What's a buffer?

I'm not exactly getting started since I've been using YNAB for about a year now.  Something I've seen around the forum is people talking about having a buffer, and I'm not sure what it means. 

It seems to be about getting at least a month ahead with regular outgoings.  If that's right, does that mean budgeting this month's income into next month?  And what's the reason for doing that rather than having a category "Buffer" and keeping the money there?  

I still struggle with some YNAB concepts, and I get confused between an emergency fund category,  some of the true expenses categories and the mysterious buffer.

Could anyone who uses a buffer explain what it means to them and how it's different from other rainy day/future proofing categories?

Thanks!

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  • For me, a "buffer" describes the delay between when I earn income and when (in which month) I budget it.  I.e. it's the thing that ensures I'm not living (or budgeting) paycheck-to-paycheck. 

    Emergency funds and generously-padded categories provided financial security: If an unexpected expense occurs, I'll have some ability to absorb it without making uncomfortable sacrifices to my other spending priorities. 

    In contrast, a buffer mostly provides an administrative convenience. It enables me to fully allocate my budget on the 1st of the month; I don't need to rely on any mid-month paychecks to cover my expenses. It's convenient to budget an entire month of aggregated income all-at-once vs doing that piecemeal as it arrives, especially if you have frequent/small paychecks or multiple income streams (e.g. joint family budget). I also find it helps me "see the big picture" and make smarter decisions when I budget in monthly increments vs piecemeal.

    Mechanically, operating a buffer in YNAB can be achieved in several different ways. My preference is a category-based solution: As income arrives throughout the month I budget it into a "Income For Next Month" category, and at the beginning of the next month I empty that category out and distribute it as needed. 

    Like 9
  • What bret said. The buffer is essentially a time machine.

    Although I actually prefer to avoid using the word "buffer", because people think of it as a financial cushion because that's what they are used to.

    Like 5
      • jenmas
      • jenmas
      • 2 yrs ago
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      nolesrule in another thread WordTenor referred to buffer as a state of being rather than an object: you don’t have a buffer, instead you are buffered because once you reach that state there is no need to have a buffer category.

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      • bret
      • bret
      • 2 yrs ago
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      jenmas 

      Ehhhh, that might have been true of YNAB 4 with its built-in support for assigning income directly to a month, but in the new YNAB I think the best way to maintain a buffer is for the user to perpetually maintain a category (e.g. "Income for Next Month".)

      Budgeting directly into future months (no category) can achieve some financial-security benefit; adding a delay between when you earn money and when you spend it is always a good thing.  But IMO that was never really the point/value of a buffer. You should have an emergency fund for financial security!  Rather, the administrative benefits of a buffer (which I describe above) are best achieved with some kind of category or off-budget holding area for isolating money. Sadly, it requires a little more effort in the new YNAB.

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      • LarryinLA
      • Larryinla.1
      • 2 yrs ago
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      nolesrule  I've been thinking about this, inspired by a couple discussions on the old forum that I just got around to reading and by some more careful introspection of our finances as we consider buying a house and putting some renovation funds into it.

      The power of the buffer isn't really the time shifting, it's the aggregation of funds assigned to a specific time period, so that scarcity can be enforced.  It's not the time shifting that's so powerful.  It's the enforced fund <=> time one-to-one correspondence.  That allows you to determine what funds can be shunted off to wish farms or savings or investments or wherever you want to build wealth.

      If the model is "apply your income as far forward into the future as you can," then you never have enough, so there's never any extra.  The buffer resolves all of that ambiguity.  

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
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      LarryinLA That's all true, and I do not disagree with you. When I call it a time machine, the time jump has a defined end point. And that's the start of next month. The length of the time jump will be different for each income event.

      There are many different ways to describe it, and some make more sense than others depending on one's perception.

