budget - do you divide 'everything' by 12?

bjsa06bjsa06 Posts: 2Member
edited March 2012 in Desktop (YNAB 3)
Background: I have used an excel spreadsheet to track every cent of my spending for years (i.e. recording 'spending', not BUDGETING). Then I saw this program and I liked the idea of budgeting first!

Got the software, here we go...

Do you budget for 'all' your categories by totalling a years worth of accumulated spending and dividing by 12? Then adding this figure in the current month, then copy the figure another 11 times for the remainder of the year? I know this method is probably the tightest in terms of 'planning' to ensure you stay in the black.

Anyway, I did this....for food, power, insurance, ..., ....YES all of my 56 categories (which mirrored the categories I had in my old excel system).
But then I realised 2 annoying things:
1. If a bill or purchase increased over time (as they all do) I would have to go in and change the budget entry from that date forward. For example, power bill is 800/yr. Divide by 12 = $66 entered as a budget each month for that category. If the bill rises by, say 5%, the following year. The $66 will also increase by %5 - I need to manually go in and set that figure again. Remembering I have 56 categories!
2. I like to see when a bill is due. For example, if I have a single yearly payment of $3000 for personal insurance due in December I want to be able to visually see it coming. But all I see are recurring monthly budget amounts of $250 (3000/12).

which is why....I stopped dividing my bills by 12 and just put in the full amount for whenever I knew they would be due. For example, water bills vary in amounts but and are paid quarterly. I totalled a years worth, divide by 4 and input these average figure into the months of Feb, May, Aug, Nov. Now I can see when they are due and for how much. I guess the down side to this system is that I may not have enough to cover the larger bills when they arise (because I haven't actually allocated funds 'each month')

Fair dinkum, have I lost the plot? How do you do it?
Thanks
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Comments

  • DonGatelyDonGately Posts: 637Member, Beta Tester
    We did a variation on this when we started in August reviewing the prior year's spending and initially dividing by for most categories. Since we started using YNAB mid-year certain expenses had to be divided differently. For example, our car insurance payment is due every six months but when we started budgeting there were only four months remaining until the bill was due so it was divided by four to meet that payment then by six as we set money aside for the next payment. There's enough wiggle room in our budget to absorb variations in a category like our electric bill so we simply take the bill we receive at the end of one month and make that the budget figure for the next.

    We use the note feature for certain categories to record the annual or semi-annual amount and the date's they will be due.
  • letseatpasteletseatpaste Posts: 59Member
    I think switching from tracking spending to actually planning spending and budgeting is a bigger hurdle than most people think. Tracking what you spent can give you a good starting point to budget on steady things like utilities and insurance costs. But in most other discretionary areas like clothing, eating out, groceries, vacations, entertainment etc, what you spent last year has almost nothing to do with what you make a decision to spend this upcoming year. You have to make the switch from a passive (tracking) to an active (budgeting) mindset.

    It sounds from your post that you are worried that you are going to have to make lots of adjustments to your budget every month. You are right to be worried, because you will be making lots of adjustments! The nice thing is that I think you'll find that it really wasn't much to worry about, once you get used to the idea that a budget is dynamic, not an automatic set-and-forget sort of thing. YNAB makes it really easy to adjust.

    I do think it's fair to say that planning for annual or quarterly expenses is a weak point in YNAB right now. For now you might just have to keep track mentally or manually make a note for those categories. I'm against the idea of forecasting income and planning spending very far ahead, but it'd be nice to have some sort of indication of progress to a goal for a particular budget category.
  • Tif_AnnTif_Ann Posts: 402Member, Beta Tester
    I do think it's fair to say that planning for annual or quarterly expenses is a weak point in YNAB right now. For now you might just have to keep track mentally or manually make a note for those categories. I'm against the idea of forecasting income and planning spending very far ahead, but it'd be nice to have some sort of indication of progress to a goal for a particular budget category.

    I'm having trouble wrapping my mind around this quote. YNAB's Rule 2 - Save for a Rainy Day - is one of the strongest and most liberating features of the software. Tacking those yearly/quarterly expenses and allocating funds each month instead of having to come up with it all at once is a HUGE part of YNAB. And there is instant indication of progress - the category balance builds each month, so you can watch it grow right there in the budget screen. Yes, you originally have to do some mental work - for example if your water bill is due in April, and you know it will be $66, you have to figure out that for Feb-Mar-April you need to set aside $22/mo for it - but that gives you control and makes you more aware of your spending. Once you do that initial calculation, as long as you budget money to that category every month, it doesn't matter WHEN the bill shows up, because the money will be there. If you have a big yearly bill due in May and just start now, you will have to recalculate after you pay it since you'll have a full year to save up for it instead of 4 months, but once you've initially figured out the monthly amount it's just autopilot.

