How to Create a Budget

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > How to Create a Budget

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Baja Mofufu posted:

I posted in the newbie thread asking about Mint vs. YNAB before I saw there was a new budgeting thread! (Thanks for the new thread, OP.) Anyway I was just wondering, for people who have used both: How much time do you spend on each per day? We've never lived on a budget but we're also living in the black. I'm interested in trying a budget to cut excess spending, but not in making a huge time investment.

I am almost obsessive compulsive about YNAB. I generally keep it open when I'm at my computer since I like looking at my budget. There's absolutely no need to be as obsessive over your budget though - you can probably spend about 20-25 min a week updating and matching transactions with what you've added via the mobile app. Outside of that, its a very nice program.

OP - you may also want to add the 4 rules of YNAB into the OP as well as the webinars they have available (for anyone who is interested in watching quick videos about budgeting):

http://www.youneedabudget.com/method

http://www.youneedabudget.com/support/training-and-education

http://www.youneedabudget.com/method/nine-day-course

http://vimeo.com/36573165

These are all free and are a great thing that YNAB actually does. I can't recommend these enough.

It also goes on sale on Steam occasionally. I bought it full price but definitely wait for a sale if you are interested.

# ¿ May 15, 2013 16:04

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# ¿ Apr 26, 2024 14:39

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Ashcans posted:

Does YNAB link to your accounts and pull your transactions/balances automatically? Neither my wife nor I have smartphones, so if I need to input stuff myself it would mean keeping a physical ledger and entering it all at the end of the day. In which case, it seems like I might as well just be keeping my budget in a physical ledger to begin with. Having Mint able to automatically pull and sort things is a pretty big deal.

It won't automatically automatic, but you can download the QFX fiels from your bank and import those without any issues.

Edit: I think part of the appeal of YNAB is that you have to actively keep your budget and discuss with your spouse. Its why they haven't programmed in automatic importing of transactions and balancing. The act of manually doing it forces you to constantly think about your budgeting activity. That's the major weakness of the Mint budgeting feature in my opinion. When I used to budget with Mint, I'd stop paying attention or ignore the "You've gone over your budget limit!" emails because I would constantly feel bad about that.

Shadowhand00 fucked around with this message at 20:32 on May 17, 2013

# ¿ May 17, 2013 20:28

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

kripes posted:

I started with Mint, did some categorizations, and stopped because it told me I had no income budgeted (but I did). I could not figure out how to fix it. Plus I'm really nervous about having it connect to my bank account. Seems to me that MINT would be a hacker's dream.

I then started with budgetsimple.com, but there are no such things as parent and child categories, so I quickly ended up with 20+ categories to track.

Now I'm checking out YNAB. I really like the free budget webinars (http://www.youneedabudget.com/support/training-and-education). I'll sign up later and give it a try.

definitely givve those webinars a try prior to using the software.

# ¿ May 30, 2013 20:35

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Nocheez posted:

I found the YNAB software to be a terrible, terrible exercise in manually entering everything. However, I did get some ideas for saving for the future (things like gifts/birthdays/christmas, vacations, etc.) and my wife and I built our budget around that. A simple Excel spreadsheet has been our method until recently, when we merged our accounts. Now I use "Compass" through my credit union, and it's made things extremely simple.

Yeah, it seems to be the chief complaint about YNAB - manually entering in all of the data. Personally, I like the process of manually entering all of my transactions. It keeps me extremely aware of where my money is going. I do the reconciliation where I import my bank transactions via .qfx files, so I'm able to make sure I get everything in. Outside of a small $.40 discrepancy, I've had no issues though personally. I know people are different and some people do find this extremely annoying.

# ¿ May 30, 2013 22:59

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Briantist posted:

I don't use a lot of cash, but I find it easy enough to use a Cash account in YNAB. Every other account is accurate to the cent, Cash is accurate to the dollar for me. A $3.25 muffin is $4.00. If I buy that muffin tomorrow and use a quarter from today's change, it will be a $3.00 muffin. If I buy a bagel for $3.95 and count out $0.95 in change from car then it's a $3 bagel. Basically for me it's not cash that isn't real, it's change. This makes a cash account super easy and mostly accurate.

I hardly ever use cash so again it's easier than if you use cash for everything. My main use of cash is for gas since it's cheaper and at most full service stations they top up to get a round number anyway.

Cash is accurate to the $20 bill for me on YNAB. Its the most annoying thing to track because I don't ever save my quarters, dollars are lost here and there in the laundry (and later found).

