Instead of looking back and recording what you’ve already done with your money (too late), YNAB helps you decide proactively how to use your money. Then, you’ll use your budget to guide your spending decisions.
At the top of the Budget is the Header:
This gives you information about how much money you have going into a given month. The header can be expanded or collapsed by clicking on the words Available to Budget.
When it’s expanded, you will see a formula that shows you how the Available to Budget number was arrived at:
Not Budgeted in (name of last month)
This is the amount that you received in prior months but did not budget.
(-) Overspent in (name of last month)
This is a total of all overspending from the prior month across your budget categories. It is subtracted from the Not Budgeted number.
(+) Income for (this month)
This is all income that you categorized in the register for this specific month. For example, if you categorize income as “Income for September” it will show up in September’s header.
(-) Budgeted in (this month)
This is the total amount of money you have budgeted in different Categories in the month below.
The budgeted column is where you will enter the amount you want to assign to each Category. This is the only column on the Budget where you enter information.
When you categorize spending in your register, YNAB automatically records that amount in the outflow column on the Budget in the same Category. For example, if you enter a transaction for grocery spending, YNAB enters that same amount in the outflow column for groceries on the Budget.
This tells you how much you have remaining to spend in this Category, based on how much you budgeted and how much you have already spent. The number in this column is:
Any Category Balance from the previous month
plus Budget amount in the current month
Check this column to help guide your spending decisions.
When you are first starting out, you might not be able to budget the entire month at once. That’s okay, just assign dollars to Categories until the Available to Budget number is zero. This is often a different way of thinking about budgeting for most people. That’s why we’ve devoted an article to it:
This means you will only budget each paycheck as it arrives instead of the entire month at once. You will gain tremendously because you are budgeting with real money that has already arrived, as opposed to budgeting with money that you think/hope/want to have.
Eventually, you’ll build a Buffer of one month’s income and then you can budget the entire month at once.
Yes! With YNAB, you can make adjustments any time you deem necessary. This puts you in a proactive position so you can deal with things as they occur, as opposed to the reactive position of analyzing what happened when it’s already too late to do anything.
It means you have assigned more money to Categories than you have. This makes it impossible to to trust your budget when making spending decisions. Some people do this so they can forecast ahead.
YNAB recommends only budgeting what you have. To fix this, lower amounts in the budget column until the Available to Budget number reaches zero. Prioritize as you work asking yourself, “What does this money need to do before I’m paid again?” Assign money accordingly.
For example, let’s say you budgeted $400 for groceries, but you decide that isn’t enough. You see that you have a surplus in restaurants of $40.
Lower restaurants by $40. This will make that $40 Available to Budget.
Add the $40 to the grocery Category.
If you want to move money out of a Category that you haven’t budgeted anything to in the current month, simply budget a negative number, and a corresponding amount will come out of the Category balance and be added to your Available to Budget number.
The start date of the budget can't be adjusted, but you can still use it just as easily as if you could. You can learn more about how to do so here.