You need a budget (YNAB) advice thread

hiddenshadow

getmore4less wrote: »

Those seem like fundemental flaws to basic budgeting which is planning ahead.

You're still planning ahead, you're just not making assumptions about what resources you will have in the future (as circumstances might change).

that is not budgeting thats short term cashflow management.

Budgeting is planning ahead by the time the money comes in you should know exactly where it is going and all the future money as well

Budgeting doesn't require planning for an entire year. You can certainly do this, but you could have a daily/hourly budget plan if you wanted to. Pretty much all budgeting software that I know of has you plan on a monthly basis, even if it also allows you to forecast future income/expenses (which YNAB discourages, re: income at least).

You can get around it in the software if you want by inserting a transaction with today's date equal to a month's worth of pay checks (YNAB doesn't prevent you from budgeting known funds into future months), but then you're going against the concept of the software (as I mentioned in my previous posts).

You're welcome to disagree on how one should budget, but I don't think it's fair to claim that YNAB doesn't allow you to budget purely because it restricts the frame from which you budget (only funds on hand rather than forecasting into perpetuity). Personally, I use a spreadsheet to track longer-term goals as I find it more useful than budgeting software (with formulas, charts, macros, etc).

matchboxfull

Thanks both.

Looks like I might have accidentally hit upon one of the key differences between YNAB4 and nYNAB?

I just tried putting in next month's income and outgoings into nYNAB and it's all gone red. I completely understand what you've done, hiddenshadow, wrt putting down a month's worth of savings and then adjusting it the following month, but I might find that a bit faffy for my tastes.

It's looking like YNAB might not be for me, but I might well see if I can import some of its concepts to augment my existing budgeting set-up. Helps that the OH does spreadsheets for a living!

hiddenshadow

You can "give yourself money" in both apps if you want to avoid the red. Create a category to track it (Emergency Fund, Income Buffer, whatever), and in the month that you want to plan ahead, enter it as a negative amount in the budgeted column.

Then your categories will look like:
Rent: £500
Food: £200
Council Tax: £100
Transport: £100
Fun Stuff: £100
Income Buffer: -£1,000

Income Buffer will show a red -£1,000 in the Available to highlight that you don't actually have the money, but the rest of your budget will be green (assuming you only budget £1,000 and don't over budget).

*nYNAB is a bit trickier as it counts your To Be Budgeted as globally available, so future months can affect the current month, YNAB4 has distinct months as you assign your income to a specific month and it's only available for that month and future. nYNAB treats all income as available in the current month and any future month, and there are some bugs about how overbudgeting is handled. All that said, worst case just clear out future months in nYNAB and make sure the current month looks OK.

Sharon87

I've started with YNAB Classic now. I found it hard at first as I started mid month so when I did a 'budget' I accidently did it for a whole month, not just from when I started YNAB. I've now corrected everything..

Just a question about income and budget for 'that' month. I tend to budget from payslip to payslip, but obviously I get paid before the very end of the month, but when I pay my rent I pay it last day of the month, but to me that is the following month's rent. Is there a way to count it as 'rent for March' instead of 'Rent of February' without altering the date I actually transferred it?

getmore4less

hiddenshadow wrote: »

You're still planning ahead, you're just not making assumptions about what resources you will have in the future (as circumstances might change).
......
Budgeting doesn't require planning for an entire year
......

Thats the point of budgeting to make estimates of what will be coming in and going out to see if it fits.
Things will change your income changes you want to buy something not on the plan but thats when you want to be seeing further into the future than a month to adjust things to adapt ot the change not just fiddle with the current months money .

Most people a rolling year is the sensible min to do the detailed forcast of forward visibility as that is typicaly the longest cycle on any regular outgoing.

I can see why this month by month approach can work for people that have not planned successfully but once they are planning properly this tool seems to impose too many restrictions.

emg

Sharon87 wrote: »

I've started with YNAB Classic now. I found it hard at first as I started mid month so when I did a 'budget' I accidently did it for a whole month, not just from when I started YNAB. I've now corrected everything..

Just a question about income and budget for 'that' month. I tend to budget from payslip to payslip, but obviously I get paid before the very end of the month, but when I pay my rent I pay it last day of the month, but to me that is the following month's rent. Is there a way to count it as 'rent for March' instead of 'Rent of February' without altering the date I actually transferred it?

