Starting in Overdraft

One of YNAB's fundamental concepts is budgeting only money that you already have. If your bank account is negative, though, you don’t have any money to budget. 

So what do you do?

Here’s how to work your way out of overdraft. For good.

Getting Set Up

Create a category for each of your expenses. You’ll need more detailed categories right now to help you get on top of your expenses.
Create a repeating scheduled transaction for each bill. This will give you a yellow alert in the corresponding category reminding you to budget for the upcoming bill.
yellow reminder alerts on the available amounts for categories like rent, electric, water, and internet
Add goals for other important expenses. For categories like groceries and gas, add a monthly funding goal in the amount you’re planning to spend. Once again, you’ll see a yellow alert in the category reminding you to budget more.

At this point, you’re all set up and ready to go! Don’t let the yellow worry you, it’s there to guide you and will help you move forward.

Spending and Budgeting

Now, you'll record your spending. Don't worry if you haven't had your account go positive yet – your spending is going to help you decide the most important actions in your budget!

Record spending in the account where it occurred. If you haven't had a chance to budget for the spending yet, you'll see red in the Available column.

a grocery category with $0 budgeted and a negative $87.50 activity amount, resulting in a red overspent available amount

When you're paid again and your account balance is positive, budget to cover any overspending first. Any overspending that's not corrected this month will be subtracted from next month's To be Budgeted.
If the overspending has been covered and there’s still money to be budgeted, start budgeting toward goals and scheduled transactions. You may find it helpful to drag your categories into a priority order and then when you have money, you can just budget your way down the screen.

Continue to track your spending, repeating the steps above. Question your spending as you track and you'll find places to cut. It's important to only spend on your most critical expenses until the overdraft is gone - but seeing less red will let you know you're making progress!

Want some personalized help?

Starting in overdraft can be a challenge – we're here to help. Check out our Set Up Your Budget Workshop and ask your question! Or send us a message any time and one of our support reps will get right back to you!

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