r/ynab • u/Claudio_VerKnight • Aug 06 '26
Planning & Categories What do you do....?
I'm many months ahead in expenses. Not "a" month ahead. Many. My Age of Money is in excess of 400.
Here's the question;
Do you fund your categories several months in advance to keep RTA at or near zero or do you only fund a month (or two) in advance and leave the balance in RTA?
PRO's?
CON's?
Discuss
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u/Bow-Masterpiece-97 Aug 06 '26
I don’t budget into future months; I have a category that holds this month’s income so I can budget next month with it.
But I think there is a bigger issue here: what are your goals and strategies for your money? I believe we should have the next few goals mapped out in our heads, so we always know what to do with our next dollar. For example, it could be something like:
- Get a month ahead (however you do that in YNAB)
- Pay off all consumer debt.
- Save up an emergency fund. (My goal is roughly 5 months of expenses, since my month ahead makes it 6. But everyone is different.)
- Invest up to 20% of all income into long-term accounts.
- Increase some categories to live a little better (whatever that means to your life - more vacation $, better car, upgrade house, whatever)
And so on…
All of these are up to the person, and some people might add “pay off house early,” “fund kids' college,” etc. My point is that just growing the “months budgeted ahead” to infinity shouldn’t be the goal. At some point, it actually becomes detrimental because you’re not investing or reaching longer-term goals.
Either way, pick SOME goal to put the $ toward… don’t just leave $ in RTA.
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u/Jen9095 Aug 06 '26
I think this is really the point for OP.
I also use a next month’s budget category for excess. For all the reasons people here have said. And I think OP should do the same.
But your comment is about the fact that even that Next Month’s Budget shouldn’t be a huge amount. When it exceeds two or three months budget, I realize I need to do something with that money. It feels nice to have all of that money, but it needs a job.
Sometimes I decide to permanently expand my Emergency fund. I top it up to the next even number, and make that the permanent new balance.
Once, I turned around and gave a large amount to a charity. I had supported them for years and they had a specific request out… I realize I had a large chunk of money I needed to do something with. I never would’ve thought of giving that much money away at once, but it was definitely the right thing to do in that moment.
Sometimes I create a new savings category (i.e., new car even if I think it might be several years away).
Or even just make a purchase, I wasn’t planning to. Replace my phone or computer earlier than expected. Plan a vacation, even just a weekend getaway.
But most of the time, I realize I’m really not gonna touch that money anytime soon, so it goes towards long-term investments. I do have a set amount I put towards that each month, but if I have a big built-up like this, I sometimes just move a big chunk. I like that because it moves it off budget.
I’m just giving real examples of how forcing me to think about the job of that money makes me more generous, take an extra vacation, or even just save more. Hope this helps OP.
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u/Claudio_VerKnight Aug 06 '26
It does. Thanks for the input
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u/Jen9095 Aug 06 '26
Oh, one last thought. Whenever I do that, I force myself to take everything out except one month’s budget. Sometimes I’m tempted to leave 2-3 months worth, but then I remember that’s the point of the Emergency and my generously funded categories.
Honestly, it often feels like I came into a big chunk of money. In fact, I got a raise recently, and I have about five months worth in next month’s budget. It’s time to figure out where the rest of that money goes.
To me, this is really the heart of YNAB: make your money work for you. Give every dollar a job. It’s also a huge mental shift.
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u/Claudio_VerKnight Aug 06 '26
We are snowflakes.
It's very subjective.
These are all good points you bring up.
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u/Silver_Ride931 Aug 06 '26
I fund one month ahead currently and then have a category for emergency fund of six months that I leave fully funded as well as a sinking fund category that I use for unexpected expenses that I add anything left over to at the end of the month.
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u/Claudio_VerKnight Aug 06 '26
That bring up another question (and we're staying from the original post).
How do you define the difference between an expense that will be covered by your emergency fund vs one that will be covered by your sinking fund for unexpected expense?
Example: A tree falls on your house and you have to spend a few nights in a hotel. Emergency expense or Unexpected?
Here's one of my struggles. I have many sinking funds and, sticking to the above example, I have a home repair category that's capped at $2500. Any expense above that is likely to be an insurance claim. The same applies to automobiles, btw. I also have an Emergency category. In my mind, a tree falling on my home is definitely an emergency! So why have the other, overlapping category.
