video or tutorial on how to use the spreadsheet? I'm having a little bit of trouble understanding it completely. 

      Like
  • So I am facing this problem too but what is the TLDR? If I have a category with a bunch of sub expenses should I just create a goal/category for each sub expense or just keep them all under one category? 

    For example a movie subscriptions under fun money would have: 

    Netflix 
    Amazon channel(s)
    HBO Max 
    etc......

    The same could be said for annual subscriptions: 

    Amazon Prime, Costco, Google, YNAB, etc. 

    I would prefer to keep them all under one category, but it's hard to budget for the total expenses without doing the math outside of YNAB. 

    Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • 1
      • Reported - view

      Slate Blue Pilot (2903ac015cdb) as I said up thread, pick your poison. Multiple categories is easy but probably ties up too much money. Tying up no more than necessary requires work to be done outside of YNAB at present.

      Edit: Or WordTenor 's approach to budget the steady-state amount but cover overspending when necessary. At some point, the month of max drawdown will be passed, after which the steady-state amount is actually the optimal value.

      Like 1
    • Slate Blue Pilot (2903ac015cdb) I personally like to keep all subscriptions in separate categories under the Category group "Subscriptions". Some are monthly (Netflix, Spotify), some are semiannual and some are annual. This keeps me aware of the subscriptions I'm actually paying for (when looking at March's budget recently I decided to cancel two subscriptions) and because of different time frames/dates due never has much more than $150 total available in any given month.

      Like 1
      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 5 mths ago
      • Reported - view

      Slate Blue Pilot (2903ac015cdb) I split the difference. 😄 I have all (edit: most of) my monthly streaming subscriptions lumped into one category because the amount I need to budget for every month is unchanging (except when someone -coughNetflixcough - raises their rates). My less-than-monthly bills and sinking funds (mostly annual, but my water bill is quarterly) I have set up each with their own category on their own funding schedules based on their due dates. It may not be the "perfectly optimal" system in terms of freeing up every unnecessary penny and minimizing categories, but I like it.

      Like
    • Periwinkle Flute the only problem i have with that is I would like to delete the category, but that requires the transactions be put under a different category. Unless I start fresh again, which is ok, but kind of annoying. 

      Like
    • Slate Blue Pilot (2903ac015cdb) When I stop a subscription I just hide the category.

      Like 1
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