Tutorial for: YNAB and YNAB4 Suggested skill level: beginner
One of the most frequently raised issues among new YNABsters is the monthly layout of the YNAB4 Budget screen*.
Perhaps you’re paid once a month on the 15th and you want your “month” to run from the 15th of one month to the 14th of the next. Or maybe you’re paid every two weeks and you want the “month” time blocks to be “two week” blocks instead.
Or are you struggling because you have big payments due early in the month so you pay them in the previous month? It’s confusing to budget this month’s income to pay next month’s expenses and you just wish you could adjust the dates on the budget months for goodness sake!
The range of situations and resulting requests seems infinite.
The answer to every single permutation of this can I change the start date question is a simple, No.
But before you throw your hands up in the air and abandon YNAB for not being flexible and bending to your needs, read through my tips below. Hopefully you’ll start to understand why the monthly structure of the YNAB budget screen is a moot point and a non-issue.
Lose focus, gain insight
Have you ever looked at one of those paintings where there’s a picture in a picture? The only way to see the hidden picture is to let your eyes get a little fuzzy and let your mind relax a bit so you lose focus on the obvious picture and allow the hidden picture to show through.
When dealing with the overall structure of your budget, it helps if you can let your mind relax just a tad because the physical structure of months and accounts and columns — that’s the obvious picture. The continuity and flexibility of YNAB — that’s the hidden picture.
It’s also the magic of budgeting with YNAB.
Follow these steps and and keep these points in mind to avoid getting hung up on start dates, paycheck dates, or billing dates:
Start at the Beginning: Accounts
Forget the whole Budget Screen and categories thing for a minute.
It is critical that you get your Accounts set up properly and that all of your initial balances are entered correctly from the outset. You need to know that your Available to Budget [ATB] amount is correct from the beginning.
Build on Core Known Facts not a Fuzzy Random Hodgepodge of Recollections
Make sure you carefully consider any accounts you’re thinking of putting off-budget and avoid guessing about on-budget account balances.
Investment accounts and really long-term savings are good/okay to leave off budget (respectively). But best practice is to put all of your short-term and/or regular savings accounts on-budget. This includes all the miscellaneous accounts you set up for specific savings goals.
If it’s liquid, it should be on-budget.
That said, it is more important to start an account with the correct starting balance than it is to start YNAB with all of your accounts in place. In other words, if you do most of your spending from your checking account, then start YNAB with just that one account — but make sure you have your correct starting balance.
If you want to list all of your accounts at the beginning but aren’t sure of their starting balances, it’s better to start with a $0 balance than to start with an incorrect balance.
Taking Stock: What’s Available?
Once all of your accounts are entered with correct starting balances, now look at the Budget Screen and your ATB.
Think of your Available to Budget [ATB] as a big pile of physical dollars and coins piled on your kitchen table. That’s what you have to work with.
Now think of what you need to do with your money until the any new money will be put on your kitchen table (i.e. your next paycheck). What does this money have to do?
Taking Charge: Assigning Jobs & Setting Priorities
Start dividing up (budgeting/allocating) your pile of dollars and coins into smaller piles (budget categories) according to what needs to be paid immediately/soon/before the next paycheck.
In your life, what’s the next bill you have to pay? What’s the next purchase that needs to be made?
If it’s the 1st of the month and you have to pay rent today, then allocate money to rent. But what today is the 10th, payday is next week, and you’ve already paid your rent and utilities? Skip those categories and ask yourself where does this money have to go? If the gas tank is close to empty, allocate money to your Gas category. If the cupboards are bare, budget money to your Groceries category.
Once your immediate bills and expenses are covered, consider a longer timeframe. What’s happening next week? What’s the next bill coming due? What’s the next big event coming up that you need to have money for?
Remember, you’re allocating until you get paid again, not until the 1st of the month.
Know When to Stop
Once your Available to Budget [ATB] hits $0, stop. You can’t budget beyond zero.
The idea is to give Every Dollar a Job. But if you budget beyond $0, now you’re creating Monopoly™ money and that’s not good.
If you run out of money before you run out of jobs… you’ve got some decisions to make.
The critical question is what does this money have to do before I get more money. So if you run out of money before you run out of jobs you’ll need to go back and reconsider the piles you made.
Where have you allocated money that can wait? Can you get by with spending a little less on dining out? Maybe you can put off buying that widget for a while?
If things are tight, it may take effort and strategic juggling to move money here and adjust piles there until the money is divvied up into reasonable/workable piles.
Time Flows On, Tomorrow’s Just Another Day
Calendar months aren’t hard resets. They’re simply a universal, convenient means of marking the passage of time.
Just as time is fluid in real life, so is it in your YNAB budget. Budget columns are not physical containers with impermeable sides.