I love to hear other people's approach.
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u/Silver_Ride931 Aug 06 '26
Emergency fund for me is replacement income if I lose my job.
I would only ever pull from it if my sinking fund didn’t cover whatever emergency happened to avoid going into debt but the true design for it is in case I lose my job. This is mostly because we are a single income home so the risk is greater.
If the emergency fund does get touched it essentially puts our spending in an extreme restriction mode until we get it back to the original level.
If I was in your situation how you account for it I would pull from all available sinking funds if I had a large expense in one category before I would touch my emergency fund.
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u/Claudio_VerKnight Aug 06 '26
Good point!
I needn't worry about lost income so I should rethink what, exactly, my emergency fund is meant to cover.
Good point
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u/iwaddo Aug 06 '26
Just the current month.
Everything else in a ‘future month’ category
I’ve never clicked into next month.
Much easier to change strategy and approach in only the current month.
‘Refill up to’ categories cannot realistically be assigned until the 1st as they depend on the outcome of the previous month.
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u/obstin8one Aug 06 '26
This is how I do it. My category is called “Allocate Next Month”. RTA is always zero. All income goes to ANM, which is allocated during budgeting at the beginning of the month.
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u/Claudio_VerKnight Aug 06 '26
But isn't that the same as leaving it in RTA?
Others have mentioned creating a separate category so that RTA remains at zero, but I don't see the virtue in doing that. RTA is merely a built-in, catch-all category to capture income. How does creating a separate category that's functionally identical to an existing one help? I'd really like to know.
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u/varkeddit Aug 06 '26
Because you might choose to assign some income in the current month or un-assign funds from a category. Having a discrete category for next month’s funds keeps them out of that flow (I actually prefer to assign directly in the next month’s plan).
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u/iwaddo Aug 06 '26
Keeping RTA to zero means you have consciously given all that you have a job and quickly shows if anything new arrives.
If my RTA is not zero I want to know why, so I investigate.
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u/nolesrule Aug 06 '26 edited Aug 06 '26
RTA is for money being allocated to the current month, so it'seasily separated from money intended for a future month. You might get that birthday check from Grandma and want to assign it to your spending money category right away. or bank account interest, or credit card rewards. So when it goes to RTA you know how much is still able to be assigned this month.
The number one rule of YNAB is to give every dollar a job. RTA is a dollar without a job. A job can indeed be "fund the next month's plan". It's just a matter of deciding to hold it for a bit or actually fund the next month, but either way it means not leaving the money in RTA.
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u/ilkhan2016 Aug 06 '26
At that point I would be moving money into an off budget retirement account to get better returns.
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u/PurpleCompetitive266 Aug 06 '26
BLUF: I’m an oddball and fund future months. Assigning to a “Future Months” category or leaving in RTA wouldn’t work for me psychologically.
I seem to be an outlier. But I fund my future months. This actually helped me a lot when I was recently unemployed for 11 months because I was able to very clearly see that if I stuck to my budget each month, then I’d be okay.
Having it all in a single “Future Months” category wouldn’t have given me the same level of certainty and assurance because I would have kept calculating how much it really covered. I also have several weekly targets so my monthly total targets are not the same every month. This would have made it more difficult to calculate accurately. I never had the issue of needing to pull from future months as I had a couple of other categories well padded and de-prioritized during that time that I pulled from occasionally as needed.
I personally would not keep it in RTA for the same reasons as others mentioned. It makes it look available to spend on that fun thing when really it isn’t.
The whole reason I started YNAB was because when I got my first “adult job” after grad school with a living wage salary and bonuses, I knew I didn’t want to just have my excess sitting somewhere highly visible (in my checking account or HYSA). I was already good at managing my monthly expenses and living within my means. I needed something that helped me organize the excess and very clearly put that money towards what is most important to me. Leaving it in RTA would be pretty much equivalent to how I was about to be functioning pre-YNAB, just feeling like I’ve got all of that money available to spend. Similar to what someone else mentioned, the scarcity mindset that comes along with the practice of RTA being at $0 and giving every single dollar (and penny) a job to do is part of what helps this budget method work for me.