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      • LarryinLA
      • Larryinla.1
      • 2 yrs ago
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      nolesrule I wasn't intending to disagree, just try to say out loud what I've been thinking and see if I get any feedback that helps clarify further.  Also, the discussion of what exactly a buffer is philosophically, why it worked so well, and whether, given the timeshifting flexibility of nYNAB (to be kind), there might be a better way to get that effect, while not also disappearing a pot of money from the budget for 3-4 weeks (which the YNAB4 buffer does sort of do, and leads to the misconception that the buffer serves as a mini-emergency fund).

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      • bret
      • bret
      • 2 yrs ago
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      LarryinLA 

      Excellent analysis / insight.

      I'd add, "applying your income as far forward into the future as you can" is functionally similar to living paycheck-to-paycheck. Even if you're financially secure, you're forever awaiting your next check, "chipping away" at bills further & further into the future.  It strikes me as a very...unpleasant? stressful?...way of operating a budget.

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      • LarryinLA
      • Larryinla.1
      • 2 yrs ago
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      bret Yes, if you are budgeting each check when it comes in, you are living paycheck to paycheck in YNAB!  The whole point is to get out of that mindset.  To be fair though, the consequences of slippage are much reduced if you are parceling out the funds from today's paycheck into budget slots well into the future. 

      Sometimes the scarcity of YNAB can lead to things feeling tight when, in fact, you are not broke.  That's kind of the point, but also counterproductive mentally at times.  A regular look at the net worth chart can be a helpful tonic in those moments.💰

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      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 2 yrs ago
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      LarryinLA 

      LarryinLA said:
      The power of the buffer isn't really the time shifting, it's the aggregation of funds assigned to a specific time period, so that scarcity can be enforced. It's not the time shifting that's so powerful. It's the enforced fund <=> time one-to-one correspondence. That allows you to determine what funds can be shunted off to wish farms or savings or investments or wherever you want to build wealth.

       This is very true, and it's my biggest gripe with the budget future months methodology.  I need to know how much I have available to throw at lower priority goals.  I have categories that get *no* regular funding, only funding from dollars salvaged from categories I underspend.   Having a budget of a fixed amount for a given month gives clarity to the budgeting decision process that I would find lacking if the next solution is budget forward.  Is budgeting for my electric bill next month *really* more important than building up my Unexpected Expenses category?  I find this decision much easier if I only have to look at whether I have (or expect to have by month end) a month's worth of my par budget of income deferred to be used for next month's budget.

      There is also a psychological effect from the time shift that I don't personally see, but which is important to some people just starting to learn financial skills.  When you defer income to be budgeted in a future month without actually going to do next month's budget, you are learning to have the patience to let the money sit unallocated until you know enough to allocate it appropriately.  From an administrative perspective, this avoids rework; I don't know how much to budget for groceries next month until I see how much I have left over in the grocery category at the end of this month.  But from a discipline standpoint, it enforces an allocation discipline of, "don't touch that money because you will need it for next month's budget."  This so natural to most buffered YNAB 4 users that we don't notice it; but for people who started out living paycheck to paycheck, it's the second step toward financial security.  The first step was budgeting and getting away from living paycheck to paycheck. 

      Deferring income for future months is getting away from *budgeting* paycheck to paycheck.  It allows the budget allocation process to take the place of spending in disposing of income.  It allows time to reflect on what the most important uses of the money are, instead of having to decide the most important use of the money as soon as the paycheck comes in.  And that allows more thoughtful budget decisions.

      Early in my use of YNAB, I learned that what I *thought* my budget priorities were at the beginning of the month weren't always close to what my spending and budget adjustment actions showed to be my true budget priorities.  A decade later, I'm more in touch with my true budget priorities and the psychological aspect of waiting to make a decision isn't as important to me.  But the administrative convenience of budgeting a full month at a time  is important to me, and the system of tying a month's income to a month's budget is vital for determining how much extra I have available to allocate to lower priority categories.

      Like 10
    • LarryinLA  Yes yes! That’s what I got stuck on the first time budgetting ahead; how far should I go? It felt like forecasting and I didn’t have any money left to go towards les important things as there was always the mortgage of a next month to fund.

      It seems this thread explaining about the same as what I finally understood yesterday thanks to (much the same people?😊) explaining in a different place.

      so happy I do understand now!

