You Need A Budget - Confused starting out

FiggyFiggy Registered User regular
So I want to get better at managing my money. I have some minor debt I'd like to knock out, but I'm more or less confident my income is sufficient to my expenses for that. Problem is that I'm always assuming, and I'd like to have things more concrete and organized.

When starting out with YNAB, should I just accept that the first month or so is going to be a shit show in terms of what it's telling me?

When I set up my budget, I then look at October and everything is at $0 and it carries over all my "unused money" from September. Obviously, when I said $x for property tax, and that already came out, I don't want that money carried over.

Also, can it not just carry over my Sept budget to Oct, then I'd modify/take away items I won't use in October?

I'm obviously still very confused. I didn't find their 5-step quick start guide helpful at all.

XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
Brolo

Posts

  • ArbitraryDescriptorArbitraryDescriptor Registered User regular
    edited September 2016
    Right clicking (or something) the allocation field in the next month gives you an option to copy last month, carry over/ignore the remaining balance, or set an average of the last 3 months (once you have three months). Still have to do it line by line, though.

    Yes it will look like a shit show if you don't have a month's worth of bills saved up. I project my income using the scheduler to verify if I'm in the green. (You can set up recurring income/expenses and then add them ahead of time. You can then return them to the scheduler because your mobile app doesn't differentiate between cleared and uncleared when displaying your balance.)

    It took me a few months to get used to. Pro tip: Get the app so you can log your daily expenditures as they happen.

    ArbitraryDescriptor on
    Banzai5150
  • ArbitraryDescriptorArbitraryDescriptor Registered User regular
    Note: That may only apply to the "classic" version I got on Steam. There's apparently a new one that's billed monthly and doesn't use dropbox for server space. Two different phone apps as well.

    DisruptedCapitalist
  • AthenorAthenor Battle Hardened Optimist The Skies of HiigaraRegistered User regular
    I highly recommend that when you start out with YNAB, go through the tutorials and workshops they offer. They are quite important to understanding their philosophy -- and the philosophy of budget keeping is just as important as the tool itself.

    pTWAqPb.png
    Looking to get rid of some 2005-2010 era Star Wars vehicles/toys. If interested, please PM me.
    He/Him
    an_altDisruptedCapitalist
  • FiggyFiggy Registered User regular
    Ya I'm using the new one.

    So I went back and removed recurring expenses I had added that have passed and am "starting fresh" . September's budget looks lean, but I've only budgeted what will occur this next week.

    But when I go into October it says I'm in the hole like $3k.

    It looks like it adds your budgeted dollars for the entire month, but doesn't look ahead to consider what income you've said comes in that month.

    How does it work then? You're only supposed to budget for the month what you have on-hand, then go in on payday and top up your lines? That seems kinda silly.

    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • AthenorAthenor Battle Hardened Optimist The Skies of HiigaraRegistered User regular
    One of YNAB's philosophies is to have your money pay for your next month of expenses. The idea being that by putting your money a month ahead (at least), you get a buffer under you. Building that buffer is the hard part, and what the courses are to help you with.

    Basically - track your recurring payments as you are. Track your income as you get it. Create a "buffer" category and put money into it. Then, when the buffer = your monthly expenses, empty your buffer to cover the current month, and then start applying your new income towards the following month.

    Don't beat yourself up if things are lean. :)

    pTWAqPb.png
    Looking to get rid of some 2005-2010 era Star Wars vehicles/toys. If interested, please PM me.
    He/Him
    ArbitraryDescriptorDisruptedCapitalist
  • ArbitraryDescriptorArbitraryDescriptor Registered User regular
    Figgy wrote: »
    Ya I'm using the new one.

    So I went back and removed recurring expenses I had added that have passed and am "starting fresh" . September's budget looks lean, but I've only budgeted what will occur this next week.

    But when I go into October it says I'm in the hole like $3k.

    It looks like it adds your budgeted dollars for the entire month, but doesn't look ahead to consider what income you've said comes in that month.

    How does it work then? You're only supposed to budget for the month what you have on-hand, then go in on payday and top up your lines? That seems kinda silly.

    Eventually, you'll be able to do that. But re the bolded, and the grim reality of the present:

    If have a predictable income, you can schedule your paychecks in the ledger as recurring income. Select the scheduled payment in the scheduler and right click to "add to ledger" or something. The item will be added, and the next scheduled date will be shown in the scheduler. Repeat for all you pay checks for that month to sanity check your budget. Then right click the now future ledger entries to return the to the scheduler.

  • FiggyFiggy Registered User regular
    Athenor wrote: »
    One of YNAB's philosophies is to have your money pay for your next month of expenses. The idea being that by putting your money a month ahead (at least), you get a buffer under you. Building that buffer is the hard part, and what the courses are to help you with.