    As for OP - you're going to hear it over and over again from long time users, but YNAB is not MEANT to be a planning/forecasting tool. You are only supposed to budget the money you have RIGHT NOW, not anticipated money. You are supposed to spend according to categories which you CAN'T do if you've already budgeted money into the categories without having money on hand. I personally keep an "ideal" budget a couple months out so I have a visual representation of what my goal to budget is, and I'm not buffered yet so I do have to be aware of when my bills are due to budget them according to paycheck timing, but the system, if used as it is meant to be used, really works.
  • blackdiamondblackdiamond Posts: 2,308Member, Beta Tester
    I think the best solution for you would be to only input data for the current month and possibly one or two into the future. Because things change you're setting yourself up for more work. YNAB is about the NOW and not the LATER.

    Also, you're past history can be very valuable for things like gasoline, groceries, and other variable spending, but I would simply budget each month for the know bills.

    Right now I budget my fixed bills and then use the remaining to fund savings categories and the misc. variable spending categories. I put all of my utilities in a single category so that one is funded based on a calculated average per month.
  • letseatpasteletseatpaste Posts: 59Member
    Tif_Ann wrote:
    I do think it's fair to say that planning for annual or quarterly expenses is a weak point in YNAB right now. For now you might just have to keep track mentally or manually make a note for those categories. I'm against the idea of forecasting income and planning spending very far ahead, but it'd be nice to have some sort of indication of progress to a goal for a particular budget category.

    I'm having trouble wrapping my mind around this quote. YNAB's Rule 2 - Save for a Rainy Day - is one of the strongest and most liberating features of the software.

    I get it, I just wish there was a way to not have to keep track of such things separately. It's absolutely not any sort of deal-breaker and it's not hard to account for it mentally. I only have one big annual expense that I have to do this for, and it's not that hard to mentally divide and budget it accordingly. This is a fairly common complaint, though. I wouldn't want it to autofill budget amounts or automate transactions or anything. Just some sort of progress indicator where I could keep of track of how much and when the goal was, and a suggestion of what I should budget to meet that. This is not the same thing as forecasting income and mentally spending money I don't have.
  • marzydjmarzydj Posts: 80Member
    I put a note next to the category with the total amount then how many months i'm dividing by so, for example bike tax £66/12 = £5.50 due March. That way I know how much to put in and when I need the £66. You are right the tax may go up so I either round up to £6 per month or, as we are sitting down and working the budget each month, when we get to March and discover it is higher we budget the extra in.
    Marzy
  • Tif_AnnTif_Ann Posts: 402Member, Beta Tester
    Tif_Ann wrote:
    I do think it's fair to say that planning for annual or quarterly expenses is a weak point in YNAB right now. For now you might just have to keep track mentally or manually make a note for those categories. I'm against the idea of forecasting income and planning spending very far ahead, but it'd be nice to have some sort of indication of progress to a goal for a particular budget category.

    I'm having trouble wrapping my mind around this quote. YNAB's Rule 2 - Save for a Rainy Day - is one of the strongest and most liberating features of the software.

    I get it, I just wish there was a way to not have to keep track of such things separately. It's absolutely not any sort of deal-breaker and it's not hard to account for it mentally. I only have one big annual expense that I have to do this for, and it's not that hard to mentally divide and budget it accordingly. This is a fairly common complaint, though. I wouldn't want it to autofill budget amounts or automate transactions or anything. Just some sort of progress indicator where I could keep of track of how much and when the goal was, and a suggestion of what I should budget to meet that. This is not the same thing as forecasting income and mentally spending money I don't have.

    I actually, the more I read about it, have come around to see the value of a calculator/goal column as well - but I'm not sure how it would be implemented. I wouldn't want a "goal" column for my monthly bills, for example, and it would clutter the screen. I currently do a bit of a workaround and put my goal in the category name (like Efund ($1000)) so I can easily look at my goal and where I'm at. But perhaps down the road an automated "Rule 2" wizard could be developed, where it asks you "what is your goal?" "What is your due date?" "How much do you have saved now" type thing and figures out your payments for that section. I don't know. I wouldn't use it, personally, but some people obviously would.
  • letseatpasteletseatpaste Posts: 59Member
    Tif_Ann wrote:
    I actually, the more I read about it, have come around to see the value of a calculator/goal column as well - but I'm not sure how it would be implemented. I wouldn't want a "goal" column for my monthly bills, for example, and it would clutter the screen. I currently do a bit of a workaround and put my goal in the category name (like Efund ($1000)) so I can easily look at my goal and where I'm at. But perhaps down the road an automated "Rule 2" wizard could be developed, where it asks you "what is your goal?" "What is your due date?" "How much do you have saved now" type thing and figures out your payments for that section. I don't know. I wouldn't use it, personally, but some people obviously would.

