Creating a Budget Template
When you first start using YNAB, the concept of assigning only the dollars you have right now can feel new and maybe even scary, especially when you want to plan ahead. Fear not! You can plan ahead while still following the YNAB Method by setting up a budget template.
A budget template uses Targets and scheduled transactions to plan for you future expenses. A budget template will give you the month-ahead view you're wanting without sacrificing the benefits you get from only assigning the money you have.
Building Your Budget Template
How to Begin: Add Your Targets
- Add a target for every category by selecting the category and clicking Create [category name] Target in the right sidebar.
- You'll then choose your target type (options will vary based on the category selected).
- Set any additional customizations (date, frequency, amount, etc.) as prompted in the window, based on the chosen target type.
- When you're done, click Save Target.
If you have a category that you consider as optional each month, feel free to skip it. After you've added targets to your categories, you'll see a yellow Available amount until the category is funded completely.
Look at Underfunded
With a target assigned to every category, Available amounts will be yellow and your Budget will now tell you exactly how much you need to stay on track. With no categories selected, you can see how much money is needed to make this template work by looking in the Inspector (right sidebar). Under the Auto-Assign header, the Underfunded amount gives you the total of your Budget Template. Or, if you have funds available in Ready to Assign, you can also find the Underfunded number by clicking the "Assign" button in Ready to Assign, choosing the "Auto" tab, and looking at the Underfunded option there (with no categories selected).
Remember, your categories are yellow, which just means they're underfunded. Soon you’ll fund them when you’re paid and budget to cover your targets.
Reality Check: Is This Realistic?
Before you start budgeting, ask yourself this question: "Is this realistic?" If your monthly income is less than the Underfunded amount, you'll need to make some changes—but that's okay! You have a much better picture of what you can afford, and you won't come up short.
Adjust your budget template to ensure you can pay for the things that matter the most. Do this by adjusting the targets you've set up—change the amounts or push back the dates. Keep tweaking until your budget template fits your income and your priorities.
Now, it's Time to Budget
You know how much you need for everything, so it's time to look at how much you actually have. Remember, this is where that all-important budget-only-the-dollars-you-have piece comes into play.
In the example above, Ready To Assign is $810, but Underfunded shows I'll need $2,162.19 to meet my template's Targets this month. I'm only going to budget $810 today, and then I'll cover the rest once more income arrives.
Budget for your most important—or immediate—expenses first. Then ask yourself: "What do I need to use my money for before I'm paid again?"
Getting Organized with Due Dates
When you put a date in the category name, that can help you decide what to budget when (click the name of the category to edit). If you know you'll get paid again on the 17th, be sure to budget for every bill with a due date before then. You can even drag and drop your categories to sort them by due date as seen in the GIF below:
It's okay if you can't cover everything immediately—that's why you have a budget! Select those categories and use the Underfunded button to allocate all those dollars with a single click.
If you don’t have enough money to budget for the entire month at once, assign dollars where you need them the most first. Some categories will be fully funded, while others—like Rent in this example—are only partially funded. YNAB keeps you in control by alerting you—with yellow Available numbers—to the categories that need more dollars. In the meantime, the budget reflects reality because it only uses the dollars you have, and you can confidently spend what's Available.
When your next paycheck comes in, you'll add that income in your account register. The Inspector shows you exactly how much you need to fully fund the rest of your categories. In this example, there is more than enough to cover the Underfunded amount:
If you have dollars left over, and all your categories are green, you have some (really great!) choices to make. Do you want to budget more for big expenses down the road? Or save extra for that vacation you've been wanting to take? Or maybe you'll even start budgeting for next month. It's up to you and your priorities.