I have one bill that goes out after pay day but before the end of the month so what I do is enter my paycheck as split income with the amount for my bill allocated to February and the rest of it for March. Although when I asked about my pay date in one of the online workshops they told me I should still be aiming to be a month ahead and ideally I should be sending my end of Feb pay ahead to April. I havent built this buffer yet as I am preferring to build up my emergency fund elsewhere - off budget.

hiddenshadow

Sharon87 wrote: »

Just a question about income and budget for 'that' month. I tend to budget from payslip to payslip, but obviously I get paid before the very end of the month, but when I pay my rent I pay it last day of the month, but to me that is the following month's rent. Is there a way to count it as 'rent for March' instead of 'Rent of February' without altering the date I actually transferred it?

You can handle this one of two ways.

The "YNAB way" would be to count it as February rent because you're paying it in February (and presumably you paid February's rent in January, January's in December, etc). You budget whatever you pay for rent in February and it goes out on the last day of that month. Depending on your current budget setup it may require you to have a month with 2 months' worth of rent allocated for it (if you told YNAB that the rent you paid on Jan 31 for February should be counted in February, then you also need to add in the rent you'll pay on Feb 29. In March - and going forward - you would just have one month allocated and paid each month.

The other way is to fudge the dates. I do this with our mortgage OP because we save interest paying it on payday rather than the 1st of the month. I enter the transaction as if it happened on the first, clear it immediately (so that I know what my bank balance is), and then don't bother reconciling the account until the 1st (because it won't match up to the current balance the bank knows about because it will only count transactions dated today and previous). In my budget it appears for the next month, balancing against the amount I've budgeted for OPs, and YNAB doesn't have to know/care why I paid it early.

hiddenshadow

getmore4less wrote: »

Thats the point of budgeting to make estimates of what will be coming in and going out to see if it fits.
Things will change your income changes you want to buy something not on the plan but thats when you want to be seeing further into the future than a month to adjust things to adapt ot the change not just fiddle with the current months money .

YNAB doesn't prevent you from planning in future months (except that nYNAB makes this a little more challenging from a number-comparison standpoint because you can only see one month at a time).

I can see why this month by month approach can work for people that have not planned successfully but once they are planning properly this tool seems to impose too many restrictions.

Again - I don't discount the value of planning longer-term, but to imply that you're only using a monthly budgeting process because you aren't planning properly is incorrect and offensive. If you don't want to think about/deal with a monthly budgeting system, perhaps it's best to avoid a thread for questions about a monthly budgeting app.

(FWIW, we have no debt, we've paid off 20% of our mortgage in 2 years and are on track to pay the other 80% off in the next 5, we're putting close to 40% of our pay into pensions, and we're able to pay for all our regular bills plus fun/holiday money every year. Ideally we'll reach FIRE in the next 10 years. I don't credit all of this to YNAB, but we've been using it for 18 months and it's enabled us to increase our mortgage overpayments dramatically and plan for the future, so it certainly hasn't hurt our finances despite being focused on monthly budgeting.)

Newme2014

Hi, just wondering, I can get discount on reloadable gift cards, eg I can get sainsbobs @ 4% off so I'm going to start loading these up with my monthly budget should I add these to YNAB as an account (already worked out I'd need to do a transfer from bank to card for say £96 then add income of £4 from source XYZ) and then add transaction to that OR just put money on the card and don't record the transactions
Or any other ideas?

Also I'm thinking of adding off budget accounts for Amazon vouchers, survey sites, Swagbucks etc, would this work or should I just keep them on a spreadsheet?

hiddenshadow

With reloadable cards, I add the bonus to the relevant category.

e.g.
Current Account - Transfer: Sainsburys Card - outflow £48.00
Sainsburys Card - Transfer: Current Account - inflow £48.00
Sainsburys Card - Payee: Love2Shop - Category: Groceries - inflow £2.00

The only trick is that - at least for our banks - the money comes out of the current account within a day but then takes another day or two to show up on the Sainsburys Card side. In order to have the accounts accurate you have to enter the earlier date to account for the current account, but the Sainsburys card will act like it has the money then (in the accounts list on the right) even though it doesn't yet. Perhaps you're lucky and your transfers are speedier though.

I prefer that method as it keeps the "bonus" money where it belongs - in Groceries for us. There's no temptation to allocate the money elsewhere (like there would be if it were in ATB/TBB), and it's not really "income" as you only get it by committing money to the card (spending, in a sense).

We have an on-budget account for Am@zon gift cards. I enter any money for those (swagbucks, surveys, etc) as income (which it is). DH generally uses them up with his regular fun money spending (he spends soo much money on Am@zon) so I allocate them as mortgage OPs, but if not I'd allocate them to whatever we planned to spend them on (gifts, probably).

I like that in the Income v. Expense report (in YNAB4) you can view all the income sources for each month and see how that "bonus" money from surveys/sites is doing throughout the year. (Would love an "income by payee" report as well though!)