      Like
    • Powder Blue Pony sorry all the spelling mistakes. I can speak and write english... only my spelling randomiser (dutch based) gets in the way sometimes ....🙄

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    • Powder Blue Pony 😂 sorry for all the...

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
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      Powder Blue Pony Would have never guessed English wasn't your first language!

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    • dakinemaui thank you. Always nice to hear 😊

      (and I finally found the edit button!)

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      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 7 mths ago
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      Powder Blue Pony 

      Almost any time someone apologizes for their English, their English is usually better than many native speakers.  Even when I can tell English isn't someone's first language, it's usually wording choices and not incorrect grammar.  Occasionally odd but completely understandable.  

      Generally makes me sad about the sad state of American education that we're not making any effort to get our kids fluent in other languages from a young age.  Waiting until high school is usually too late.  My mono-lingual kids will be at a disadvantage in the future increasingly here in the states, much less globally.  

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    • Technicolor Cheetah  It all has to do with the need to speak other languages as well; English is after all a world language. Dutch certainly isn’t!(in Holland you now often get the story about New York being traded for some other, nice and warm, plac. And how, if that wouldn’t have happened, all those people would speak some from of Dutch)

      Your comment does make me feel extra rich (again) with my 11 year old in bilingual school, being able to understand and speak basic english already 😊. (Though I suppose I’m just kidding myself with the reason; it might well be because of gaming as much as school...)

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  • I have found that the temporal buffer (all of this month's funds were earned last month) frees me from having to time my spending and bill paying to my paycheque  That is so incredibly life-altering, that if you haven't experienced it, it's hard to understand just how freeing it is.

    What I love about being buffered:  the bill comes in, I pay it. The grocery store has a huge sale on pantry staples this month, I buy some.  I need tires, shoes, new book? I buy those too. There is no cash-flow crunch or checking the calendar to see if I can hit the shoe store during the sale which is occurring before payday because a utility bill might be due.  

    How much I budget to food, utilities, clothing, etc. wouldn't change if I had no buffer, but the timing on when I can do my spending would be dependent on receipt of income and the timing of that income to due dates on some bills. That was the element that was so frustrating and annoying to me early on in budgeting. I actually made the move to being a full month ahead of my spending before I found YNAB. I think I may have been predisposed to liking YNAB because of the buffer principle aligning with my own thinking.

    I also believe that being able to budget the entire month at a shot helps me keep my spending tight. When the money was rolling in every two weeks, and the cash-flow was complicated by timing, there was a lot of leakage on what I was spending on some discretionary categories. Plus, there was the difficulty in taking advantage of reduced prices at sales that didn't align with my ability to spend.

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  • Thanks, everyone.  

    So, I seem to be buffered already because I'm paid once a month, right at the end, and I use that for the following month's budget.  I can't imagine having to drip feed the budget and therefore the spending through the month .  I have enough trouble getting my head round it all as it is.

    But I am now starting to get a bit of income in addition to my main job, and I like the idea of setting that aside in a "For next month" category.  I think that would help me use it more intentionally, rather than tending to think of it as a bit of free money that just landed!

    That's helpful, I appreciate the replies.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 2 yrs ago
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      Pikayo 

      I am now in a job where I'm paid once a month at the end of the month. When I started here, they offered me the option of a mid-month advance against my salary. I was able to decline that option because I was already buffered, and could function normally until paid at the end of the month. It caused the HR pay and benefits employee to look at me like I was a strange creature. 🙂

       When I started using YNAB and joined the old forum, I read a lively debate about the merits of extending the buffer a full 30 calendar days when paid once at the end of the month, the argument for that being that someone who is paid once a month at the end of the month would be in dire straits if their paycheque didn't come through, whereas someone else who is paid more frequently would have more liquid assets to get them through. I decided I didn't need to either buffer or  budget out past the next calendar month, but I also recognized that potential for disaster if something snafu-d the pay system where I work, so I've increased my emergency fund liquidity by the equivalent of one month's income.