    I like your idea of putting the goal amount in the category name!

    I have no idea what the feature would look like either, I think a good start could just be a separate "Goals" tab without interfering with the main budget screen.

    I do think it'd be a useful feature to be able to adjust on the fly and still keep track of where you're at. For example if you got a bonus or extra paycheck one month, you could apply some extra to some of these rainy day type goals, but still easily keep track of what you need to do in upcoming months without mentally/manually recalculating.

    Sorry to OP, didn't mean to hijack your thread.
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    I put my goal amount, monthly budget amount, and target date for my lumpy expenses in the note field, which appears as a little page icon that appears when you hover your mouse over the category name.

    I emphatically do not think YNAB is weak on planning for quarterly, annual, or other lumpy expenses. Anyone who can use a calculator can figure out how much per month to save for something that's due in six months. If it's a variable amount, I pick the higher amount it could be and record that in the notes field. Also, if I budget $15 to my semi-annual insurance payment this month, surely I can see that number and know it's what I need to budget next month. I could have 50 categories and still be able to budget the beginning of the month in half an hour. Actually, I have about 40, and it's much less of a burden that it's been with any checkbook method.

    YNAB simply does not provide the kind of prospective "planning" features we get used to in other financial programs. If you're even minimally using the YNAB method, you won't budget money you don't have because not only is it dangerous to your bank account, it prevents you from thinking hard about what you're spending NOW.

    I'm sorry, I just get a little cranky about this. There are a lot of people who use an Excel spreadsheet because they feel a need to project a best-case scenario for their savings and debt repayment. If you feel a need to do this or keep manual lists of bills and savings, please, go ahead. But I think that building tons of workarounds into YNAB can lead to a lot of confusion and even disappointment if you don't reach the goal you entered as though it were a fact when you set up your projection. I mean, it's just math, people!
  • letseatpasteletseatpaste Posts: 59Member
    litterbug wrote:
    I emphatically do not think YNAB is weak on planning for quarterly, annual, or other lumpy expenses. Anyone who can use a calculator can figure out how much per month to save for something that's due in six months. If it's a variable amount, I pick the higher amount it could be and record that in the notes field. Also, if I budget $15 to my semi-annual insurance payment this month, surely I can see that number and know it's what I need to budget next month. I could have 50 categories and still be able to budget the beginning of the month in half an hour. Actually, I have about 40, and it's much less of a burden that it's been with any checkbook method.

    All I'm talking about is doing exactly what you're talking about, except inside YNAB instead of the mental notes and calculations. If "Saving for a rain day" is a core value of YNAB, why not make a tool that helps you do that? I know it's just easy math, it's all math, why even use YNAB at all if it's just math?

    Just to be clear, I'm not talking about budgeting months ahead and putting in your paychecks ahead of time and all that stuff. I absolutely think that's a bad idea, too.
  • JoelJoel Posts: 9,547Member, Beta Tester, Beta Moderator
    litterbug wrote:
    I emphatically do not think YNAB is weak on planning for quarterly, annual, or other lumpy expenses. Anyone who can use a calculator can figure out how much per month to save for something that's due in six months. If it's a variable amount, I pick the higher amount it could be and record that in the notes field. Also, if I budget $15 to my semi-annual insurance payment this month, surely I can see that number and know it's what I need to budget next month. I could have 50 categories and still be able to budget the beginning of the month in half an hour. Actually, I have about 40, and it's much less of a burden that it's been with any checkbook method.

    All I'm talking about is doing exactly what you're talking about, except inside YNAB instead of the mental notes and calculations. If "Saving for a rain day" is a core value of YNAB, why not make a tool that helps you do that? I know it's just easy math, it's all math, why even use YNAB at all if it's just math?

    Just to be clear, I'm not talking about budgeting months ahead and putting in your paychecks ahead of time and all that stuff. I absolutely think that's a bad idea, too.

    I enter the due date and approximate amount for any non-month expense in a note in the category. It's just as much entry to type the total / months as it is to enter the total and the due date in a fancy box... and after the first month, it becomes completely irrelevant. Some fancy calculator might be helpful for users, however. perhaps for multiple spotty payments within a category or something.
  • brown685brown685 Posts: 497Member, Beta Tester
    I agree with letseatpaste. Rule 2 feels like the least supported rule in the software.

    A simple tool for setting savings goals would be nice to have. However, it would add some complexity.