If you budget money in June but don’t spend it, those funds easily flow right through the lines into July and beyond. So forget the name of the month and concentrate instead on how much is in the Balance column of each category [referred to as Available in nYNAB].
I would go so far as to say that the Balance/Available column is the unsung hero of YNAB. It’s easy to get all hung up on the Budgeted column but it’s the Balance/Available column that holds the answers.
Duck, Weave, Adjust — and if you take a hit, Roll With the Punches
So you budgeted your ATB down to $0 in June and but it’s July and you won’t be paid until the Xth.
When you allocated your last paycheck you did your best to guess how much you’d need for gas but you forgot about that trip over the long holiday weekend and now your tank is on empty and your Gas category balance is $0! You haven’t budgeted anything yet in July because you haven’t been paid yet in July.
Where the heck can you take money from if there are no budgeted values yet this month!?!
Breathe. Don’t panic. (yet)
Just because your Budgeted column is empty at this point doesn’t mean your categories are empty.
Yes, your Gas envelope is empty. You’ll need to find an envelope (category) that isn’t empty and reallocate some funds. You may even need to take a little from several categories in order to scrape together gas money.
Look down the Balance/Available column in July for categories with a positive carried balance. Maybe you budgeted $50 to Spending Money in June but you’ve only spent $20 so far leaving a carried Balance/Available of $30.
In the July Budgeted column for Spending Money, enter -10.00. Your Balance/Available will be reduced to $20 and your Available to Budget [ATB] will show $10.00. Now you can budget that 10.00 to Gas.
[In nYNAB, click on the green “pill” in the Available column and move $10 directly to your Gas category.]
New Paycheck, New Allocations
Each time you receive new money, the process gets repeated.
With each new dollar (or Kroner or Euro or Shekel or Peso) that enters your budget, the question is always, What does this money have to do before I get paid again?
What bills need to be paid and what plans are on the horizon that are competing for each dollar? And which of those jobs is most immediate and/or important?
Now that you have new money to allocate, you’ll return to the question of Gas and Spending Money. Budget a realisitc amount to cover all of your gas needs until your next paycheck/income arrives.
And that money you took from Spending Money? If there’s enough in your ATB to put the $10 back, it’s as simple as deleting the negative number in the Budgeted column. [Deleting a negative Budgeted number will decrease the ATB and increase the number in the Balance/Available column.]
Nothing’s Written in Stone; Adapt & Move On
YNAB is all about flexibility. It’s also about dealing with reality, not projecting or predicting some idealized version of your finances.
Nothing you “write” down is written in stone. It’s not even written in ink. Adding to (and subtracting from) previously budgeted numbers is not only allowed but expected — especially before you’re buffered and doubly-especially when you’re paid only once a month at some point other than the 1st day of the month.
In other words, don’t feel as though it’s wrong or cheating or against the rules to adjust a previously budgeted amount.
Returning to the 30,000′ View
Once you realize that time and money flow smoothly from January 31st to February 1st or from June 30th to July 1st without interruption or ceremony, you can bring your focus back to seeing the months represented in YNAB.
The 5th cross hatch mark has exactly same value as the first four marks. It is its diagonal positioning that gives that 5th mark its significance. The 5th crosswise hatch is a way of bundling whatever we’re tallying.
Months are a way of bundling days. A convenient way of marking the passage of time. But no one day within each month lasts any longer than another.
Your current job may follow a pay schedule of every other Friday but your next job may pay once a month. You may get paid on the 1st and the 15th while your partner could be paid a base salary on the last Friday of each month plus receive quarterly performance bonuses.
Pay schedules are not universal. And they are not fixed or permanent.
YNAB structures the budget based on months because months are universal (assuming we’re all using the Gregorian calendar, naturally). My months start and end on exactly the same schedule as yours. They are a way of speaking a universal language in relation to time.
Some of your bills will be due on a specific day of each month. Rent is a good example as it’s often due on the first of each month. Other bills are due after a period of time — invoices are often marked due in “30 days.” People often structure their shopping habits around their work schedule — many couples do their shopping and errands on weekends.
The key to dealing with a monthly budgeting structure in a life filled with an endless array of different, non-monthly time schedules is to let your mind get a little fuzzy so you can “see” the flexible continuity of envelope budgeting. The question to ask, every single time, is what does this money have to do before I get more money? Then allocate each dollar to one of those jobs. Rinse. Repeat.
*This tutorial/article was written specifically about YNAB4 or earlier which had a spreadsheet-style layout of columns and rows. During their move to a web-based version of the program (nYNAB), the Powers That Be over at You Need a Budget made several significant changes to the look and functionality of the software. They eliminated the monthly columnar spreadsheet appearance. But they kept the basic framework of monthly budgeting.
The questions of non-monthly frameworks still arise and the answers remain the same — it’s not about pay schedule it’s about the month being a universal period of time.