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      • WordTenor
      • Not discriminating between the sinners and the saints.
      • WordTenor
      • 2 yrs ago
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      HappyDance Ditto, ditto and ditto. 

      Except that my work didn't offer any advance. 

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      • Bakari
      • Bakari45
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      Pikayo yeah the more you get into YNAB budgeting, the more you realize you don't really have free money sitting around unused. Wealthy ppl may have that luxury, but those of us living paycheck to paycheck need to assign our money  jobs so that we know where it's going and how best to use it. 

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
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      Bakari Wealthy people don't leave free money sitting around. They put it to work.

      If one lives below their means, then at some point anyone can have extra money that they put to work.

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      • Bakari
      • Bakari45
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      nolesrule agree. But having millions and billions in wealth means that you can pay for lots of expensive things that others can't buy. It means you can waste money on stuff and still have your main bills paid for. And they have more money to put to work. But on the other hand living at or below your means creates problems for many ppl who for instance have a hard time saving for retirement. That's why I wish personal finance and budgeting  were taught in at least high school so more  ppl could do better with their money, and that there was a better distribution of wealth so more ppl could pay their bills and not have to work additional hours to do so. 

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      • WordTenor
      • Not discriminating between the sinners and the saints.
      • WordTenor
      • 2 yrs ago
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      Bakari Income inequality is a real thing. Wealth inequality is a real thing. I am one of those "bleeding heart liberals" who points to systemic societal issues all the time. 

      But a not insignificant number of people lack disposable income because they don't know how to live below their means. Acting as though financial security and nice things only come when you have millions and billions in wealth is deceiving. 

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      • Bakari
      • Bakari45
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      WordTenor oh, I agree with you. That's why I said I wish young ppl were educated about budgeting and investment. I spent so much my life not knowing how to budget my income. It's so easy to get distracted by things and real life financial demands and struggles that keep you from budgeting and spending wisely. I've even thought about doing free Ynab workshops just to get ppl on board with this system. Ppl need lots of help in this area of their life. 

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      • bret
      • bret
      • 2 yrs ago
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      Pikayo 
      The situation where you receive a single paycheck on the 30th/31st and apply it to next month is precisely why Rule 4 was reworked in the new YNAB.  Technically, you are already "buffered" and are living on last-month's income by virtue of your pay-schedule, but you have very little financial security.

      The "Age of Money" concept was intended to be a more universal rule: Regardless of your pay schedule, there should be some minimum delay (e.g. 30 days) between when you earn income and when you spend it.

      Unfortunately, the way Age of Money is calculated still leaves some room for distortion based on an individual's pay/expense schedule.  But more importantly, I think the YNAB designers missed the point: The "buffer" was never really a good source of financial security. That comes from having an emergency fund.  The main benefit of a buffer is administrative convenience, as many in this discussion will attest.

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      • Pikayo
      • Pikayo
      • 2 yrs ago
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      bret I agree. 

      Age of Money does get distorted, and by emergency funds too.  If the EF is in tracking or off-budget then saving more money in it affects Age of Money because it counts as spending (out of the budget) even though you've kept the money.  I have my EF in budget accounts and as a budget category, but that has skewed Age of Money because I started the budget with an EF and it's still counting it as income that I haven't spent yet.  

      I can see that Age of Money is helpful in getting at least a month ahead though.

      I think:

      Ageing money/being buffered = Reduce stress and avoid short term debt

      Emergency Fund = Security and avoid long term debt.

      Like 2
      • bret
      • bret
      • 2 yrs ago
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      Pikayo 

      Errr,  I don't agree that Age of Money (AOM) is "distorted" by an emergency fund.  On the contrary, if AOM is supposed to measure your financial security, then it probably should be influenced by the EF.  (If I'm aiming to have EF that could cover 6-months of average expenses, then AOM ought to be at least 180 days, right?)

      It's really the "True Expense" (Rule-2) categories that distort AOM. The money in my "Christmas" fund cause my AOM to rise, but then it ticks downward when I spend that money in December. Ditto for car repairs, vet bills, and lots of other money I keep in my budget that I plan to spend sooner-or-later. The problem is that YNAB has no way of differentiating between money that I'm saving-to-spend-later vs money I'm saving for purposes of financial security. 