    Something as simple as a field in the category definition, and green bar behind the category balance would help.

    The bar would show the percentage of the goal achieved currently.

    A more complex version would also allow you to set a goal date. Which you could then use with quick budget to budget a prorated amount to the category.

    These are small UI changes (larger programing changes), but would help a lot in making rule 2 feel more like a well supported rule.

    James
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    All I'm talking about is doing exactly what you're talking about, except inside YNAB instead of the mental notes and calculations. If "Saving for a rain day" is a core value of YNAB, why not make a tool that helps you do that? I know it's just easy math, it's all math, why even use YNAB at all if it's just math?
    I think you're not reading my posts. The thing that's all math is dividing your goal by the number of months until you need to use the money. I don't need to remember anything, and I divide $245 (for example) by the number of months until the bill is due once, put that in the note field, type the number in the budget field, and I'm done until I reach the goal. In no way is Rule 2 unsupported; it's the reason category balances carry forward unless you zero them out. It's presumed that a user can do simple division by hand or on a calculator. $245/5=$49. It just took me less than 5 seconds to pull up my desktop calculator and push 4 buttons, and it would take me 10-15 seconds at most to open the note field and enter $49 into the budget field, open the note field and enter the target date and the goal amount.

    No one but you can figure out how much money you need to save for your expenses. Why it's a hardship to push calculator buttons the first time you establish your goal and target date and then budget that amount in the category every month is completely beyond me. No financial software I've ever run into will do that for you. If I wanted to track something in a bar graph or have fields auto-filled I'd use Excel.

    What YNAB does is help you identify your priorities, target your spending to support what's important to you, and implement the method prospectively. That's what Excel does not do. Although things like a reconciliation wizard, and better reporting are important to most users and are in development, YNAB is not about automation of simple tasks that are designed to help you budget more carefully and mindfully. YNAB wants you to enter your monthly budget amounts for a reason--to support your efforts to put your money where it needs to go now. It may seem corny or picky, but that's what the program is for.

    I know this sounds ornery. Sorry; I'm not trying to be a bully, and I am not a software developer or designer and have no more say about the choices Jesse and the developers make than anyone else on the forum, and you're certainly free to ask for whatever you want. But to claim that Rule 2 is completely unsupported is simply incorrect so long as you use the software as intended.
  • letseatpasteletseatpaste Posts: 59Member
    litterbug wrote:
    I think you're not reading my posts.

    I was thinking the same thing. :) (no hard feelings here!)

    No one said that Rule 2 wasn't supported at all, just that it could be supported better. Why on earth should you have to pull out a calculator (or pull up one on the computer) or make manual notes when you've got a sophisticated budgeting software right in front of you? Obviously that works, but it's a workaround that a lot of people seem to be doing.
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    No hard feelings here, either. I just don't see YNAB as a sophisticated piece of software; it's pretty lean compared with any other financial program out there. Heck, I used calculators even when using Quicken. I don't have experience with anything else besides Mvelopes, which was such a pain that I didn't last long with it. But you and I have different styles, and there's no problem with that.
  • RodeoClownRodeoClown Posts: 3,833Member, Moderator, Administrator, YNAB Team, Beta Tester, Beta Moderator
    We are talking internally about making it easier to budget for goals, but it's not the number one priority (yet - cloud sync is coming).
    For now there is a calculator button built into the budget field (click the little arrow to the right of the field), so at least you can figure out the monthly budget amount in the software :)
  • brown685brown685 Posts: 497Member, Beta Tester
    I said it feels like the least supported rule, not that it was completely unsupported.

    James
  • akipakip Posts: 213Member
    bjsa06 wrote:
    2. I like to see when a bill is due. For example, if I have a single yearly payment of $3000 for personal insurance due in December I want to be able to visually see it coming. But all I see are recurring monthly budget amounts of $250 (3000/12).

    Thanks

    Back to the OP.

    My solution to this is to enter my goal savings amount in my category name. In your example, it would read something like Personal Insurance ($3000). Then I create a note next to the category name (little icon directly to the left) that houses all the details. The actual due date, my best guess as to the amount, the months I have left to save, and the calculation I used to figure out my monthly savings target for it. Again using your example, if my insurance was due in December I would like to have the full amount saved up by the end of November. That leaves me with 10 months to make this happen. ($3000/10= $300/month.) It is simple to glance at your ever increasing Category Balance to get a quick idea of when this payment is approaching. If I currently have $2700 sitting in that category, it serves as a reminder to me that the payment must be due soon as I'm almost at my savings target.

    When the bill finally arrives, I make a note of the date and how much it cost, and start the process over again (now dividing by 12).

