Household cashflow management

[alaskaperry]

Two-income household here, both earn decent salaries. One salary is paid monthly and one weekly. We should not have a balance issue in theory, but recently struggled to keep track of how much and when outgoings will be deducted and frequently deep into our overdraft. We do keep a detailed household spreadsheet with a list of all our expenses but it doesn't do the cashflow projection which seem more tricky to set up. We are able to save money but often move money around to often to manage the cashflow. Too messy and annoying.

So which is the best software out there from your experience to help with cash flow household? We need something that will also help with where and how much money to 'park' for budget figures or one-off large lump-sums deductions which occurring at different times of the yearly cycle (e.g. birthdays budget, Christmas, water bill, car services etc.).

Thank you.

In general, there's a lot of support for YNAB (You Need A Budget) as a concept as well as the (paid-for) app. There are several threads about it on this CoL forum and Money Matters (probably even more on MSE).

https://www.mumsnet.com/talk/money-matters/4619144-ynab-newbie

https://www.mumsnet.com/talk/cost_of_living/4794033-new-to-budgeting-where-to-start-help?reply=125820564&utm_campaign=thread&utm_medium=share&utm_source=copylink

Free method:
https://www.moneyhelper.org.uk/en/everyday-money/budgeting/use-our-budget-planner.html

Do you already have something like Monzo?

Before doing anything else, ensure you have £1000 kitty. Take it from your savings if needed. Or withdraw £100 in cash every month and put it somewhere

One account for salaries. From this one:
Feed a separate account for all your bills. Include in this amount any yearly expenses you might have (insurances, boiler service etc). So, say your bills are £500/month, add another £150 for your yearly expenses. Call this Bills Account. Set up a regular saver from the bills account, and send your £150 across.
Another separate account for food and petrol/ transport. Helps you set up a budget and stick to it.
Another account for stuff like clothes, days out, lunches with friends etc.

This is what I do, hth.

We use YNAB. It's excellent and they offer a 34 day free trial.

Excellent thank you all. @2024Hackathon good links, I read with much interest. Good to see some ex-YNABs out there who now use Monzo and self-budget instead.

We bank with HSBC and very happy with them (their services gets better all the time). My preference is to limit the number of accounts I manage to keep things simple.

Does anyone on here have achieved the same budgeting success with Monzo pots? And do you know if the same 'Pots' system can be set up on the HSBC app? I heard of Monzo but don't have enough knowledge. Ideally i don't need to set up another new current account.

I would like to see what Monzo offers and already downloaded the YNAB app so will experiment during the free trail period. From all I read so far everyone that use YNAB has nothing bad to say! But it's an extra expense and I am trying to cut on costs

I can guarantee that if you use YNAB properly, you'll save far more than you spend on the subscription.

Check out “debt free mom” on Instagram, she builds custom budgets for people that account for different ‘pay periods’ as she calls them which is basically what you’re describing ie some people are paid every week, some every two weeks, some every four, some monthly. I think you can either download her template for around $9 or she charges around $150 for her to build you a custom budget from scratch. Well worth the money! She’s American but the principles are the same and she’s done loads of Uk clients.

A simple solution would be to aim to build up one or two month's household salary in savings as buffer. Use the savings for the current month, and keep the incoming salary for the following month.
Then you will always know how much you have available for the month ahead.

'My preference is to limit the number of accounts I manage to keep things simple'

A dissenting view here ...if you want to keep things simple, then I'd avoid YNAB....!

Disagree. YNAB is literally as many pots as you like with just one bank account. I still have 3 bank accounts because I manage my children's benefits, but it's still really easy.

..so I have been playing around with YNAB this afternoon but the tutorial pages look nothing like my app (web and phone). I seem to be missing a lot of options/functions, the sidebar on the left does not show the same menu.. I looked around a bit on YouTube but something is odd. What am I doing wrong?
I linked my account and allocated sums to many categories (as goals) which took a long time but I can't figure out how to move on from there..?

Is it a USA/UK thing or do I only get to use everything on a full subscription?
I am on the trial for now.

@alaskaperry .....I did warn you.....!! You'll be down the rabbit hole before you know it....🙃

Hmm that doesn't sound right, @alaskaperry , I'm sure the trial is for all features.

Have you downloaded just the mobile app? These days you should be able to do everything from there. I wonder if the screenshots you can see are how it looks in a browser on a laptop or desktop. Here's a setup tutorial just for the phone:

Basically all you do is:

• look how much money you have in each bank account
• decide what you need to spend it on and allocate it to corresponding budget categories
• when the money is spent, record it (or import it) and categorise it

And then at the end of the month, you can review if you've spent more than you budgeted, less than you budgeted or exactly what you budgeted in each category. Set up your budget for the next month.

You don't need to add money to categories as a goal unless it is something you're saving up for, so YNAB can tell you how close you are to the goal. For the mortgage or the water bill, just plonk some money into the budget category, bish bosh.

Then when more money comes in, record that as 'Ready to assign' and then decide what you want to spend it on, allocate it to corresponding budget categories. Repeat.

If you did this with no prior thought about what your true expenses are, over the course of a year or so you'd realise things like: oh crap, the car needs an MOT once a year so we need to put money aside monthly so when the MOT date rolls around the money is already there. Or you can have a think about your true expenses and create categories for them, even if you don't have enough spare cash to start putting money in yet.

