Correct overspending if I have $$ left in budget?

Easy2puttEasy2putt Posts: 42Member
edited October 2010 in Desktop
Okay, I just got paid (2nd paycheck of the mo., I get paid bi-weekly) and did the the final budget for the rest of this month (Sept.) and with everything accounted for I am looking to have money left (green) in the "Available to Budget ".

However, I did overspend in a few areas and had an amount that went into Overspending amount.

Question 1: Am I suppose to add more of my money (left over from the "Available to Budget") into the items that went over budge to make it zero?

..or do I leave it as is, in the RED, and just adjust by adding more money into the item for next months (Oct.) budget?

Thanks again.. :)
Post edited by Unknown User on

Comments

  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    Your choice. Either way works.
  • Easy2puttEasy2putt Posts: 42Member
    Lets say I budget $3000 for the month and my outflow was only $2000 and I have $1000 in the category balance. What happens to this $1000? When I look at next month it doesn't ($1000) show it as being carried over into next month?
  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    It should show in the Category Balance column. The budgeted column is 0.00 until you actually budget something. The Outflow column is empty until you enter something in the register with that category. But the 1000.00 that you didn't spend this month will show on all the Category Balance columns going forward. You can choose to add to it in the budgeted column next month. Or not. Or negative budget in the Budgeted cell next month if you find you don't want that 1000.00 there afterall. By negative budgeting, that will free up (that portion of) your money to be re-allocated if you like.
  • Easy2puttEasy2putt Posts: 42Member
    Hmm..not sure if I'm following you here but, for example:

    Budgeted Totals (column) - $3000
    Outflow Totals (column) - $1000
    Category Balance Total (column) - $2000

    Overspending -$500
    YNAB Buffer for Oct -$400

    My question is I have money leftover in the Category Balance Total column as I spent less than originally budgeted out for. If I correct the overspending amounts and increase them with the money left over from my Category Balance, that should leave me with a net saved of $1,500..right? ($2000 - $500)

    BUT I don't see this $1,500 being sent of as the Starting YNAB Buffer for October..shouldn't it be? I just see the Category Balance Total just increasing..
  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    Ok, when I read your earlier 3000/2000/1000 example, I mistook that as a specific category, not as totals at the bottom of the budget page. Sorry.
    Easy2putt wrote:
    Hmm..not sure if I'm following you here but, for example:

    Budgeted Totals (column) - $3000
    Outflow Totals (column) - $1000
    Category Balance Total (column) - $2000

    Overspending -$500
    YNAB Buffer for Oct -$400

    My question is I have money leftover in the Category Balance Total column as I spent less than originally budgeted out for. If I correct the overspending amounts and increase them with the money left over from my Category Balance, that should leave me with a net saved of $1,500..right? ($2000 - $500)

    BUT I don't see this $1,500 being sent of as the Starting YNAB Buffer for October..shouldn't it be? I just see the Category Balance Total just increasing..

    If you "play whack-a-mole" with $500(subtract money out of one category and add it to another), you will not be increasing the Category Balance Total column. You will only be moving money from one envelope (category) to another). So your Category Balance Total column will not change. However your Starting YNAB Buffer for October will be $100 if you do so, because you will not have $500 in overspending.

    The Buffer only consists of UN-budgeted money, not budgeted money. The Category Balance Total column consists of Budgeted and Unspent money. In your example, you can think of starting October with $2100...$2000 that's already been budgeted and is waiting in specific categories/envelopes, and $100 that you can choose to budget or leave rolling forward to grow as your buffer. When you get more income, it will join that $100 and you will have to decide how much of it you want to wait with the $100 with it's job as 'buffer' and how much you want/need to join the $2000 that's been assigned jobs within categories.
  • Easy2puttEasy2putt Posts: 42Member
    Hi Malisab,

    hmm..wouldn't it seem better to have the "Category Balance" or money that was budget BUT unused to roll over into the YNAB Buffer for October? (assuming the overspending amount should be subtracted from the "Category Balance" first before rolling over into next month) <--maybe another function for YNAB later..?

    OR

    Am I supposed to be moving the unused budget around, monthly, so I don't have any OVERSPENDING for the current month (and be in the black), and thus I have seen this remainder rolling over into next month's YNAB Buffer.

    It seems if I do the latter, I'll be doing this every month of moving budgeted funds around, is it normal to be pulling funds out of one area (surplus budgeted money) and into a overspended area to make it in the black?
  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    Easy2putt wrote:
    Hi Malisab,

    hmm..wouldn't it seem better to have the "Category Balance" or money that was budget BUT unused to roll over into the YNAB Buffer for October? (assuming the overspending amount should be subtracted from the "Category Balance" first before rolling over into next month) <--maybe another function for YNAB later..?

    The hope is that lots and lots of your categories will have a positive balance going forward. You should aspire to be building category balances to pay for non-monthly expenses (insurances, taxes, repairs, vacations, gifts, etc).

    If the default is left on, the overspending will roll to the bottom of the screen. It will then come out of the pool of money available the following month (either buffer or just money available next month). This is rule 3 - roll with the punches/pay yourself back.
  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    Easy2putt wrote:
    OR

    Am I supposed to be moving the unused budget around, monthly, so I don't have any OVERSPENDING for the current month (and be in the black), and thus I have seen this remainder rolling over into next month's YNAB Buffer.

    It seems if I do the latter, I'll be doing this every month of moving budgeted funds around, is it normal to be pulling funds out of one area (surplus budgeted money) and into a overspended area to make it in the black?

