how to budget first dollars

So, I'm highly confused on how to start.

When I link my bank accounts it gives me "money to budget."  But, that money is money in the account.  For example, I have a checking account with $xxx.xx and a saving account with $yyy.yy.

 

Am I to create separate categories which are called "checking balance" and "savings balance?"  

 

Not quite clear how to state this question, however - how are you supposed to budget money which is already in the account?

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    • Khaki Storm
    • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
    • Khaki_Storm.1
    • 2 mths ago
    • 1
    • Reported - view

    Just pretend it a really big pay check and give every dollar a job. Did you budget before YNAB? 

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  • Savings and Checking accounts don't matter in YNAB.  It's all money.  The "reason" for the money is found in the categories under the budget.  If you want to have some money in "car repair" as a savings goal, put it in there.  If you want some money for Groceries, allocate some to that category.  Keep allocating money until the "To Be Budgeted" amount is $0.00.  Now you're done until your next paycheck, after which you can allocate some more money to categories that will need to be filled until the next money comes in.

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  • Hi Cyan Wizard,

    Welcome.

    From your question, I would guess you haven't worked with YNAB very much?  If this is correct, I would highly recommend you learn the YNAB way.  For me, it took a while to learn since I came here having no idea how to budget, even though I thought I had been doing it for years.  Here is a link to some of their recorded classes, which helped me a lot.  If you have questions, take some of the live classes.  They are even better than the recorded ones. 

    Jump right in.  You will probably make many changes, for the first few months, when getting started.  That's okay, this budget is flexible.

    Wishing you great success with your budget.  

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  • If you had specific ideas about what you were saving for, I'd do those first. Otherwise, go Star Wars style and try my steps in this order: 4, 5, 6, 1, 2, 3.

    1. Make categories for income replacement (what most people think of as "emergency fund" or what you'll use if you lose your job), medical costs, dental/eye, vet costs, auto maintenance, home maintenance, etc.  Those can be thought of as contingency savings or debt prevention - you don't want to have to use them, but they're there for when you need them and won't cause debt when then unplanned inevitably happens.

    2. Make categories for long-term expenses like vacation, 6-month insurance premiums, annual memberships, car down payment, house down payment, or whatever else you were saving for.

    3. Budget the amount in your savings account to those categories.  After this, it won't matter whether the accounts and categories line up, but doing this now transfers whatever plan you were working with to YNAB. 

    Note: If you had enough money in your savings account to fund all the categories you thought it would, great.  Most people don't, so if some categories end up with less than you'd like, just put a goal (target balance works great) so you know what you're working towards.

    4. Budget money to whatever you need before you're paid again.  This could include monthly spending - bills, daily spending - groceries/fuel, any major purchases looming near, or discretionary categories. 

    5. If there's extra, look after the next paycheck.  This could be to the end of the month and/or into next month.  If you have enough to budget into next month, you could click to it and budget there, but I'd recommend making a category called Money for Next Month to hold that money until the last day of this month.  Then, you'd zero that category out and budget in the next month properly.  This will save you from some headaches because you can keep your whole financial plan on the same page.

    6. Especially if you didn't have enough money to spread among all your categories, pick a system to be organized about knowing what to budget next.  Some common systems are goals, scheduled transactions, putting the date due in the category title, arranging the categories in chronological order, arranging category groups by paid cycle (monthly, daily, annually, contingency), and putting the monthly or paycheck budgeted amount in the category title.

    ***Most Important Note***

    You always want your To Be Budgeted (at the top of your budget screen) to be 0.  If you ever have money there, decide what category to put it in (even if it's Forgotten Stuff).  If you ever have a negative number, figure out what categories you can subtract from to make the TBB 0 again.

    There are a lot of good resources on YNAB's help docs, and they have classes you can take throughout the week.  Aside from that, you can read through the many threads on the forum for ideas and troubleshooting, but you'll want to have a basic understanding of the method to make sense of what people say on the forum.

    Reply Like 1
  • Hi Cyan Wizard ! Welcome to You Need A Budget. There are some great tips here!

    Have you seen our Ultimate Get Started Guide yet? It's designed to get you up to speed in about 20 minutes. Check it out and let us know if you have questions along the way!

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  • Thanks for replies.  Still confused.

     

    Practical example - I have a saving account with $2000.00 in it when I start YNAB.  This is for a college fund.  YNAB shows me $2000.00 inflow to budget.

     

    Am I supposed to setup a category called "College fund savings" and then put all of this money in there?

     

    That's what I did, and now it shows me that I have $2000 "available".  Which looks to me like I have $2000 available "to spend" however, is this right?

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      • jenmas
      • jenmas
      • 2 mths ago
      • 6
      • Reported - view

      Cyan Wizard yup. It’s available to spend on college savings because that’s the category that it’s in. And just because it’s available to spend doesn’t mean you have to spend. I have a Loss of Income category that could cover me for 6-8 months in the available amount, but obviously the goal is to never spend any of it. 

      Reply Like 6
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