When you spend on a credit card, YNAB treats that money as gone from your budget that same day. So your real world bank balance may be different from the budget amount, but that's a good thing - that money is already spent, you don't want to try and spend it again. When I first started using YNAB I would pay off my credit card balance every week so that I could keep the scary negative numbers in the account register to a minimum.

We use monzo and budget amazingly with it - it will even fill your dedicated pots straight from your salary as it comes in. It tells you with the click of a button when payments go and no need for different accounts. I believe they are also toying with bringing in a 'debt dashboard' which lets you see everything in one place and helps you decide which is most beneficial to pay off which sounds great.

definitely in the rabbit hole ...😵‍💫

Does your app look like this?

@NotYourBrain Monzo will be my next experiment. I can see YNAB can take forever and currently paints a scary picture.

@tribpot thank you for the tips. I think my problem is that I have allocated the exact (to the penny) amount to each of my monthly, yearly, and goals budgets as they are currently listed on my low-tech home spreadsheet.

Examples:
keyed in the exact amount of monthly mortgage payments
The exact figure for MOT (based on the one we just did last week (+£10 in case it goes up next year)
Yearly allowance for Christmas (say £1000) ..
Then we have money that goes to a savings account each month (on the 1st) to 2 separate NS&I accounts. I can not link NS&I to YNAB it seems. So I put it in the category 'savings' with the monthly deducted amount.

All in all, YNAB generated a big fat 'Minus' at the top as most of our regular deductions are on the 1st of each month so no money (almost) left. Now, YNAB tells me go 'Fix This'.. but I don't - yet - know how to... thought the software would fix it for me 😂

Is it only after a few cycles of salary coming in and outgoings that YNAB stabilises the budget? My next wave of income is not till 1st Feb and in the meantime, I can not allocate money I don't have.

Right so it sounds like you've put the full cost of next year's MOT into January's budget, even though said MOT won't happen until December? In which case you want to say the goal is £X and the due date is X date in December 2024. It will then tell you how much to assign in January.
Likewise Christmas. Next month you can tell it to auto-assign and it will put the same values in for February. You can't assign the full amount of the MOT to January as you don't have the money to pay for it yet, which is what the budget is telling you.

For the savings accounts, you can just set those up as accounts in YNAB and input the transactions manually, as transfers out of the current account. That way the money in the savings accounts counts towards your budget total. On the other hand, with NSI I assume in fact that money shouldn't count towards your budget total, are those savings which are long term/earmarked? Should you be saving when you are deep in the overdraft?

Ahh @alaskaperry you're missing the rules of YNAB. The first rule is 'give each £1 a job.' You can't budget with money that isn't there.

To set up YNAB, you need to think in two phases:

1. What are my goals - what do I want to spend my money on?
2. What does this money that I have need to do until I next have money?

So you've started mid-month. You can cheat, and change the start date to the end of last month, then add all your transactions from that date until now. That's fine to do if you want to. In which case, you'll then be able to allocate all the money you've already spent in January, and allocate what is left to whatever is your priority. However, if you are starting from today, you need to do things a bit differently.

Let's say you've paid your big bills - they already came out on 1st January. You don't need to think about them because for this month they are paid. What you need to do is think 'I've got £500 left to last me until 1st February - what does that £500 need to do? Fuel £50, groceries £150, clothing £50, Savings £50, Coffees/snacks £20, Car repair £180" So you allocate that money. You have £0 left to budget, but if an emergency expenditure came up, you could choose not to save this month, or not to buy clothes, etc.

Then, at the end of the month, when you get your wages, you'll be able to allocate that money for all your bills, then whatever is left you do the same thing.

@Lougle .. it looks like this..

@alaskaperry That looks right for the desktop app. It might look more like this if they have the YNAB toolkit extension added in Chrome.

https://chromewebstore.google.com/detail/toolkit-for-ynab/lmhdkkhepllpnondndgpgclfjnlofgjl?hl=en-GB&utm_source=ext_sidebar

If you take out all the advanced spending for next month, you'll see the Available to budget gets fixed.

@tribpot I assigned £70 to MOT as a yearly target, 'First Due on' date is Jan 2nd 2025. I did the same for all my yearly expenses which are due in the future months, say TV licence, I set £160 target by Dec 2024...
I think the issue is that the starting point is from the lowest point in the month after all our 'heavy' deductions left our account on 1st Jan and the new budget we need for 1st Feb is based on what will be coming in on the 1st Feb so in the meantime cant assign any money.

ok! Thanks. That's helpful. I give it a go.
...rabbit hole day :)

Okay I see @alaskaperry. After you've paid all your bills for January you don't have enough left to budget for these non-monthly expenses.

You could unassign money from those budget categories this month, but that just means you'll have to assign more to them next month in order to have the money on hand when it's due. I think what you're discovering is why you end up deep in the overdraft.

That said, if some of the money in your savings account is to pay for the MOT, for example, then you definitely want to list that savings account as an account in YNAB, so you can allocate the money that's in it to things like MOT. Otherwise it looks like the money is leaving your budget.

It's just a mindset change. We're used to forecasting our budget - looking at what we need to spend over the course of the month, and we're good at tracking our budget - what we did spend over the course of the month. What YNAB is encouraging, is 'real budgeting' where we assign the money we have and no more.

I get the bulk of my money twice per month (We also get child benefit on a 4-week cycle). I split my bills into two batches, so that I budget the first half of the month's bills with the first set of money, then the rest can do daily living expenditure, etc., then the second batch of bills is budgeted with the second inflow of money, and the rest can do daily living, etc., and between it any yearly, or quarterly expenses are funded, plus savings, etc.