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.
Add Your Goals
Create a goal for every category. If you have a category that you consider optional, feel free to either skip it (or hide/delete the category), though you’ll want to be sure to include your True Expenses.
There are two specific types of goals you should use when building your template.
- 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.
These two goal types will create an yellow alert in the category until the category is funded completely.
Look at Underfunded
With a goal assigned to every category, your budget will now tell you exactly how much you need to stay on track. With no categories selected, look at the Underfunded amount in the Inspector. That’s how much money you need to make this template work.
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 goals.
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 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 example above, To be Budgeted is $1,700, but Underfunded is $2,080. I'm only going to budget $1,700 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 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.