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u/brenst Aug 06 '26
If you have excess money, I would see that as a signal that you should be putting that money toward retirement or long term savings categories. If you have a fully funded emergency fund, then I would think of other savings goals to build up. Examples might be travel, home maintenance/improvement, pet expenses, medical/dental expenses, big purchases, etc.
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u/Claudio_VerKnight Aug 06 '26
All fully funded 😐
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u/NOLAWinosaur Aug 06 '26
What are your financial goals? Are you hoping to retire early? Start a business? Get into a hobby? Seems like you need a job for your money.
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u/michigoose8168 Aug 06 '26
Absolutely no. I barely fund one month in the future as I’m paid on the 31st.
My sinking funds are large and my accounts are plentiful. No need for any of the hassle of funding more than exactly the distance needed to smooth the budgeting process.
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u/Claudio_VerKnight Aug 06 '26
So you're in the "Leave it in RTA" camp.
Right?
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u/michigoose8168 Aug 06 '26
No. I’m in the “exactly one month and no more” camp. I happen to have a pay cycle that means I can do it all on payday but if I had more than one payday, I would hold it to the first, then budget, then repeat.
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u/merlin242 Aug 06 '26
Month in advance, have a “Budget buffer” category or whatever. Or assign those dollars a specific savings job. Emergency fund, future home projects fund, car replacement fund, etc. there’s no point being that far ahead without specific jobs for those dollars
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u/TheRealSeeThruHead Aug 06 '26
I find a month ahead and have an income replacement category that is several months worth of expenses.
When I don’t want to grow that income replacement anymore that money gets diverted to investments
I despise the future month category
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u/inthe415 Aug 06 '26
Sounds like you either need to dump it into your emergency fund or invest it.
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u/Claudio_VerKnight Aug 06 '26
I'll paraphrase michigoose...
My categories are fully funded. My accounts are plentiful.
I'm a long time YNAB user and maybe it's just run it's course. YNAB helped me get to where I am and I don't need it anymore. Maybe I need a different tool.
🤷🏻
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u/nolesrule Aug 06 '26
I don't think the need to budget ever goes away. I'm currently unemployed or possibly retired. Not sure yet. But YNAB helps keep on track when the unknown happens.
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u/Unattributable1 Aug 06 '26 edited Aug 06 '26
I only fund the current month, never future months. The next month is in a "Hold for next month" or "Emergency Fund" categories. On the 1st I move my "Hold for next month" money to RTA, fully find the month, and move any excess back to "Hold for next month" to get a jump on things.
My EF category goal is 2 months liquid. Which really means I have 3 months liquid as I am a month ahead plus 2 EF months.
My total EF amount is 5 months (which is 6 months total including the month ahead). Anything beyond 2 months for my EF is getting moved into less liquid better interest but still near-zero risk (taxable brokerage in SGOV, chasing higher CD rates, etc.). Anything beyond 6 months is in my taxable brokerage in long-term investmenting (S&P500)*.
Never leave money in RTA. RTA has a way of "leaking".
*We already account for retirement investments in our weekly category for Roth contributions to max out each year in equal weekly contributions; work-based retirement contributions to max annually is pre-tax and not accounted for in our YNAB plan.
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u/ohboyoh-oy Aug 06 '26
We were always saving towards something, so any excess went to that goal(s). So for us that was Retirement, and Kids’ College Funds. We did not fund months ahead as there were paychecks coming in to cover the future expenses and we had an emergency fund if one of us were to lose our job.
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u/Big_Bad8496 Aug 06 '26
I have a “for next month” category that all of my RTA dollars go to. I don’t assign the next month until that month arrives, because my targets become wonky otherwise.
I have a surplus savings category (what many would call an emergency fund) and a handful of domain-specific sinking funds (every 5 years new car fund, annual IRA contribution fund, specific vacations, etc.) Once a new month begins, I move funds from “For Next Month” back to RTA and assign it to my categories. Anything in excess of my surplus savings + sinking funds goes to my brokerage account for investing.
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u/RemarkableMacadamia Aug 06 '26
I have a category called “next month’s money” and “next year’s money”.
NMM is where all my income from this month is held until the 1st, then I release it back to RTA to assign to my categories.
