YNAB - getting to grips

[earlgreymarl]

Hello! There's been some useful and positive threads re YNAB on here before so hoping I can find some help.

When it gets towards payday ( 25th for me) I go to the budget and on the basis that you ask yourself what you need to fund before you next get paid, I zero those lines where the expense has already been budgeted for and then paid. But then that makes the available amount go to red. The sort of example would be a direct debit or oven groceries category has been budgeted for and paid with no further requirement before pay day.

The accounts are reconciled.

What am I doing wrong?

I have asked YNAB for advice before but they seen to mainly refer to the 4 rules or whatever, could do with some advice on how people make it work in real life, especially when you get paid on 25th and how you deal with it between months as it were.

Thanks!

[Happierwithouthim]

I use ynab and just can't picture what you mean, I get paid weekly so it's like budgeting 4 times a month!
Are you zeroing out the budgeted money also maybe? Could you try set available amounts to zero?

[earlgreymarl]

@Happierwithouthim thanks - yes I mean changing the budgeted amounts to zero for those items that have already been budgeted for and also paid for, else you have money still budgeted for stuff you have already dealt with , which seems to be against the "rule" of thinking about what your money has to do before you next get paid .

So I am looking for a true picture towards end of months when a) most things have been budgeted for and paid for but ,b) I have been budgeting to contribute to less frequently incurred costs ( quarterly bill for example) . I wouldn't zero those amounts as I need to have that money ringfenced / accumulating ( it hasn't been spent that month - unlike the mortgage payment and various direct debits etc ) .

So it's like why would I still have the budgeted amounts around when it's sorted but if I put zero it tells me they are underfunded - when they might actually have been incurred and paid for ( activity column indicates this )

[earlgreymarl]

Hope that is a better explanation of what I mean lol .

[Happierwithouthim]

Have you goals set for those categories?

[Happierwithouthim]

I've thought a bit more about what your query is, and I think it's because you're within the month you're taking away the money that you spent on this items, you want to budget for the month ahead - so if there's money left in the category you can either leave it there as a buffer or you can take that amount away from the total you want budgeted and budget that amount. I find it handy to click on the amount to be budgeted at top of screen and right click and budget my amounts to each category then, when you click the category then it'll give existing balance category and you can budget each line item then. Does that make sense?

[NoSquirrels]

Have you taken any of the classes and watched the videos? They are the most helpful things.

There is also a vlogger called Nick True who has a series on YNAB which I know loads of people find helpful - he walks you through things step by step:

yes I mean changing the budgeted amounts to zero for those items that have already been budgeted for and also paid for, else you have money still budgeted for stuff you have already dealt with , which seems to be against the "rule" of thinking about what your money has to do before you next get paid

I think you are misunderstanding what the line "budgeted" means.

In YNAB, it doesn't mean the money is still there to be spent. The "budgeted" column is just how much you planned to spend, how much you added to that category in the month.

There are 3 columns for each category.

Budgeted: how much money you ADDED to the category this calendar month.

Activity: how much money you SPENT from the category this calendar month.

Available: how much money you HAVE to spend in the category RIGHT NOW.

So it's like why would I still have the budgeted amounts around when it's sorted but if I put zero it tells me they are underfunded - when they might actually have been incurred and paid for ( activity column indicates this

You're trying to make "budgeted" mean and do something different to how the software is set up.

The "budgeted" line isn't actually that interesting or helpful to you during the month. It's just the name for the column where you add money to the category.

What is important is the "available" column - that's what tells you what money you "still have around".

I am looking for a true picture towards end of months

So at the end of the month, the "activity" column shows you how much you have spent. That's the real data you need.

[NoSquirrels]

Then, to answer your next question about being paid on the 25th.

You can either:

Add extra to the budgeted line for groceries etc. if you will spend money on groceries between 25th and 30th September.

Or:

Go forward to October and budget the money for your month's worth of groceries there.

What you need to remember is that YNAB doesn't care when you get paid - it cares when you pay for something.

So you're used to thinking "I get paid on 25th and then I budget for October" and you sort of ignore the fact that you're actually still spending money between 25th September and the end of the month.