    Basically - track your recurring payments as you are. Track your income as you get it. Create a "buffer" category and put money into it. Then, when the buffer = your monthly expenses, empty your buffer to cover the current month, and then start applying your new income towards the following month.

    Don't beat yourself up if things are lean. :)

    Is that the intention then? That until you're a month or more ahead on your expenses, your "To Be Budgeted" at the top is going to be in the red?

    I manually did a 1-month forecast and see that I'll be 30% or so ahead of my expenses, yet if I look ahead to October, it says I'm like 90% behind.

    Isn't "Age of Money" being 30 days supposed to be the indicator of that?
    Figgy wrote: »
    Ya I'm using the new one.

    So I went back and removed recurring expenses I had added that have passed and am "starting fresh" . September's budget looks lean, but I've only budgeted what will occur this next week.

    But when I go into October it says I'm in the hole like $3k.

    It looks like it adds your budgeted dollars for the entire month, but doesn't look ahead to consider what income you've said comes in that month.

    How does it work then? You're only supposed to budget for the month what you have on-hand, then go in on payday and top up your lines? That seems kinda silly.

    Eventually, you'll be able to do that. But re the bolded, and the grim reality of the present:

    If have a predictable income, you can schedule your paychecks in the ledger as recurring income. Select the scheduled payment in the scheduler and right click to "add to ledger" or something. The item will be added, and the next scheduled date will be shown in the scheduler. Repeat for all you pay checks for that month to sanity check your budget. Then right click the now future ledger entries to return the to the scheduler.

    There's nothing like that in the version I have. Future pay days do show in the "transaction" log, but they're greyed out.

    So am I only supposed to look at a current month? Looking ahead confuses the heck out of me.

    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • AthenorAthenor Battle Hardened Optimist The Skies of HiigaraRegistered User regular
    I have the classic one and have been using it on and off for a few years, depending on commitment.

    I really can't answer how the new one works. Again, and I can't stress this enough, watch the training vids and courses and other things that cone as part of your subscription.

    pTWAqPb.png
    Looking to get rid of some 2005-2010 era Star Wars vehicles/toys. If interested, please PM me.
    He/Him
    Banzai5150DisruptedCapitalist
  • MalgarasMalgaras Registered User regular
    edited September 2016
    Age of money is a very nebulous thing as to what it represents. All it technically represents is for your last 10 (I think) transactions, how long ago the money you used to pay for them was deposited. Lot's of things can distort the age of money, like paying with a credit card (+30 days to your age of money even if nothing else has changed). Generally, higher is better, but past that, I wouldn't put too much stock into it.

    As for your other question, the short answer is that as soon as your current funds run out, your budget will turn red, regardless of anticipated income. You can set income as recurring, but again, until the day passes, it won't be counted.

    As for the future, you can handle this in one of two ways. You can leave money in "to be budgeted" and budget coming months from there. When it turns red is when your current funds run out. I personally don't like this approach because it makes it easy to "steal" from future months. As in if you allocate more to your budget this month, it will quietly turn the future month red without mentioning anything unless you check that month explicitly. This makes it hard to have savings goals for the buffer since it kind of hides it if you aren't meeting them. It also doesn't show you how sustainable your budget it is, as you could be taking from your buffer every month, but it won't really show you till it actually runs out.

    The other way is to budget every month to 0.00, budgeting to savings categories for every dollar remaining after expenses are covered. Then budget each month on the first of that month, transferring from those savings categories as needed. This way if you re-budget and miss your savings goals, your budget turns red. So if income < budget, it will tell you right now what you are doing isn't sustainable instead of "drain all your savings, then tell you". This is the method I use and has been working pretty well so far, although you can go either way.

    Malgaras on
    1tLJUH2O.png
  • FiggyFiggy Registered User regular
    edited September 2016
    From what I've been reading, the "buffer" was a concept created by the users and not really recommended. I kind of agree.

    If you're supposed to be giving every dollar a job, the "buffer" is just a cheat to make it look like you've done that. In the new app, you instead assign those extra dollars to budget lines in the following month. That way, you're giving each dollar an actual job instead of putting it "on deck" until you use it on the first of the next month. You lose the feeling of "scarcity" by thinking of it as just a giant sum in a buffer account, and you're more likely to pilfer. But if those dollars are, say, assigned to next months mortgage, you may be less inclined to take from it.

    I guess you could still use the buffer system by just creating a buffer category and then assigning it on the first of the month.

    I guess I'll wait to see what method works for me. I still need to tackle hooking up my credit cards to this. I'm not sure I currently have online accounts for them. I just pay them off every month. I realize it needs to be hooked up though, or else I'm not tracking a lot of my expenses.

    Figgy on
    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • FiggyFiggy Registered User regular
    Follow up question, should I be seeing transactions automatically? Nothing is coming in...

