We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

YNAB on self employed income

Hi everyone

Are there any self employed YNAB users here? I have two streams of income but I don't get paid a set amount on a set date. What comes in can vary quite drastically month to month and I wondered if this kind of zero based budgeting would actually be helpful in my situation?

It would be for managing spending and savings. I don't have any debts other than the mortgage.

Thank you!
Mortgage - £23,500 remaining
MFW2021 #8 - £2,519.77/£3,000
Overpayments: 2020 - £4,722.83 / 2019 - £16,042.00

Comments

  • Lomcevak
    Lomcevak Posts: 1,026 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    It's pretty good for that sort of scenario.

    My YNAB budget is prioritized, with master categories for the must-pay items at the top (e.g. monthly bills, mortgage, food, etc.) through to nice-to-have at the bottom (e.g. eating out, vacation). Emergency funds sit quite near the top, other non-emergency savings lower down.

    YNAB revolves around 'giving every dollar a job', and in a lean month you would start from the top and fill the essentials first, and then allocate whatever's left - if anything, in a really lean month you might need to pull on emergency savings just to fund the essentials, but obviously you can't afford too many of those! On better months you'd fill the essentials, and then use the extra to boost savings and lower-priority budget items - that would build you a buffer for leaner months. As long as you don't overspend what you've budgeted then you'd be fine overall.
  • That's really helpful, thanks. I wasn't sure how the allocation to each 'pot' worked month to month but that makes sense.
    Mortgage - £23,500 remaining
    MFW2021 #8 - £2,519.77/£3,000
    Overpayments: 2020 - £4,722.83 / 2019 - £16,042.00
  • Lomcevak
    Lomcevak Posts: 1,026 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 1 November 2019 pm30 1:13PM
    To give a concrete example, say I want to budget £100 a month on average for clothing, but it's not an essential category for me.

    My first month is normal, so I budget £100 but only spend £50 of it. That means £50 carries over. The next month several invoices get paid, so there's spare cash, and I budget £200 into the category and spend my normal £100. That category now has £150 left in it - the £50 from month 1, and £100 from month 2.

    Next, I have a couple of lean months, and budget nothing to clothing - it's not one of the essentials. However, as I topped up the category in the good months, I can still spend my 'normal' £100 in the first month, but in the second I have to cut my spending down to £50 as that's all that's left. Then it's another good month - those invoices finally get paid - and I top up again. And so on.

    Over a year or so the good and bad months average out, but as long as you don't overspend a category - and you can move money between them if you need to - you won't overspend and can't go in to debt.
  • Lomcevak wrote: »
    To give a concrete example, say I want to budget £100 a month on average for clothing, but it's not an essential category for me.

    My first month is normal, so I budget £100 but only spend £50 of it. That means £50 carries over. The next month several invoices get paid, so there's spare cash, and I budget £200 into the category and spend my normal £100. That category now has £150 left in it - the £50 from month 1, and £100 from month 2.

    Next, I have a couple of lean months, and budget nothing to clothing - it's not one of the essentials. However, as I topped up the category in the good months, I can still spend my 'normal' £100 in the first month, but in the second I have to cut my spending down to £50 as that's all that's left. Then it's another good month - those invoices finally get paid - and I top up again. And so on.

    Over a year or so the good and bad months average out, but as long as you don't overspend a category - and you can move money between them if you need to - you won't overspend and can't go in to debt.
    Good example, I couldn't have put it better.
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
  • Ellie78
    Ellie78 Posts: 195 Forumite
    Third Anniversary 100 Posts Photogenic Name Dropper
    That's perfect, thanks. I think I'll give the free trial a go and see how I get on.
    Mortgage - £23,500 remaining
    MFW2021 #8 - £2,519.77/£3,000
    Overpayments: 2020 - £4,722.83 / 2019 - £16,042.00
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.3K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.1K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.