      There's plenty more I could say about AOM, suffice it to say, I don't consider it very useful and am disappointed that it replaced something that I did find useful from YNAB 4.

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      • Pikayo
      • Pikayo
      • 2 yrs ago
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      bret  yes I see, I hadn't thought of it like that.  My view is that I had most of that fund when I started YNAB and now I want to see what happens with my money leaving that out of the equation, ie how well I'm doing now going forward.

      Anyway, there are plenty of other features in YNAB that help me!  I'm happy to disregard one or two functions that don't work for me personally and focus on the rest.  😊

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
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      Pikayo AOM doesn't actually work for anyone, for the reasons that bret mentioned. It essentially blurs the line between measuring whether you're falling behind, keeping even or getting ahead.

      Like 2
  • I've kept up a one month buffer for over year now, and I prefer to assign my latest paycheck to the following month because it helps me to keep track of what needs to be specifically budgeted for.

    When I budget ahead, my goal is to not bring the money I assigned for the following month back into the  current month because I didn't budget for something in the current month. I know I'm still living paycheck to paycheck, but it's good to hit the first of each mouth with money already assigned to pay for things. And because I'm also assigning money to true expenses, I have more money in my checking throughout the year. 

    As for an emergency fund, it's just money that is not assigned to a specific budget.  In my journal I made a list of things that could be deemed a true emergency, and that's when I started to realize I didn't have enough money in my emergency fund, for say a loss in income, an emergency trip, or a major car repair. 

    Having a buffer and covering true expenses are the most goals of budgeting. 

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  • HappyDance said:
    When I started here, they offered me the option of a mid-month advance against my salary. I was able to decline that option because I was already buffered, and could function normally until paid at the end of the month. It caused the HR pay and benefits employee to look at me like I was a strange creature. 🙂

    I do the payroll for the company where I work, and I can't believe how many people have to get an advance on their salary if they're hit with a sudden expense, even a parking fine.  It doesn't seem to matter how high their salary is either.   If we have someone coming from being weekly paid to monthly paid they usually get an advance on salary too, because they've been living from one week to the next.

    I tend to worry that I'm not doing very well financially, but in comparison this does make me see that I'm not doing that badly.  (Thanks to YNAB and to advice from the community too.)

    Like 3
  • Bakari said:
    I know I'm still living paycheck to paycheck, but it's good to hit the first of each mouth with money already assigned to pay for things. And because I'm also assigning money to true expenses, I have more money in my checking throughout the year. 

    This is exactly where I am, although I'm still a bit wobbly with true expenses.  I haven't built them up enough yet so I occasionally have to raid them all if something happens.  At least I'm just WAMing in the true expenses categories, not using my Emergency Fund or credit card.

    I'm really serious about the Emergency Fund because I have had big emergencies at different times in the past like unexpected job loss and the roof falling in (literally).  Unfortunately, I know painfully well how much it costs. 

    But yes, although I think I'm still living paycheck to paycheck, it's that the paycheck is assigned to spending for the following month, rather than life is on hold (or on overdraft) until the money arrives.

    Like 1
      • Bakari
      • Bakari45
      • 2 yrs ago
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      Pikayo , you’re on the right track. And as you pinpoint and budget for your true expenses, you will start to see your checking account grow. Just use the Goals feature for recurring annual or quarterly expenses, such as car registration and insurance, subscriptions, Christmas and birthday budgets, etc.. If you use that  Target Category Balance by Date, YNAB will tell you how much you need to set aside to meet that goal by a specified date. That’s makes a significant difference for me, because I have business related bills that I need to budget for. 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 2 yrs ago
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      Pikayo 

      As soon as I was able to not use today's paycheque immediately, so that I could hold off on budgeting it until the month after it was received and not need to spend all of it in the next month, I no longer considered myself living P2P.  At that point, I began to feel like I might be in control of my own affairs and not a victim of circumstance.  Building up some funds in true expenses, emergency, and savings categories was a major priority for me in the beginning, and I was very anxious about it.  In (not quite) four years I have increased my liquid funds by a factor of 10 while also helping a family member in financial crisis and buying a car (paid off the loan in 14 months instead of 4 years).  Now that most of my formerly empty categories are filled or filling nicely, I am even more confident in my ability to handle what comes at me.

