YNAB Users: How do you use it? Some questions about budgeting

[wintertell]

When reading through the forum I've discovered that many of us are dedicated YNAB users.

I've been using it for about 18 months and love it!!  However,  I recently switched from aggressive debt payoff to savings mode. I find that the ways I'm using YNAB are changing and so have some questions.

For those that use YNAB, I have some questions (pretty graphics are always welcome!):

1) How do you budget your emergency fund and why do you do it that way?

First things first: I have a one month buffer already.

Beyond that buffer, I've been accumulating the emergency fund in a line item. I also haven't been saving up in my categories, so when I have an overage, I have to draw from that emergency fund line item. Which is physically painful to do : )

The other way I have seen saving for emergency funds in YNAB is to take money out of a e-fund line item, and then to forward fund all of your living expenses for the next couple of months.

Any other ways? How do you do it and why?

2) Do you save up for big expenses in your categories? Why or why not?

As I said above, up until now I've been in aggressive debt pay off mode. I've never saved for items in categories before. I just cash flowed all expenses each month. When I tried to save in categories, I always ended up stripping those categories to apply more funds to debt.

Now, I'm considering building up my savings (in addition to our e-fund) by forward funding categories such as Christmas, car insurance, vacation/travel, pet expenses, etc, in advance. A big reason I'm considering changing this up is that we will be dropping down to 1 income soon.

So how do you do it and why? What line items do you save for in advance?

3) Right now I track my NW outside of YNAB on a spreadsheet, though I know others do it by updating their off-budget accounts. How do you use/not use YNAB for tracking NW?

4) Any other cool tips/tricks about how you use YNAB to reach your goals faster? Any features that you love and use in a cool way that you want to share?

For example, when I was paying off my student loans, I made a floating category called "Extra debt payment". I changed the name from "extra car payment" to "extra mortgage payment" as my goals changed. Now, when I run my reports, I can see exactly how much extra I put towards my changing goals.  Pretty cool!

Thanks for all the advice in advance!

[carozy]

I'm interested in the responses also, to get some more ideas.  I use YNAB 4 but not the recommended categories.  I use more logical (to me) categories, so I can use the Reports easily (how much I spent on food, transportation, etc. at the end of the month or year).


1. How do you budget your emergency fund and why do you do it that way?

I've been budgeting my EF as a line item under Rainy Day Funds where everything in the Rainy Day Funds adds up to the amount in my savings account.  Other Rainy Day Funds include my trip to Maine, Christmas, my annual eye exam, contact lenses (bought throughout the year), and a general vacation fund.

I've customized the name categories to be most useful to me.  For example, in the Rainy Day Fund I have:

3 Maine $500 ~ $50 ($200 funded so far)

(Purple is the full name of the fund, green is the amount in it.)

3 = this is my 3rd priority after the 1s (rent, utilities, cell phone) and 2s (groceries, Bart refill).
Maine = basic name of category, my Maine Trip
$500 = the goal
$50 = the amount I fund each month so I'll be able to go to Maine in June.


2. Do you save for big expenses in your categories?  Why or why not?

Yes, in theory.  I see that as the best benefit of budgeting.  However in reality, when my SO wanted us to get furniture all at once and I could pay her back interest free over a couple of months, that happened.

Line items I do actually save for in advance would be things like Christmas, the Maine trip, my emergency fund, vacations, and anything else I'm eyeing for a while.  I sometimes create categories and then delete them or just keep them on there to inspire me until I get to a point when I can fund them.  New bike came and went - I decided my current one is good enough, rental down payment is on there but no funding as yet.


3. Net worth tracking

Reports lets me see Net worth for any time frame, and includes a graph I can play with.  I used to track it through this forum also but haven't always kept up with it.  I check it every month though.


4. Tips

Customizing YNAB is it's strength I think.  I use the name categories and notes to plan and forecast a little.  I can break down bigger goals that way and know when I'll achieve them.  I can see that $500 is where I want to be and put in $50 in the name so I know how to get there.  I can add notes to break things down further if I want, or plan a strategy (very helpful for me with Roth IRA planning).  YNAB training had a bit of a "stay in the moment, don't forecast" lean to it.  I think you can do both if you make use of the flexibility and tools of the name categories, notes, and calculator.

[Travis]

Neat thing about YNAB is there really is no right way or wrong way.  When I first started a few years ago I had no budget at all so I categorized and forecasted everything.  Since then my list of categories has become much smaller, particularly as many expenses become muscle memory and I don't need the program to remind me.  One of the "rules" of YNAB is to budget every dollar.  This isn't optimal, but I fill in the required categories to my ideal amounts each month and keep a float uncommitted in case something goes a few dollars over.  At the end of the month whatever is left over in that float is added to my investments category to be spent next month.

1. Emergency fund - My EF gets smaller every year.  My income is salaried and secure for at least another 3 years.  I'm living off of last month's income so in effect that is my emergency fund.  If I really go over due to an emergency expense then I take it out of my investments category and simply don't invest as much the following month in order to pay it off.

2. The last big expense I saved for was a car a couple years ago.  By the time I was ready to buy I had about 90% set aside and used #1 to fill in the rest.  Early in my YNAB history I saved for every annual fee, tax, and predictable expense I had.  Now I just dip into that float I mentioned in #1.  I can get away with this kind of budgeting behavior because I'm able to save a significant amount of my monthly income so there's really no such thing as a savings event that I can't put on a credit card and take care of the next month.

3. I use Personal Capital for net worth tracking.  I tried doing what you mentioned with YNAB, but it was a lot of extra work to update every account each month.

4. I like that every penny is accounted for (as long as you're being honest with yourself).  For the program to work properly you can't leave anything out.  You can get the true cost for something by averaging out the expense so you can see it right in your face every month so it's not forgotten.

[Rocketman]

I have YNAB categories for anything that we know we will spend. For example we have a car repairs and a home repairs and a new car expense.  We like keeping these catagories growing. If they get full then we stop adding money to them.

I love this concept of saving then buying it. A few months ago my MIL's car died. Her choices were to borrow the money from us for a transmission to put in a car worth 2k (maybe) or finance another used car.  She really couldn't afford either.  We decided to give her our car and buy a new to us car. We were planning and saving for that newer car, so I wrote a check for a nice 2 year old Camry. I LOVE THAT WE DIDN'T FINANCE IT!!!!!!!!!!!!!  A first for us.  The money was all saved up in the "New Car Fund",😎😎😎
Hope my story helps plant the vision of how you want to use your accounts.