You need a budget (YNAB) advice thread

LondonGirl252

Oh I like the sub-buffers idea too, nice one!


I am in my trial but will definitely purchase at the end one way or another. I honestly feel like even being on this for 30 days has already saved my butt!


I parked like a div at the weekend and took a shiner off my tyre, it didn't blow but not happy it's safe enough. There goes £75 at the garage. That's OK, I had buffer this month and a bit extra in a couple of categories I was able to cover it with.


Then the garage call today. Tyre fitted but they noticed I'm due a brake fluid service £50 and an air con service £60. Amazing. NOT. Right, air con can wait a month or two, brakes can't for my peace of mind. That's booked in for next week. In the budget it goes, I have some birthday money I logged for this month that I can allocate to that until I get paid next month.


Usually this will have happened and I will have majorly panicked!


Now I have a separate car repairs buffer to my main buffer.

FireWyrm

The sub-buffer idea seems to add honesty and stability to your budget. The budget can withstand the peaks and troughs of demand more easily, and you are far less likely to simply hide an unexpected spend in the 'buffer' and pretend it didnt happen. If you maintain sub-buffers, you are automatically building in leeway at every stage rather than trying to anticipate every eventuality ahead of time and hoping your main buffer will be adequate. The way this works, if you have been building a food buffer (like mine) for some time and you lose your job, that could be the food taken care of in the short term. Your bills come out of your main buffer and petrol perhaps out of a petrol buffer etc. You see the idea. It just further segregates the buffer into different purposes. Meanwhile, since you budgeted it, you can handle the sudden summer bar-b-ques and the odd trip to the pub with what you have been saving from the main category.

SeduLOUs

LondonGirl252 wrote: »

Then the garage call today. Tyre fitted but they noticed I'm due a brake fluid service £50 and an air con service £60. Amazing. NOT. Right, air con can wait a month or two, brakes can't for my peace of mind. That's booked in for next week. In the budget it goes, I have some birthday money I logged for this month that I can allocate to that until I get paid next month.

I'm a woman and don't know much about cars (disclaimer alert!), but air con and brake fluid service seem like strange things for a garage to randomly notice when changing a tyre.

I could very well be wrong but it would be ringing my alarm bells of them generating work for no necessary reason and I'd be inclined to get a second opinion.

headachesrus

So do you have a sub buffer for each category or one sub buffer for all?

FireWyrm

headachesrus wrote: »

So do you have a sub buffer for each category or one sub buffer for all?

I have a sub-buffer for each category as well as the main ones. I split my finances across various accounts too so it might seem a bit complicated, but it works for me. So, for instance, you have seen the 'food' buffer, there is one for motoring, children, annual bills, household etc. Each major category is funded as necessary and in the case of 'annual' bills, if the renewal comes in under budget, then the remainder is buffered or apportioned to other categories in that class for next year. It works best with spending that is largely impossible to quantify accurately such as food shopping and petrol. Some months, I spent over budget, some months under. The buffer just evens out the peaks and troughs so that I never spend more than the annual budget overall. Since those are buffers though, they actually count as part of the main one in case of emergency.

I maintain a proper YNAB buffer whch is in the main bills account so that it would be very difficult to go into overdraft for instance. The money just sits there and bills come out. I never spend from the bills account, preferring to do so from the appropriate sub account which is funded by standing order on the 1st of the month. This means that there is always money to cover the bills first whatever else happens in the month. I can choose to spend more or less than the budget in the categories covered by those accounts so long as there is adequate leeway in the sub-buffer.

For instance, if I want to buy petrol, I have an account for that with a massive overdraft (if I break down, I have money for that in the account ready). If I want to buy food, it is an entirely different bank. If I want to buy some clothes, another bank again. I have 5 accounts which maximises potential for interest and categories are assigned to those accounts. Everywhere I try to build contingency into the budget. The result of this is that earlier in the year, I ended up spending nearly £900 on car repairs which were unexpected. I already had about £300 because that was what I expected, but thanks to sub-buffers, this counted as enough of an emergency that I could happily raid them without affecting my normal monthly finances. I have just received my power bill. It is, as anticipated, larger than the DDs could cover. I have a year's worth of sub-buffer money waiting to pay it since instead of just accepting the power company's assessment and lowering the DD from £100 to £60 and forgetting about it, I put that additional £40 into the buffer instead.

This is what I believe is true budgeting. It is not just about anticipating immediate requirements on a monthly basis, but anticipating requirements nearly a year ahead and making provision for them. Life is rarely smooth and it does not conform to your careful calculations so you need to build contingency into it based on risk assessment. What is the risk that the power company has grossly underestimated my monthly DD? Pretty high I would say. What is the risk that the roof will need replacing within the next 3 years....reasonable, so better do something about it. What is the risk of a tornado tearing off the roof...unlikely so no budget for it, but if it did....there are buffers all over that could be pulled into play as that emergency would override all others.

headachesrus

How long have you been ynabing? I'm still in my first month, but it has fitted in seamlessly so far.

SeduLOUs

I'm at around the 12 month mark now, and still reconciling every couple of days.

I used to budget on a spreadsheet that was similar to YNAB but not as clever, and even though I wasn't 'new' to budgeting, it has been a life-changer for me.

headachesrus

I haven't watched the reconciling videos yet, next on my list. I did have to start over a few times at the beginning because things just didn't match up, but I'm getting the hang of it now. Never touched a spreadsheet previously!

Dandytf

I've downloaded ynab again after trying a few years ago when I purchased 1st macbook.

Not too difficult to learn...maybe a wee bit of saving potential starting with next months salary.

I'll have the chance to amend what my costs are starting 28th May.

faithcecilia

I keep hearing about YNAB and am curious. I have a very low income (I have serious health problems so am on benefits I afraid) and few outgoings compared to many people, would it still be useful do you think?