      Now, my annual income is a little below the median wage in Canada, and I am not independently weathly so must work and earn an income in order to live, but I still wouldn't describe myself as being a wage slave or living P2P simply for needing to earn money.

      I am so in tune with what you are saying and how you are saying it.   I can look back at my budget categories four years ago and see that of the 22 categories that I can define as true expenses, emergency-type categories, or savings categories, 15 of those 22 categories had zero funds in them in my first month. Four years later, 20 of those 22 categories are very well-funded.

      YNAB gives us awareness.  The rest is a matter of time and patience.

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      • Pikayo
      • Pikayo
      • 2 yrs ago
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      HappyDance  thank you!  That 's very encouraging.

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  • Bump

    This thread is one of my favourite concepts.  I think it's worthy of a bump up to more recently posted.

    Like 6
  • ^ Bumping up the recently posted list.

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      • adriana01
      • adriana01
      • 1 yr ago
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      HappyDance it's definitely worth bumping up! This concept is what made a difference for me when I started with YNAB4. Somehow the combination of sitting on my paychecks for up to 4 weeks and then making decisions about my budget for the whole month led to me making better decisions. Add in saving a monthly amount for my annual bills & things like Christmas (Rule 2), and suddenly it was easier to see if I could afford to donate more a month, or needed to cut back on fun money or groceries, or if I could buy things for my nephew just because.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 7 mths ago
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       ^ Bumpity Bump.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 6 mths ago
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       bumping

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 4 mths ago
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      bumping

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  • bret said:
    The main benefit of a buffer is administrative convenience, as many in this discussion will attest.

    Since we've bumped this, I will say that I regard clarity as the primary benefit. It is obvious (sometimes painfully so) how much money you have for EVERYTHING. There is no wondering about whether you should budget for X out of this check or wait for next or maybe even split. All of these choices have cascade effects on other categories (due to the finite amount).

    There is no doubt how much money is "left over" after necessities to apply to debt, discretionary, or whatever your next level priorities are.

    Given consistent income, it's a chance for a mini-reset every month. (And if you have variable income, you should normalize it so you have consistent effective income.) No kicking the can down the road, that month gets what it gets, or has to rob it from elsewhere.

    Like 2
    •  HappyDance  thanks for bringing it to my attention.

      dakinemaui I so agree on the clarity! Oh, I did like YNAB since starting it 1,5 months ago. But now, a whole new view has opened! 😁

      Like 1
  • I tried budgeting ahead but found it confusing. The Next Month category works for me. Where I have been lacking is the Emergency Fund. I constantly raid it without replacing those funds. This thread reminds me that it’s been a year now, and high time I sorted it out....

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  • Does it also count as "buffering" if you just put extra money into the categories?

    I am paid at the end of the month. So technically I am "buffered"right from the get-go. But . . 1 month in . . I find the month rollover pretty confusing. I got so scared I was overlooking something , and would end up overdrawn or end up in a pickle of some kind. That hasn't happened but I still feel jumpy with the month rollover, and probably will keep feeling that way till I get more practice and am less on the edge . .  

    I was thinking I could make it less scary-confusing for myself (and more just, confusing confusing, lol) . . What if,  with some extra money that is coming in (my tax refund), i budget money to some categories that would then roll over into the next month (i.e. overfunding my key categories). I am imagining, for instance, having my mortgage funded at 1.5 of the actual payment cost, so that when the month rolls over there are funds rolling over as well. Then when my new paycheck comes in, I would just budget it as normal. In my mind this feels very comforting and stress-relieving. 

    Is that the same as 'buffering" ? It's like having a 'buffer' category, but different in just allocating out to the different categories directly? And then, when my next month paycheck comes in, I do my budget at the beginning of the month but with categories that already have some juice in them.