    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • wonderpugwonderpug Registered User regular
    YNAB's philosophy is against the concept of forecasting, so that's part of why you're having trouble projecting into the future. YNAB very actively tries to get people away from spending money they don't have, which is what forecasting encourages you to do. This Whiteboard Wednesday covers why they're against forecasting.

    Basically, don't budget for the next month until your bank account contains the money you're trying to budget. If you got surprise fired today, you wouldn't be able to pay for all the things you budgeted for the next month because you don't have that money yet. That's why that next month is red.
    Figgy wrote: »
    Follow up question, should I be seeing transactions automatically? Nothing is coming in...

    What transactions are you not seeing? Two posts above it sounded like you hadn't hooked up your credit card accounts -- are you using your checking account a lot and still not seeing the transactions show up? It does take a few days to show up since YNAB has to wait for the transaction to fully post to the account.

    DisruptedCapitalist
  • PailryderPailryder Registered User regular
    i heavily use YNAB and am a firm believer. I'll try to generically answer a couple of questions. ALso on the reddit forum they refer to the desktop versus cloud as YNAB (desktop) and nYNAB. sounds like you are using nYNAB
    1. If you don't have the money on hand, then yes, red is expected because you are budgeting for things you don't actually have money for. That's OK! It tells you that you need to prioritize. Eventually you'll have green because you are paying for things in advance instead of check to check.
    2. you can import transactions from your bank but this is mostly for "reconciling" what you are putting in. As you spend money you should be adding that expenditure to the proper category and then you can combine that entry with what you import from a bank/credit union later. There are some guides on setting up importing but on the left side of the screen in the web browser you need to add accounts under your budget and set them up to import. SOmetimes it takes a while (30 minutes to hours), it's not an on demand import where you click a button and suddenly all your bank transactions will show up.
    3. It really is best to set up all the categories you want, even things you are thinking about next year like property tax and then start budgeting for them. Think of it as two parts. What you expect to pay (the budget) and what you actually used. So you may "budget" for property tax of 1300 dollars next September, but end up paying 1200 or 1500.

    I recommend going through their whiteboard wendesday videos also to grasp on to the philosophy if you are liking it. As others have said, part of ynab helps you understand where you are spending but that is really in service of budgeting in the future. And hopefully in a short period of time your next month budget will be in green at the top as you've put that money to work as you've received it.

  • DisruptedCapitalistDisruptedCapitalist koyaanisqatsi Registered User regular
    Figgy wrote: »
    From what I've been reading, the "buffer" was a concept created by the users and not really recommended. I kind of agree.

    If you're supposed to be giving every dollar a job, the "buffer" is just a cheat to make it look like you've done that. In the new app, you instead assign those extra dollars to budget lines in the following month. That way, you're giving each dollar an actual job instead of putting it "on deck" until you use it on the first of the next month. You lose the feeling of "scarcity" by thinking of it as just a giant sum in a buffer account, and you're more likely to pilfer. But if those dollars are, say, assigned to next months mortgage, you may be less inclined to take from it.

    I guess you could still use the buffer system by just creating a buffer category and then assigning it on the first of the month.

    I guess I'll wait to see what method works for me. I still need to tackle hooking up my credit cards to this. I'm not sure I currently have online accounts for them. I just pay them off every month. I realize it needs to be hooked up though, or else I'm not tracking a lot of my expenses.

    Yeah, I never created a buffer, but the result was that I was in the red for the current month for a long time (since my paycheck was pretty much going straight out the door). As a result I was just updating the budget in the "rainy day" expenses after my mid-month paycheck came in and I left it blank up until that point. My goal was to make sure that the everyday expenses and monthly bills were budget first--to cover for the "suddenly lost my job" scenario. I finally managed to get the whole month budgeted for the first time this past month and it's been two years since I first purchased YNAB classic, so it feels good to finally reach that point.

    Admittedly, after they announced nYNAB I lost a little bit of my faith in their method. One of the things they always harped on in the classic version was that you should keep all your receipts (or better yet enter your transactions into the mobile app the second they occur) so that you know exactly where your money was going. Now they said they were wrong and that it's okay to download everything from your financial institution. To me it seems like just an expensive version of Mint now.

    I'd be curious to see how nYNAB is working for you @Figgy after you've had a few months to try it out.

  • wonderpugwonderpug Registered User regular
    You're not supposed to abandon your receipts when you tie nYNAB to your banks, it just makes the reconciliation step easier. You use your receipt to enter the transaction, a few days later nYNAB tells you it found a match from your bank info, you then approve or reject the match and clear the transaction.

    I like it a lot since it saves me the lengthy process I had with YNAB4 of trying to match up every transaction with my monthly credit card statement. Now I can pretty much reconcile any time I want since my cleared transactions are almost always up-to-date.