    (This doesn't just work with Annual bills, I do the same thing with my quarterly car insurance payments as well as a couple of bi-annual bills.)

    If you ever have to "rob" from these categories to cover a "murphy" visit or some other bad planning/spending, it is true you would have to start the calculations all over...I think this is a good thing as I consider these categories as a last resort to borrow from. It is these large expenses that we haven't saved up for that got a lot of us into trouble in the first place!

    Alison
  • kixncrumpetskixncrumpets Posts: 9Member
    litterbug wrote:
    All I'm talking about is doing exactly what you're talking about, except inside YNAB instead of the mental notes and calculations. If "Saving for a rain day" is a core value of YNAB, why not make a tool that helps you do that? I know it's just easy math, it's all math, why even use YNAB at all if it's just math?
    I think you're not reading my posts. The thing that's all math is dividing your goal by the number of months until you need to use the money. I don't need to remember anything, and I divide $245 (for example) by the number of months until the bill is due once, put that in the note field, type the number in the budget field, and I'm done until I reach the goal. In no way is Rule 2 unsupported; it's the reason category balances carry forward unless you zero them out. It's presumed that a user can do simple division by hand or on a calculator. $245/5=$49. It just took me less than 5 seconds to pull up my desktop calculator and push 4 buttons, and it would take me 10-15 seconds at most to open the note field and enter $49 into the budget field, open the note field and enter the target date and the goal amount.

    No one but you can figure out how much money you need to save for your expenses. Why it's a hardship to push calculator buttons the first time you establish your goal and target date and then budget that amount in the category every month is completely beyond me. No financial software I've ever run into will do that for you. If I wanted to track something in a bar graph or have fields auto-filled I'd use Excel.


    As a relative n00b to YNAB and having recently set up (and still encountering!) this type of non-monthly category, I found myself with two options:

    1) Create a category for every single non-monthly expense, individually.
    Pros - Don't have re-do math (e.g. full amt/12) as each category is a discrete item
    Cons - lots of (sub) categories, reports mean less

    2) Allocate non-monthly expenses to non-individual categories (i.e. "Books," not "Kindle downloads," "Paperback swap" and "new books").
    Pros - Categories mean more (e.g. "Media subscriptions", not separate for "Wired", "Hulu", "Horse & Hound") when looking at overall spending
    Cons - May not remember when certain subscriptions are due w/o looking them up; may not know what amount in a category is fixed vs. adjustable (e.g. "Music" might contain $10 worth of discretionary iTunes downloads *and* $20 Sirius XM subscription); needing to re-do calculations when paying an expense not in a tidy, 12-mo period and starting over with a tidy, 12-mo period for the next year.

    I ended up with a little text file that reminds me of dates and, sometimes, tacking specific items and due dates on to the category name. Having read this thread, I see I completely missed the hovertext note to the left of the category (thanks, marzydj and litterbug!) and will fill those in instead.

    litterbug: for some of us, it's not about doing the initial calculation, it's about remembering from month to month how/when we did it and if we combined, increased, decreased amounts, remembered to add in xx item. I end up doing the same calculations over and over again if I don't write them down clearly and very specifically, as my brain won't hold the information for more than a fruit fly's age. Having a space in the program, rather than outside of it, keeps things tidy and a bit more serene. I think money serenity is my ultimate YNAB goal!
  • heatventheatvent Posts: 57Member
    I haven't had the discipline to keep this going but I am back to trying again. However, my process is to do an annual budget offline in Excel. I try to forecast net pay by doing a bi-weekly calculation of pay, taxes, 401(k), etc. Also try to forecast all expenses in the month they occur. There is a mix of budgeted expenses that are actual expected costs (insurance, property taxes, etc.) and those that are more or less expected monthly average spending (clothing, food, etc.).

    At the moment, I use both Quicken and YNAB. Quicken autodownloads and does the initial categorization of expenses and aggregates data into one QIF file that I export to get data into YNAB. I also put my annual budget into Quicken which I don't change from the original. I use this as more of a look at how am I doing to where I expected to be. Quicken also keeps investment data like 401(k) that I don't keep in YNAB -- i.e. I use Quicken for my complete financial picture/history and YNAB to budget/control spending.

    I import my Quicken transactions into YNAB which has the same categories as Quicken. I use my annual budget as a guide for my monthly YNAB budgeting but tweak things as there are changes - for example, I am refinancing my house so I will change my payment from what was in the original budget or I may take down spending on groceries if my spending habits have gone down.