    Do you see any drawbacks to this idea I had?

    I feel like I would be more likely to pull money from a "buffer" category to buy some new shoes than I would from an overfunded mortgage category.

    (Right now, on the basis of these conversations, i did start a buffer category, but I only funded it with the money which is the minimum balance for two of my bank accounts - so I know not to spend that money.)

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 4 mths ago
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      Ivory Storm The problem with overfunding your categories is that you can no longer use the category balance for spending guidance, because zero is no longer the baseline. Some other random number is. Makes it harder to work with.

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      • WordTenor
      • Not discriminating between the sinners and the saints.
      • WordTenor
      • 4 mths ago
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      Ivory Storm If you are paid at the end of the month then you have what many of us call an administrative buffer. You won’t have the actual financial cushion of having a month of money in the bank at all times, but you’re able to budget a month at a go, which is the goal. 
       

      When you are paid budget the next month in its entirety. If you need an additional financial cushion on top of that (you do), it’s your loss of income fund. In the event your income stops, you will draw from that category to fund the following month. 

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      • dakinemaui
      • dakinemaui
      • 4 mths ago
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      Ivory Storm If you receive one-off (windfall) income, use that to accelerate high priority categories or fund lower priority categories that normally do not receive finding.

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      • PhysicsGal
      • Nerdy female homo sapien
      • physicsgal
      • 3 mths ago
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      WordTenor That's pretty much what I've decided.  I am paid for the month on the last work day of the month, so I can budget my entire month in one go.  But I still built up a one month emergency fund/buffer, which doesn't give me the same benefits as a buffer gives a weekly or bi-weekly paid person, but still gets me one month farther from being behind on my bills.  This compared to being on the credit card float at the end of 2018 and being a month BEHIND on my bills.  Woot woot!

      Like 1
  • thank you for this!

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  • This thread is really interesting.  I'm only on month 2, so right now I look forward to funding categories on a weekly basis (I'm paid weekly, my husband is bi-weekly).  Maybe eventually I'll tire of it and want to just budget once per month.  Then I could MAYBE understand the want for a "Income for Next Month" category.  But right now, budgeting ahead is working for us. 

    My husband and I have decided that once the current month is funded, we'll move on to next month.  Monthly Bills are priority when budgeting ahead, then Everyday Expenses, True Expenses and Savings.  Our thought is that after we are fully budgeted a full month ahead, the excess money will go into our "House Down Payment" category.  If we overspend in the current month, we can always reduce a bill we've funded in the next month.  We have time to fund it when the next paycheck comes in. 

    Because January had 5 weeks (and there was some unexpected income), I was shocked by how much we were able to cover in February before the month began.  I've been a little disappointed in February that we aren't as far ahead, but I'm trusting the system and know we are on the right track. 

    The great thing about YNAB that I'm learning from reading the forums is how everyone uses it slightly differently.  I love getting other's perspective.  

    Like 2
      • Bakari
      • Bakari45
      • 3 mths ago
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      PhysicsGal , totally agree. I wish I had the time to push for financial literacy in schools. It’s so important. Companies are making a lot of money off of people’s ignorance of finance. 

      Like 1
  • atoznewlyweds said:
    If we overspend in the current month, we can always reduce a bill we've funded in the next month

    You might consider an emergency fund instead. Anyone who is buffered (i.e., can push their money into next month) will try REALLY hard not to steal from next month.  (Doing so loses the benefits of being buffered.) Instead, they find the money in the current month if at all possible.

    Like 4
  • dakinemaui said:
    they find the money in the current month if at all possible

     That's a good point.  I'm giving us some grace as we are still getting all the categories right.  For example, we each have fun money, but what do we do when it is a joint social outing?  So in the middle of February we set up a "Social" category. 

    I definitely hear what you're saying though.  I'll try to be more mindful of that.  We are still working on the shift in mindset that is required when transitioning from money tracking to true budgeting.  Thanks! 

    Like 1
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