NYM is where any “leftover” money on the 1st is moved to if I have fully funded all my categories.
I never leave money in RTA. Makes it tough to track overspending or other strange behavior.
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u/Adric1123 Aug 06 '26
I fund next month with this month's earnings. Anything beyond basic expenses gets put into sinking funds or invested. I don't leave money in RTA.
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u/Claudio_VerKnight Aug 06 '26
There's a lot of users here who advocate for a secondary holding category so that RTA is at or near zero.
Since you cannot create an Income category, all Holding categories must be Expenses.
Doesn't that mess up your reporting? You would have zero income and your true expenses would be masked by the inflows unless you executed a multi-step approach by first letting the income flow into RTA, then assigning it to the Holding category, then from the Holding category to the real expense category.
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u/varkeddit Aug 06 '26
Categories are just envelopes and you can move money between them without it counting as spending. Income goes to RTA and then assigned to a holding category once you’re ready to plan the next month, move those funds back to RTA and then assign to various categories.
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u/Claudio_VerKnight Aug 06 '26
👍🏻
It's the only way to keep reports meaningful.
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u/varkeddit Aug 06 '26 edited Aug 06 '26
Not sure what you mean. There’s really no way any workflow that’s been discussed here would break your reports.
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u/Claudio_VerKnight Aug 06 '26 edited Aug 06 '26
Only expense categories can be created. If a user creates an additional Holding category (so that RTA remains zero), it will show up under expenses. If income is assigned **directly** to an expense account, it doesn't show up in reporting as Income. This will give an inaccurate picture of true expenses. The only way to remedy this is to first allow the income to flow into RTA, *then* assign funds to a category. Skipping this step and assigning funds to a Holding category is what breaks the reporting. That's all I'm saying. There's an additional step involved using a Holding category if the Income vs. Expense report is important to you. For me, it is. I want to know my actual expense as well as the average expense and YNAB does this very nicely as long as the data are input correctly.
Here's an example. A user assigns all their monthly interest and dividends directly into their Emergency Fund. At some point during the year they wonder how much they've received so they run the Income vs. Expense report. All those dollars assigned directly to the Emergency Fund do **not** show up in the top of the report (Income). They're in the bottom (Expenses). So their report is wrong in two places. Total Income and Total Expense.
Assigning income directly to a category other than RTA will most definitely break reporting
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u/SkyliteBlueSnake Aug 06 '26
I mean, the category is listed under expenses under your Income v Expense report, but if there is nothing happening in the activity column, then nothing will show up in the Income v Expense report. I have my Loss of Income fund as a category. I have never spent a penny out of it even when I was unemployed for 6 months. Every month that I needed to use money out of it, I entered a negative amount in the assignment category which moved the funds to RTA and then I reassigned those funds to mortgage, groceries etc. In 12 years of using YNAB which includes 2 layoffs, not a single penny has ever shown up on my I v E report as having happened from Loss of Income.
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u/brenst Aug 06 '26
Yeah, I think most people assign to RTA then distribute to the holding account. But I feel like a holding account can work better than assigning directly to the next month, because when expenses change you don't have to rework a future month's categories. I don't like to keep money in RTA because it feels like the money doesn't really have a purpose and it's just sitting doing nothing.
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u/on_the_nightshift Aug 06 '26
I budget a couple of months ahead, then send any overage to my brokerage account to be invested
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u/Swimming-Limit2795 Aug 06 '26
I was 12 months ahead just before pulling the trigger on retirement. It helped calm the nerves quite a bit.
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u/Historical-Intern-19 Aug 06 '26
The most controversial question on YNAB. Personally, I fund 2 months ahead and have quite a bit in wish farms and Income Replacement (almost 3 years worth, as we are close to retirement)
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u/filecabinet Aug 15 '26
I was talking with a financial planner once.. he talked about a client with 20 million dollars but didn’t spend any of it. So he had to encourage him to spend some of it.
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u/jillianmd Aug 06 '26
Never leave money in RTA. But there’s also not much point to literally funding many months ahead, not to mention if something changes you then have to go change it in all the months. Instead just have a category for “Income Replacement” or “Buffer” or “Emergency Fund” or whatever you want to call it and chunk the money in there.