    The total process is a bit of belt and suspenders approach but while I think YNAB is a good way to focus on your current spending, it isn't really as strong dealing with your overall financial picture unless you only have a simple financial setup like just a checking account and savings account. Each program has its own focus and strengths - Quicken puts comprehensive account tracking and reconciling first and foremost and YNAB puts budgeting up front so each tends to excel in its respective area of focus.
  • litterbuglitterbug Posts: 3,636Member, Beta Tester
    Kixncrumpets, I too have the memory of a gnat, so having it all available on one screen is important to me, too. Perhaps I'm lucky in that I can cover all of this in 9 master categories with 4-5 subcategories apiece. So far, I've only had to adjust a handful of budgeted amounts, and usually that's because I reduced the budgeted amount because I threw extra 'windfall' money at it.

    Here's what my note for my renter's insurance premium category looks like:

    Starting 8/12: $200/6=$34/month by March 1

    That shows me when I started saving (August, which is when I got comfortable with YNAB and started saving), the goal amount ($200), the number of months left at the time I started (6), and when it's due. Notice that I'll actually reach the goal by February, but that's just my conservative nature acting up. Starting next month, I'll divide $200 by 12 for $17/mo to save it all by next March. If I change an amount for some reason--let's say I have an urgent emergency and have to raid that fund--I again divide the new balance needed by the months left. I haven't seen any reason to track how I changed the budgeted amount in the past, but if I wanted to I could look back at previous months to see when the amount changed, or add a note saying why it changed.

    My Lumpy Meds category note is different because it covers multiple items and is more of a rolling fund:

    Med A: $150/3 mo=$50/mo
    Med B: $80/3 mo=$27/mo
    Med C: $90/mo
    Total budget: 167/mo

    I don't know whether this covers your issues, but it works for me!
  • kixncrumpetskixncrumpets Posts: 9Member
    Thanks, litterbug.

    Yup, that's pretty much what my text file looked like. I've just been putting those notes into YNAB this afternoon, since this thread pointed out the notes feature to me. (Thanks!) I'm currently at 9 Master Categories and nearly 70 Subcategories, and feel I'm being general!! We seem to have lots of potential subcategories, maybe I like too much granularity.

    Looking at that feature, if a set of notes were to be added to the "category balance" column (and that traveled with the column from month to month, unlike the "budgeted" column notes), maybe that would be a nice space to record a particular goal vs. general category notes. That way, if I have 5-6 furniture items I'm saving up for, I or the other have can see which one we're currently saving for (or what percentage belongs to what) quickly.

    I'm doing lots of end-of-the-month calculations, and retroactively underfunding a few categories if they weren't used in order to get rid of debt as quickly as possible. Those moles will be whacked with the emergency fund should they rear their heads. It's not the most conservative route, but I'm most concerned with eliminating debt. I did spend some time today doing a "what-if" projection for when the elysian fields of positive net worth are in sight. Then it was back to reality. :D

    knc
  • fiishfiish Posts: 11Member
    G'day. Long time lurker (of 2 weeks), first time poster.

    For what it is worth here is the method I use. It's a combination YNAB and multiple bank accounts and allows one to budget for something regardless of how often it recurs.

    First the bank accounts... Your bank may be different but here in Australia it's pretty much standard that you can open a near unlimited about of free sub accounts in the online banking portal. A 'regular' Savings account acts as the parent account, but each sub account has a unique account number and transfers can be made to and from it by yourself or any external party - including direct debits and Paypal. Savings accounts also have no monthly fees here in Oz. I have 2 savings accounts, 19 sub accounts and 1 VISA. Having 2 savings accounts means on the VISA card I can push Chq, Sav and Credit to deduct from 3 separate accounts without having to first wire something using internet banking on the phone or computer. It is not possible to access the sub accounts with the card so they're better suited for setting aside money than a daily cash Savings account.

    Anything that's a non-monthly expense has a dedicated sub account - one account per item. e.g. Car registration, clothing, vacations, and so on would have a separate bank account. The purpose of this is to let me see how much has been set aside for that expense regardless of how much budgeted each month. In the example of annual car registration, on the first month the amount in the account might be $10 and so is the budgeted amount in YNAB (under Transport : Rego & CTP). However by month 6 the account will have $60, YNAB will still show $10 budgeted for that particular month but with $60 in the Category Balance column. By 12 months the account has $120, YNAB still has $10/month but $120 in category balance. Then taking something like pet expenses for example. I have 3 categories in YNAB but a single sub account with the bank. The monthly amounts in the YNAB categories of food, litter, and vets all get wired into 1 bank account. When I have a pet related expense as long as there is enough money in the account (which I can check on the YNAB phone app) then I know it's safe to spend that money and stay in budget.