# ¿ May 31, 2013 18:20

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

PhantomOfTheCopier posted:

And Part Two (of Two):

Luca Pacioli, in Summa de Arithmetica, Geometria, Proportioni et Proportionalit� (1494), contains the first codification of double-entry accounting, titled Particularis de Computis et Scripturis. While the audience was primarily merchants, it contains discussions of: Credits, debits, cash, capital, inventories, journals, ledgers, what we now call savings and checking accounts, loans, household expenses, keeping receipts and (bank) statements, how to keep a (running/checkbook) balance, and retention of records. Many of the discussions are pertinent to keeping records for the sake of budgets, but it's more of a general expectation than a specific chapter.

Oeconomicus (c. 362 BCE), by Xenophon of Athens, starts with a dialogue about the economics of household management, and makes the following points:

"Economy" is a science (requiring knowledge, artistry, experience, observation, and talent).

"Wealth" is the collection of useful possessions. Items that you can't/don't/won't use are only useful if you can sell them, and money may not be 'wealth' if you know not how to use it.

Some people have knowledge and possessions, but not "wealth", as they are: Idle, reckless, negligent, frivolous, intemperance, slaves to food, drink, luxury, and profitless associations.

Property and possessions are "sufficient" if they fulfill needs. An estate has duties in proportion to its worth. Larger estates have more duties and responsibilities to friends, relatives, hired hands (slaves, workers, farmers, crew, etc.), and the state (charitable giving, arts, institutions, and, yes, taxes in proportion to value).

Get your information from people with first-hand experience. If you want to know how to create a surplus from little, ask a lucrative person that possesses little. If you want to run an operational household, inquire of a successful household. If you want to run a farm, learn from a profitable farm. Observe successful people if you want to be successful.

Don't waste money on useless possessions (specifically, expensive, lavish houses). Having moderately-priced items that fulfill all your needs is better. An expensive, empty house is useless, compared to a moderate, furnished one.

Items are not useful if they are not arranged and stored properly. To modernize the example, one might claim the following items as useless for their intended purpose/value: Hammers that you can't find, the finest towels that have been used to soak up an oil spill in the garage, a collection of dishes sitting dirty in the dishwasher, or even a trash can that is full because no one has taken out the bag of garbage.

A functioning household (from an economic perspective) requires consistent goals. If your kids are stealing money from the "Grocery jar", you can't buy groceries.

If you wish to be profitable at something, it becomes a topic of study (as opposed to enjoyment). If you want to be part of a couple that practices economy, and your partner doesn't know how to budget money, you have to teach them. (There are allusions in the text not just to dealing with money, but possessions, the balance of chores/duties, and dealing with the care of the household during times of sickness.)

There is a rather lengthy conversation about giving back to the public and the state, in the sense that property should contain trees, grass, crops, and so forth, as can be reasonably planted and tended, both for the pleasing appearance and to provide food in times of need, for example. (Random thought: Large plots of grass, within city limits but on personal property, may be reasonable donations for a community garden. We have these in this city. I don't know how they came to be, who paid/pays for them, or what the tax advantages might be.) There are also pages explaining how gardening (husbandry) is worthy of study, because it not only teaches you how to grow things, but how to learn, how to pay attention, adhere to a schedule, exercise care and maintenance, and so forth. The same could be said to apply to raising stock, rearing horses, etc.

Be happy with your lot and use what you have to advantage.

There is also a rather lengthy conversation about the choosing of a partner and the aforementioned sharing of property, possessions, and money; dividing of duties, chores, and household maintenance; creating an inventory, and having organization for storage of possessions. (I include this here, in a budgeting thread, because your partner buying more crackers might be wasteful if you still have the three boxes you bought last week sitting in your car instead of the pantry.)

True knowledge, wisdom, power, and wealth, are learned by being engaged in the tasks, learning from others, being an overseer, and so forth. (Actually, he bitch slaps his wife for wearing an excess of makeup, and suggests that she be honest in all things, including teaching what you know and learning what you don't.)

Take care of your possessions and your body. Be efficient with your time. Walking to work or a nearby grocery may save on fuel or bus fare and get you more exercise.

Perhaps I should consolidate that to a few buzzwords and call it Xenophinance, but mantras really aren't my thing. I proffer that effective budgeting seems as much about proper and efficient use of money as it is about keeping records.

I'm actually really enjoying reading through these things.

I agree with you - a mantra or process being repeated about budgeting is no use unless the person reading the process or mantra understands the framework of what they're trying to implement. in this case, effective budgeting seems to be a combination of a few things - efficient use of money, clear record keeping, and finally, discipline to be responsible with your money. The last seems to be the most important. I've been budgeting for a while now and I've been doing well in making sure I don't spend outside of my means, but I'm definitely guilty of frivolous spending from time to time. The framework and process helps keep me in place though and brings me back when I do spend frivolously outside my budget.