[Happierwithouthim]

nosquirrels fantastic answers for the OP, even though I've been using ynab for years I just couldn't grasp what they meant!

[NoSquirrels]

It’s such a mindset shift, though, isn’t it? It’s in fact totally, totally logical and simple but it feels ‘wrong’ when you first start out. Because you have to unlearn how you previously thought about ‘budgeting’. AKA the ‘budget’ is the ‘plan’ and the plan is what matters.

But the plan doesn’t matter as much as you think - life happens - what matters is what you REALLY SPENT.

It clicks best when you just remember categories = envelopes.

You put money in the envelope (category) when you get it. (Budgeted)

You take money out of the envelope (category) every time you spend (Activity).

You cannot spend what you don’t have in an envelope- so you need to move money from another envelope or not buy something or go into debt. (Available)

And nothing should ever be red!

[Happierwithouthim]

Definitely, since I started using it I have never gone overdrawn or had a returned direct debit due to lack of funds, I find scheduled transactions are my saviour as I can see what's coming up and have to budget ahead for them.
It's intuitive now, I budgeted for both joint bills and personal this morning in five minutes in bed before I got up. I've two budgets running because I'm in the midst of a separation & want to keep household & personal stuff separate.
I actually think I'll probably continue with this because it works for me.

[earlgreymarl]

Thanks everyone & sorry I am late in saying that.

That definitely all helps. I have done quite a few of the tutorials but felt like I was having some kind of stupid mental block. I will check out those you tube videos as well.

Thanks again, I am determined to stick with it.

I think I have been thinking about the budgeted column in the wrong way.

I do have goals set for the majority of budgeted items

[tribpot]

Yes - I think it used to be clearer that the goal is to break the cycle of living 'pay check to pay check' as they would say in the US. And it is more acute there where apparently getting paid monthly is still a rarity. So if you get paid towards the end of the month, once you have saved up enough to pay for the final few days of the month without dipping into the salary you got paid on the 25th, you would technically have broken the cycle of living pay check/cheque to pay check/cheque. Basically a buffer consisting of your living costs for those few days would be sufficient. However, in those days what the goal really was was in October to start spending money you had had in your account since the start of September, so an entire month's worth of money on hand.

I think that's why they changed it in the more recent software to be 'age of money' instead.

However, what hasn't changed is that budgets relate to calendar months, not pay periods. This is really important. The calendar months don't change, pay periods may do - as you move jobs, or get paid early at Christmas, etc. The goal is, on the first of the calendar month, to have all the money in hand that you need to meet all of your budgeted expenses for that calendar month. However, obviously most people aren't in that position when they first start budgeting.

Keep going and I think it will definitely become clearer once you can break the cycle and can think about the budget purely in terms of calendar months.

[Lougle]

Late to the party, but I agree that it's really helpful to think in terms of envelopes. Your 'To be budgeted' envelope starts out quite fat - it has all your available money. Then you move that money around.

Say you decide that Groceries are likely to cost £150 this month, you move £150 to the groceries envelope. At the end of the month, if you've only spent £120, you can either take the remaining £30 and put in back in the 'To be budgeted' envelope, or you can say 'Well, I'll still need money for groceries next month, so I'll leave it in the Groceries envelope and top it up with my new wages.' If you actually spend £170, you need to take another £20 out of the 'To be budgeted' envelope, or shift some money from a different envelope which has some spare.

The crucial thing is that every £1 can only be allocated once. You can move it if you need to, but you can't have the same £1 in two envelopes at any one time. You can't budget more than you have.

The ideal situation, for neatness, is that in September, on 30th September, every column has the same figure in 'budgeted' as in 'activity' and the available 'To be budgeted' is 0 because you've allocated any spare money to October. But the beauty of YNAB is that even if it doesn't look pretty, it will do that for you anyway - it will carry over spare category money into the next month.

[NoSquirrels]

Forgot to say earlgrey, if you email YNAB help team and say you’re liking it but not 100% sure if you want to subscribe yet, they’ll nearly always (from what I can see in forums etc) extend your free trial for 1-2 months. Well worth asking!

[earlgreymarl]

Thanks again everyone - here's to the 1st of the month!