You need a budget (YNAB) advice thread

andyfromotley

Ok, so todays question is, do i need a buffer? As i understand it it helps smooth out budgeting cash-flow problems.

However, i have a cast iron index linked govt pension which lands on the first of every month and covers all of my expenditure for that month. I kinda like the idea of any spare going toward debt repayment and my Emergency fund and saving goals rather than the buffer? Is there an advantage to being fully buffered? (phnarrrrr)

Pixie5740

I have a buffer because until very recently I was self-employed and had some clients who were a little erratic when it came to paying invoices and it was anyone's guess when I might actually get the money.

Whether the buffer is really necessary for someone who knows they receive £X amount every week, fortnight or month I'm not entirely sure. I suppose it's handy to have in case you ever get made redundant or only get statutory sick pay but I've often wondered if the buffer has something to do with the way people are paid in America.

FireWyrm

andyfromotley wrote: »

Ok, so todays question is, do i need a buffer? As i understand it it helps smooth out budgeting cash-flow problems.

However, i have a cast iron index linked govt pension which lands on the first of every month and covers all of my expenditure for that month. I kinda like the idea of any spare going toward debt repayment and my Emergency fund and saving goals rather than the buffer? Is there an advantage to being fully buffered? (phnarrrrr)

It is a matter of perspective. The idea of the buffer is that you stop living in the now, and start living in the months before. Essentially, the buffer is there to smooth the peaks and troughs of income and ensure that you are living on 'x months-in-the-past' income rather than this pay cheque. It means that you have breathing room should you ever lose your income for some reason. I look at it as a self-service income protection policy. You dont have to have one, but consider if for some reason, there was a computer hitch and you didnt get your pension this month and they said it would be 2 weeks before they sort the mess out? Your bills all still need to go on the designated days, but you dont actually have the cash to cover them. If you were 'x' months buffered, this would be irrelevant to you beyond a bit of annoyance.

January2015

Thanks everyone - I got my free student licence for YNAB through today - valid to end 2015 (at which time I will just renew the student licence as my study is not due to finish until 2017)

TooClumsy

Hello!

Nice to see a dedicated YNAB forum on MSE


Hubbie and I have been using YNAB since March 2014, so almost up to a year and I think we've only just started to 'get it'.

We bring in a decent income between us and were bending the rules to suit us, such as Rule 1, give every dollar a job...we would fill in the essentials (car, direct debits, travelcard etc) and then be like, oh I still have £400 left, lets put some in eating out (which I always end up increasing and WAM-ing) and other luxuries such as recreational activities.

We were using YNAB as a money tracker to see where our wages were going vs making our lives easier and working towards 'unexpected expenses'. We have just paid our car insurance off in one lot (just over £1k) for the first time, we usually pay it monthly

Have started going through the emails that they sent out (in November, last year!) over the course of 8 or 9 days and they have really started to resonate with me and after seeing this forum pop up, I made a list a YNAB To Do List and worked through it with hubbie last night.

We have a 'build categories' master category that we always end up WAM-ing from (naughty, I know!).

So recently, I've added in my Pre-YNAB debt in the form of credit cards and also a credit card I am using for cashback rewards and paying off in full. Its jarring, but very realistic to have this in our budget as this is a short term goal for us to be credit card debt free (should be this Nov!)

Also, I was looking back at the earlier months and I can see that we didnt give every dollar a job, so now I'm totally getting my YNAB groove on! Am looking forward to making our current wage work in our favour (building categories, building a buffer etc) instead of just using it to track where the money is going.

KirstyO

I've been looking at getting this for a while now, debating starting the free trial tonight and seeing how I get on, as I've just been paid, all of my online account 'pots' have been satisfied for the month and after doing some calculations I think I have quite a bit more left this month than I've ever had. I'm really wary of fittering this away on nothing, so I like the idea of 'using' the money for something the YNAB way, even if it isn't actually spent this month.


I'm also very much in favour of being a month in hand with wages, setting up an emergency fund, and like TooClumsy I would love to be able to pay my car insurance off as a lump sum this year instead of monthly (renewal is in July). I've just set up a 12 month DD for car tax, but this time next year would like to be in a lump sum position again.


I think YNAB could really help me achieve these goals, but I need to be sure that I'm happy with the interface and regular updates.

FireWyrm

KirstyO wrote: »

..sure that I'm happy with the interface and regular updates.

There are updates, but they are not regular as such. They will never tell you directly, but the word is that a new version is due sometime around the last quarter of this year (but dont take that for granted). The current iteration is now nearly 3 years old. Having said that, for the price and the money saved over the last year or so, it is well worth any price regardless of having to pay and upgrade percentage charge at the end of the year. There is nothing that stops you continuing to use the old version despite the presence of a newer one.

Essentially, YNAB is a really big spreadsheet with lots of helpful widgets and should be thought of this way. It isnt a magic bullet, it wont stop you frittering unless you embrace it whole heartedly. The interface is easy enough to grasp - you have account registers and you have the actual Budget sheet where you allocate that money. The hard part comes with divorcing your attention from account balances to category balances instead. To all intents and purposes, what is actually in your account is irrelevant - it is the budget screen you will spend most of your time in.

KirstyO

Thanks FireWyrm, going to see how I get on with free trial. I've ringfenced the money for it already should I decide to purchase

maggiecon

YNAB has officially saved my sanity! I have spent years worrying about money and having changed my way of thinking to the 4 rules of YNAB I can safely say I worry at lot less about money. I found an old diray of mine last night and I was amazed at the amount of pages in it that I had spent calculating how much money I had and how many bills I had to pay etc. With YNAB that is a thing of the past.

For me the most crucial thing is getting your categories right, you really need to think of everything.

I have 5 Master Categories not counting my Pre-YNAB debt.

1. Everyday Expenses - to include groceries, petrol, electric, home heating oil, hobbies, school dinners etc.
2. Direct Debits - Mortgage, Car payments, phone bill and so on
3. Annual bills - Council Tax, Car insurance, Car servicing and Tax, School Uniforms, TV license, House Insurance etc
4. Savings Goals- Kids uni fund, Christmas, Presents, emergency fund, holidays
5. Buffer.

For the Annual Bills category I work out what they cost on a monthly basis and then allocate the money to them every month. I have two bank accounts and at the end of the month I transfer my Annual bills money into one account and my Savings goals into the other. I know this isn't necessary with YNAB but I just love the fact that I now have dedicated savings accounts.

YNAB also made me realise I was over spending in some categories such as eating out. I spent £120 in January and wasn't in a restaurant once, this was just coffees and lunches for work!! I have this down to £60 this month and trying to get it down to £50 next month.

andyfromotley

Hey Kirsty,

if you don't get a free copy (they give one away in each live video class) then it is cheaper to buy it on steam than direct from them.

i think last time they upgraded it they gave the new version free to everyone who had bought in the last 6 months and then a reduced fee for others?