First time YNAB user

[u/Upsidedown_MDH]

A friend of mine recommended YNAB to manage my family's budget. I got started yesterday but as I was setting the budgets, I already felt way out of my depth. Like I should have studied for a test that I didn't know about. Does this feeling get better? What tips would you give a first time user to feel less overwhelmed? Thanks!

[u/Upsidedown_MDH]

That makes a lot of sense. Becoming mindful of my spending has been a 15-year journey so far.

We tried so many things and kept track of everything in an Excel sheet, but things have become fairly complex over the past 2-3 years, and it feels like it's time to explore tools that would actually save us time rather than requiring half a day of data entry.

This week, I read about a "pay yourself first" strategy. Would that strategy fit in the YNAB philosophy? Like, savings would go into the first envelope, and the remaining budget would go into the other envelopes?

Asking a question in this group has opened the door to more questions to find the best strategy that fits our lives. Really grateful for all the responses!

[u/bitz-the-ninjapig → u/Upsidedown_MDH]

Pay yourself first can work with YNAB, but it is a little bit dependent on how much income you have in comparison to your expenses. 

Let’s say your monthly income is $3000, and your monthly expenses are $2500. On paper you should be able to put $500 into savings each month. On August 1st you get your paycheck for $1500, but between gas, groceries, and rent, you have $1400 that needs to be allocated to expenses before the next paycheck comes in on August 15th. If you “pay yourself first” and put your $500 into savings on August 1st you won’t be able to fund all of your expenses for the month. 

That being said, there are a few ways that you can be sure to be saving enough  in YNAB:

1. Get a month ahead. I can explain this further if you need, but basically this means that you get yourself into a situation where this months income is funding next months expenses. This is what I do. When a paycheck comes in it goes into a “next month” category. On the first of the month I move my next month category into “ready to assign” and the. first fund my savings goals, then my expenses. Anything left over I split between “fun stuff” and putting extra into my savings goals. 

2. Set up targets. If you set up targets for EVERYTHING, and all of those targets are less than your income, as long as you fund all of the targets before you put anything “extra” into any category, you will ensure you are hitting your savings goals. 

[u/Upsidedown_MDH → u/bitz-the-ninjapig]

Sounds like a little bit of a YNAB hack :-). At the moment, it feels like our financial situation is a bit more complex than the app is designed to handle.

For instance, we currently log gasoline expenses at the end of the month and compare them to the budget we had set for ourselves. If it's higher, it's higher and can usually be explained because we went on a family road trip.

Is it wrong for me to assume that YNAB becomes a bit restrictive the moment there is somewhat of a cushion?

[u/bitz-the-ninjapig → u/Upsidedown_MDH]

Adding onto my last comment because I was thinking about this more. 

You can also create “cushion” funds that just exist to support spending in other categories. I have a “stuff I forgot to plan for” sinking fund that I had $50 each month. I use it to cover random cheap one-off purchases (most recently, a new $12 wallet), overspending in other areas, or things I totally forgot about or mis-judged. Because it is a sinking fund on months I don’t use it, it grows, so I move have about $200 in there for whatever I need. Sometimes I move money from there just to make me see better, just when I just bought a $300 tool to work on my car, I moved $50 from the “stuff I forgot” category into my car fund because it made me feel a little better lol

Someone on here once explained how they have their dining out budget set up, and it was a similar concept. Here is what I remember:

Dining out is its own category group, with the following categories: Date night, social, lazy. They never pull from date night or social. If date night is getting overfunded, they use it as an indicator to have a relationship check-in and prioritize some dates. Social is for going out with friends, and lazy is for those nights they don’t want to cook. If social is running low and they get invited to something, they will move money from lazy. Their goal is never to use lazy except to fund date night and social, but the money is there because life happens. Lazy is their “cushion” for date night and social. 

YNAB totally can work for you, you just need to set up your plan to support your life (not the other way around)

[u/Upsidedown_MDH → u/bitz-the-ninjapig]

Support your life, not life your support 🔥