    This is an alternative that some people prefer. It's referred to on the board as "whack-a-mole" after the arcade game (thanks to Patzer.) This way you decide which categories will build balances and which won't. (or more often where you can steal a few dollars back from here and there.)

    I use a combination. Do whichever makes the most sense to you.
  • Easy2puttEasy2putt Posts: 42Member
    Okay, I have money leftover from my budget as I didn't spend as much as I expected in the budgeted areas.

    What's confusing me is:

    1. The "Category Balance" column grows (unused budgeted money), but I don't see how this money is being utilized within the YNAB program? All I can think of is that it (Category Balance column) just tells me how much cash I have available (for the areas I am putting away money for..like property tax, insurance, emergency fund, etc.)..

    2. Am I to assume that I'll be carrying a lot of money in my checking account for these budgeted areas that I am saving for? (Unless I transfer to a saving account, and then show an outflow from the checking acct.)

    3. If I have money left from the budget areas (didn't spend as much as I budgeted out for), am I supposed to correct the overspending amount by adding into it so that red overspending amount doesn't get dragged into the next month?
  • AmbarAmbar Posts: 205Member
    Easy2putt wrote:
    1. The "Category Balance" column grows (unused budgeted money), but I don't see how this money is being utilized within the YNAB program? All I can think of is that it (Category Balance column) just tells me how much cash I have available (for the areas I am putting away money for..like property tax, insurance, emergency fund, etc.)..

    Right, those category balances are sitting there, waiting for you to call on them to do their jobs (like property tax). If you budgeted $200 to Property Taxes for October, and you don't use it, those dollars will be sitting there next month waiting to join with whatever you budget to that category in November.
    Easy2putt wrote:
    2. Am I to assume that I'll be carrying a lot of money in my checking account for these budgeted areas that I am saving for? (Unless I transfer to a saving account, and then show an outflow from the checking acct.)

    Yes. You're practicing the skill of letting money sit, and it has to sit somewhere. Now, YNAB doesn't care *where* you let it sit, so you may well choose to transfer a chunk of it into savings so it can earn interest while you're waiting for, eg, the property tax bill to arrive. Assuming your checking and savings accounts are both "on-budget", that transfer in YNAB will not have a category (since the money is already in the budget, and it's not crossing out of the budget).
    Easy2putt wrote:
    3. If I have money left from the budget areas (didn't spend as much as I budgeted out for), am I supposed to correct the overspending amount by adding into it so that red overspending amount doesn't get dragged into the next month?

    That's how I do it (to a point). You can readjust categories, say by taking out some money from the Car Replacement category and putting it into Groceries so that Groceries no longer shows a red overspend. OR you can "roll with the punches" by letting YNAB subtract those overspends from next month's money, which is what it will do by default if you don't adjust the categories.
  • Easy2puttEasy2putt Posts: 42Member
    Ambar, gotcha..so the money is supposed to "sit" or I can transfer it over into my savings account..that make sense. I think transferring the money over to savings is going to be better for my sanity.

    BUT, am I suppose to continue contributing the same amount of money into the various budgeted items (like let's say an emergency fund) OR do I save less for these type of budgets and thus increase my YNAB buffer for next month? (Is this the key balance we need to achieve?..keeping both the long term budgeted items going but also add to the YNAB Buffer?)

    For example, let's say after everything is said and done for September's budget, I can either add more to long term budgeted areas (like an emergency fund, property tax) or add less to these long term budgeted areas, BUT then be able to contribute more to the YNAB Buffer.

    Is the ideal goal/objective to be
    1. Save for our long term budgeted items (like an emergency fund/property tax)
    2. Maintain positive growth for the YNAB Buffer

    ..have I hopefully hit on the YNAB method?
  • AmbarAmbar Posts: 205Member
    Easy2putt wrote:
    Ambar, gotcha..so the money is supposed to "sit" or I can transfer it over into my savings account..that make sense. I think transferring the money over to savings is going to be better for my sanity.

    Sure -- just remember, you have given those dollars jobs, and they are sitting waiting to do their jobs, no matter which account you have put them in. The budget, and the category balances, track the jobs. Accounts are just different buckets for the money to sit in.
    BUT, am I suppose to continue contributing the same amount of money into the various budgeted items (like let's say an emergency fund) OR do I save less for these type of budgets and thus increase my YNAB buffer for next month? (Is this the key balance we need to achieve?..keeping both the long term budgeted items going but also add to the YNAB Buffer?)

    For example, let's say after everything is said and done for September's budget, I can either add more to long term budgeted areas (like an emergency fund, property tax) or add less to these long term budgeted areas, BUT then be able to contribute more to the YNAB Buffer.

    Is the ideal goal/objective to be
    1. Save for our long term budgeted items (like an emergency fund/property tax)
    2. Maintain positive growth for the YNAB Buffer

    ..have I hopefully hit on the YNAB method?

    I think you have. Just *where* to set the balance is going to be up to you. You might have budgeted $400 to Groceries and only spent $250, so you have $150 remaining in that category. You have lots of choices -- you could leave it alone and budget only $250 for next month; you could transfer $100 out for overspending and then budget $250 for next month, to accumulate a little cushion in case you have to spend more; or you could transfer all $150 to your buffer (if that's an explicit category you're tracking) and budget $400 again next month.

    The thing to keep in mind is that the budget is responsive to your needs; you are not locked into budgeting $400/month for Groceries from now until the end of time. Particularly at the beginning, you'll find yourself "tinkering" more often than you will later once you've got a good idea of your spending.
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