    This means one can keep track of money allocated to date and use a monthly budget. YNAB has sufficient categories for me to track the monthly cost of EVERY single item I buy no matter when it's due but I have far fewer bank accounts than categories. Just work out the annual cost and divide by 12 - that's what goes into YNAB.

    My salary is paid into a dedicated 'Deposits' account - which is also one of the Savings account and available on my VISA card by pushing Chq. This lets me access the funds immediately if need be. Set up in internet banking to happen the day after the money is deposited by work I have automatic recurring EFTs to wire the appropriate amounts into all the sub accounts. YNAB has matching recurring amounts for all the categories - with a number of the transactions across multiple categories being wired to a single account (on the left on YNAB)

    Maybe it seems overkill to have 50 something categories in YNAB and 23 bank accounts but I know where every single dollar goes. If YNAB could incorporate virtual accounts then the bank accounts could be removed but it wouldn't make the process any more complex or easier. The online banking EFTs are automatic. The YNAB transfers are also automatic.

    All I need to do is (1) pay for things on VISA and record this in the YNAB iPhone app at the time, (2) wire the money from sub account to VISA account using internet banking, (3) record the sub-VISA transfer in YNAB on the computer. This third step act as a sanity check and lets me see that the account balances online match YNAB in case a decimal goes in the wrong place.

    This has been the culmination of 4 years of work for me which started out with 5 bank accounts and a homemade spreadsheet made years ago that coincidently looks almost identical to YNAB but long long before I'd heard of it. In fact I'm still in my YNAB 34-day tray but am hoping cloud sync or v4 get released to avoid having to buy it twice in a month. It's just a given now that I'll be paying for it once the trial has expired.

    Hope this helps....
  • letseatpasteletseatpaste Posts: 59Member
    fiish, that sounds like a nightmare having all those sub-accounts. You know you can build up funds in your YNAB categories, right? If you don't spend it, it'll carry over to next month and you can keep adding to it. No need for any sub-accounts at all.
  • Turf_HackerTurf_Hacker Posts: 5,286Member, Moderator, YNAB Team, Beta Tester
    I'm with letseatpaste. I start to feel faint at the thought of attempting to track 23 different accounts. I have a checking account, two savings accounts (two for historical reasons, maybe I can talk the budget committee into closing one), one PIF credit card account, and my Health Savings Account. That's plenty of accounts for me, I let my category balances dictate the purpose of the money in those accounts. I know I have (for example) $10,000 in the emergency fund because that's the category balance in my Emergency Fund category. It doesn't need to live in a special account, the dollars know their purpose by the category balance not what account they happen to live in while they wait for an emergency.
  • fiishfiish Posts: 11Member
    Don't worry, it might sounds like a nightmare but it's no more difficult having multiple accounts than it is having categories in YNAB. In fact it makes keeping track of money even easier. There's certainly no disadvantages. All I did was import a weeks worth of transactions from internet banking to YNAB and right-clicked them to set it up as a recurring event. From then on all I do pay on VISA and wire money from the sub account later on to pay off the card.

    By pure coincidence YNAB has an almost 100% identical layout and maths setup as my 4-year old spreadsheet - right down to the categories, EOM rollover amounts, the lot. It's like someone took my XLS file and ran it up in Adobe Air. I'm not sure how long you've been using YNAB but I can tell you it's better to have the accounts than not. It's been a long term project for me so try it before you knock it.

    It was Jan 28th when I first started using YNAB so I experimented with the EOM rollover and such to get a feel for it. I even went through and recreated the entire YNAB budget 4 times in the first 2 days of trialling it to get a feel how everything works. One experiment was also based on a single savings bank account for bills and while it's hard to put my finger on it and explain here without writing a novel, I can tell you that a minimal number of accounts is actually not as good. This seemed odd due to the purpose of categories but them's the breaks....
  • letseatpasteletseatpaste Posts: 59Member
    To each his own... but I can't possibly see how maintaining multiple accounts and initiating and tracking a bunch of different transfers each month is easier than just divying it up into categories. You can still spend on Visa and then pay it all with one transfer without all the different accounts. Are you trying to keep your Visa off budget or something?
  • fiishfiish Posts: 11Member
    I suppose the major advantage, personally, is it essentially creates sub-categories (to the existing sub-categories within the major categories), and each sub-sub with their own totals. It's a way to group like transactions together without necessarily creating a major category or keeping a note. Think how OneNote has journals, notes and tabs. In my spreadsheet this is expressed using a simple addition formula and a comment on the cell but YNAB certainly has more eye candy and the iPhone all is a good solution on top of that.