    Pailryder
  • FiggyFiggy Registered User regular
    I find working with credit cards on it confusing so far. I get the premise there, but it kind of gets in the way of how the rest of the budget process they're using feels. At least for me, optically.

    I'm interested to how I'll like this app once I'm more "caught up".

    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • AiouaAioua Ora Occidens Ora OptimaRegistered User regular
    edited October 2016
    Figgy wrote: »
    I find working with credit cards on it confusing so far. I get the premise there, but it kind of gets in the way of how the rest of the budget process they're using feels. At least for me, optically.

    I'm interested to how I'll like this app once I'm more "caught up".

    Well, how are you using the credit card? For YNAB to make sense of it it should either be a card you make transactions and pay off in full monthly, or a card with a balance you're paying down and not using.

    If it's a little of both is gonna be a hard time to track.

    Edit: to expound;

    If you're paying off every month, then you make an account for the credit card. It's always going to be in the red, since its debt. Don't worry about that. When you do transactions, enter them in and assign them to a category as normal. When you make the payment, that's a transfer from the checking account to the credit card account and isn't part of any budget category.

    If you're paying down debt, don't make an account for the card. Just make a budget category for it and enter the payments as transactions assigned to that category.

    Aioua on
    life's a game that you're bound to lose / like using a hammer to pound in screws
    fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
    that's right we're on a fucked up cruise / God is dead but at least we have booze
    bad things happen, no one knows why / the sun burns out and everyone dies
  • wonderpugwonderpug Registered User regular
    Figgy wrote: »
    I find working with credit cards on it confusing so far. I get the premise there, but it kind of gets in the way of how the rest of the budget process they're using feels. At least for me, optically.

    The nYNAB approach to credit cards is definitely confusing at first. Basically, if you're just staying even month to month, neither increasing nor decreasing your CC debt, you never want to budget in the credit card category. Just leave the budgeted amount for the card alone, and when it's time for a payment you pay what it tells you to. This means you're only paying off the exact amount you've budgeted for in your non-CC budget categories.

    If you want to pay down credit card debt, you can budget some positive amount into the credit card. If you're ever budgeting a negative amount into the credit card, you're most likely increasing your debt.

  • FiggyFiggy Registered User regular
    The bill is paid in full each month, but there's always a balance. I'm not also paying to cover the charges that occured between when the bill was printed and when it gets to me, so that line is never $0.

    It just feels different to think of it that way, when you're used to thinking of your credit card as "paid off" when you make payment without seeing the current balance.

    XBL : Figment3 · SteamID : Figment · Website : www.nathanswyers.com
  • discriderdiscrider Registered User regular
    Figgy wrote: »
    Ya I'm using the new one.

    So I went back and removed recurring expenses I had added that have passed and am "starting fresh" . September's budget looks lean, but I've only budgeted what will occur this next week.

    But when I go into October it says I'm in the hole like $3k.

    It looks like it adds your budgeted dollars for the entire month, but doesn't look ahead to consider what income you've said comes in that month.

    How does it work then? You're only supposed to budget for the month what you have on-hand, then go in on payday and top up your lines? That seems kinda silly.

    It doesn't sound like I'm using YNAB4 according to their philosophy, but I've been using this as a tool to attempt to get a handle on where my money goes rather than attempting to budget paycheck to paycheck (as I'm lucky enough to not need to do this).

    Anyhow, I've set up a debt category to which I add all my income as inflows.
    Then in the budget screen I allocate a negative budget amount to that category each month (which immediately "overspends" on that category).
    As the inflows come in, that debt category will zero itself out.
    But in the meantime, the budget screen will then give me a net positive balance to start working from for each month, dependent on how much I budget to get coming into that debt category.

    This appears to project well into future months as well.
    You just need to make sure the income debt category is subtracting from its own balance when it overspends, rather than the total available budget amount.
    (Right click on the overspending to change the behaviour in the budget view)
    Otherwise payments that haven't come in yet this month will subtract from the available balance next month, even though you may expect them to come in.

    This works far better for me than putting my income in as income, as what I really want is to see the net effect from the budget at all points during the month, rather than help micromanaging my outflows to match the inflows.

    Steam Community page: http://steamcommunity.com/id/discrider/
    Some sorta sentient internet aggregator
  • wonderpugwonderpug Registered User regular
    With YNAB 4 you can set your income to be for a future month, which sorta sounds like what you're getting at. If you have money in your bank account right now that's enough for your October budget, change the dropdown category for your next paycheck to be November Income, instead of October. Or, if you're even all set for November, apply it to December.

    For the rest of October, your October 'Available to Budget' will stay at zero, despite additional paychecks coming in. When you reach November, you'll have a positive balance to work with for the month.

Sign In or Register to comment.