Creating a Budget Template
When you first start using YNAB the concept of only budgeting what you have can be scary, especially when you want to plan ahead. Fear not! We're here to help you set up a budget template.
A budget template will give you the month-ahead view you're wanting without sacrificing the benefits you get from only budgeting what you have. This is an overview, but you can read the whole blog post for more.
Start with Scheduled Transactions
In your account register, enter all the scheduled transactions you know about—you can even make them recurring if they happen frequently. Your budget will help you plan for these expenses by displaying an alert—categories with upcoming transactions in the current month that aren't budgeted for will be orange.
Add Your Goals
Next, look at your budget. Some categories will be orange thanks to your scheduled transactions. For all the other categories, set up goals. There are a couple different types of goals. Here are some tips to get you started:
- If you know exactly how much you'll need, and when you'll need it—$600 for car insurance in February, for example—set up a Target Category Balance by Date goal. YNAB will do the math and tell you how much to budget each month. This is a great option for savings goals like that big vacation or a new computer.
- For things you'll need to budget for each month—like $500 for groceries—set up a Monthly Funding Goal.
Look at Underfunded
With your transactions scheduled and your goals entered, your budget will now tell you exactly how much you need to stay on track.
Remember, your categories are orange, which means they're underfunded. It's time to budget dollars so you have enough to cover your transactions and reach your goals.
Reality Check: Is This Realistic?
Now it's time to ask yourself an important question: Is this realistic? If your monthly income is less than the Underfunded amount, you'll need to make some changes—but that's OK! 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 goals 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 only budget the dollars you have piece comes into play.
In the screenshot above, To be Budgeted is $1,700, but the total Underfunded is $2,080. I'm only going to add $1,700 to my budget today. (I'll cover the rest once more income arrives!)
Budget for your most important—or immediate—expenses first. Ask yourself: What do I need to use my money for before I'm paid again? It's okay if you can't cover everything—that's why you have a budget! Select those categories and use the Underfunded Quick Budget button to allocate all those dollars with a single click.
Some categories are fully funded, while others—like Rent—are only partially funded. YNAB keeps you in control by alerting you—with orange 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 enter it in your account register—dollars will show up in To be Budgeted automatically. Now comes the fun part!
Head over to your budget and select all the categories (using the checkbox at the top). You'll see something like this:
The inspector shows you exactly how much you need to fully fund the rest of your categories. In this example, I have enough after my most recent paycheck—so I'll click the Underfunded button and... that's it! All my categories are fully funded.
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!