    Example... I have 3 categories for pets: Food, litter, vets in YNAB but they go into a single bank account. (Hence having twice as many categories as actual accounts.) YNAB displays how much has been set aside for each of those categories by glancing at the Category Balance column. But I don't want to create a major category of 'Pets' and instead keep it under 'Housing'. But by glancing as the bank account I can see how much in total has been set aside. This comes in handy because maybe there's a special on food so I spent a whole lot more than the monthly amount even going into the cash set aside for vets. But that's OK because the vets isn't for 8 months so the money that would have been set aside for food makes up for it plus there's a bit of savings. It lets me put some harder limits on something I'd term a 'group', but not something that warrants a major category. Yes the YNAB buffer should cover all this so it works out but this applies a little more fine grain control. And like I said, YNAB doesn't seem to be able to group these together with the computer GUI and certainly not on the phone. If YNAB can support grouping items together like that in the future then I can get rid of the bank accounts but right now I need 3 levels of categories and not 2.

    It also allows one to achieve what the OP was trying to do.

    Semi-related: My spreadsheet also displays the breakdown of every cost in a daily, weekly, fortnightly, monthly, quarterly, bi-annual, and annual figure - something I hope comes in the Reports for v4 of YNAB.

    Hope this helps.
  • WillWill Posts: 788Member, Beta Tester
    fiish wrote:

    Semi-related: My spreadsheet also displays the breakdown of every cost in a daily, weekly, fortnightly, monthly, quarterly, bi-annual, and annual figure - something I hope comes in the Reports for v4 of YNAB.

    Hope this helps.

    So not only do you divide everything by 12, you also divide it by 366, 52, 26, 4, and 2? :wink:
  • mozzie61mozzie61 Posts: 2,035Member, Beta Tester
    Welcome to YNAB fiish from a fellow Aussie. One of the reasons your Excel spreadsheet may look similar to YNAB is that is what Jesse used when he first started putting YNAB together. I understand YNAB3 is the first version that ventures away from the underlying Excel framework.

    You've obviously put a lot of thought into your system, and it works for you, but to me it appears way more complex and detailed than I would ever need. We started YNAB with a lot more categories than we have now, partly because I (the budget geek) was completely new to budgeting and was afraid of missing something, and also because we really needed to get a handle on just where our hard earned was going. Over time I've found we dont really need the fine detail to control our spending because the YNAB system and the information it fed back to us has allowed us to live comfortably within broader categories, so where there are closely related sub-categories they have been collapsed into just one.

    To use one of your examples rather than breaking down Pets into 3 sub-categories we just have the single category, which covers anything pet related, although I must admit our one and only pet has his food needs covered in our Grocery category because that's generally where we pick up his tucker. I've found from our perspective it doesn't really matter that much whether I budget and spend $20 for our dog in a specific Pets category, or just add it to the Groceries budget. The vet and regular grooming on the other hand deserve their own category, but I'm happy for that to just be one. Again it's the total we budget and spend in that category that is important to me, not the detail of whether it was vet or grooming, which is in the transaction record if I really need to do any analysis.

    Our big ticket item is credit card debt repayment and that master category does have every debt with its own sub-category, which is for the monthly payment only. The tracking of outstanding balances and associated accounting for interest and charges is done outside of YNAB altogether in an Excel spreadsheet. If I added our credit cards into YNAB as accounts I would have had the fun of dealing with up to thirteen accounts at one stage. Not something I would relish and ultimately of no real value to our goal of complete debt elimination.

    Our budget has just three accounts, Everyday Transaction, Savings and Cash, and around 40-45 sub-categories (I've never bothered to count). This relatively simple budget setup, which takes me less than 10 minutes every day or two to maintain, has taken us from the edge of bankruptcy 21 months ago, to the point where we have paid off nearly 50% of a very large total debt figure, and built up rainy day funds and savings sufficient to ensure that we will never need to use credit cards again. This was done while still enjoying life along the way with family holidays, outings and other recreational pursuits. We've also been able to absorb a few medical Murphies and purchase a number of larger items like a new Weber BBQ. I guess the point I'm making is that while you are adapting your current system to incorporate YNAB, or vice versa, don't be blind to the opportunities that YNAB presents for simplifying things and freeing up your time for things more enjoyable than budgeting (for me it's family time, golf and a new ice skating obsession :)).

    Don't get me wrong, budgeting and taking contol of your money can be an exciting thing, especially when you see the results, but the real purpose in budgeting should be to reduce stress not increase it. That's what I love about YNAB. In it's purest form it's incredibly simple, and easy to maintain, but also incredibly powerful in its ability to highlight any problem areas before they occur, or in the case of the completely unexpected give you real options to deal with it. Good luck with it all, and I'll be interested to see how your system develops as you discover more about what YNAB can do.
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