# ¿ Jun 6, 2013 04:24

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

PhantomOfTheCopier posted:

You'd be the only one! Feel free to read the primary sources and disagree with my summaries, but I did feel it better to post the walls of text in an attempt to clarify some of the authors' intents per seriatim. I think the discipline part is difficult for most people. All they have to do is find some structure and process where they constantly hear their mother's voice in their heads: "Now Phantom, if you buy that you won't have any money left when we go out for ice cream"; or their father's voice in their heads: "You waste your money on that and I'll beat you with it."

You're telling me. I have a ring fund going right now but its extremely tempting to borrow from my ring fund to fund "fun! right now!" stuff. Takes a bit more discipline than I seem to have right now.

# ¿ Jun 6, 2013 17:13

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

I would manually enter them. Does Mint have the ability to reconcile after the fact? That might help in ensuring you captured all of your items.

# ¿ Jun 7, 2013 17:58

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

morcant posted:

Two weeks ago, I started messing around with the YNAB demo, and it worked great for me - up until I was like "Eh gently caress it" and didn't track when I got $10 cash to buy a DLC game with my credit card for $7. That, combined one or two other minor hiccups has tossed me about $30 I can't match up with the amount on online banking, and it's driving me a little crazy.

I really like YNAB, and have thoroughly learned my lesson to log everything, because I just spent my whole lunch hour trying to figure this out, and then setting up a brand new budget. Since I've only been using it two weeks is that the way to go in this case? Burn it down and start over?

Yeah, burning it down and starting over is the best way to do it. My initial run through, I tried setting up my budget similar to how Mint is sset up - this screwed up the way YNAB is set up and I had to reset a few times.

# ¿ Jun 19, 2013 19:05

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

100 HOGS AGREE posted:

You budget the savings amount in the category for your savings, to remove it from your budget.

I went through one of the YNAB live web sessions and the main point the guy was making that I didn't realize is even if you need to budget a bunch of things for the whole month, only budget in YNAB down to $0. I, for instance don't have enough money I'm willing to touch to budget all of July yet, so I only should budget for things I want the money I have now to do. I'll go back and add in the rest of my bills for the month once I get paid on Friday.

He suggested adding a buffer budget to sock extra money away until that hits your average budget for a month so you can start budgeting for next month, then take that money back out and hide the category once you're done with it. You can even eventually start marking your income as for next month instead of this month, when you earned it.

The main thing YNAB tells you to do is to loving ignore your bank account balance when doing spending, instead look at the money you have budgeted for that category. You want to eat out tonight? You don't have $1k, you've got $50 in your Restaurants category, so don't spend more than that $50 dollars. And if you do, look at your budget and lower down a different category to compensate.

The video tutorials are actually really useful.

That and as you pointed out, the live seminars, which are free, are really awesome because they will answer your questions about both budgeting as well as the software.

# ¿ Jul 15, 2013 00:46

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

PhantomOfTheCopier posted:

How does YNAB handle slackers like me who 'balance their books' long past the transaction dates? While my records always match physical accounts, it's none of their concern if I have an uncleared transaction from Books to CreditCard1 from January. (I think the worst I remember is a clothing purchase that I entered 14 months afterwards; yeah, that was before I had a good plan for clothes purchases.)

I think the goal using the method described on the YNAB site is that the budgeter should be actively managing and engaging your finances. The problem with a lot of folks is that they are not actively engaged with their finances. Since the software seems to have been built from the ground up using the methodology described on the site, its hard to get it to fit any other methodology. That being said, the budgeting style they use works, even for larger purchases.

The other way to look at the way YNAB seems to be built is that its based off an agile way of looking at budgeting. Rather than planning and then executing your budget (waterfall), they're looking at making people be more agile in their budget (iterative and responding to needs as they arise).

For the large bills/large ticket items in my budget, I have 2 categories - somethign I'm expecting (insurance bill or season tickets), and stuff that might need some buffer (I'm never sure how much my registration + smog is but I have an idea). I just divide based on that and plan accordingly (with the corresponding full bill listed in my budget).

# ¿ Jul 15, 2013 22:54

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Rurutia posted:

I'm not sure what this means. You're implying that being agile means that you don't plan and execute. Or that being 'waterfall' means you don't respond to needs as they arise and you don't engage in your finances or look over/adjust regularly. Neither is true.

Eh, I'm just talking out of my rear end based on how I believe YNAB was actually developed. Its seems like they would use an agile framework for their software development - if that works for them, then it would make sense for them to think of budgeting in a very iterative way. Works for some people, doesn't work for others. Agile and waterfall project management frameworks still respond to change and adjustment. I was just speculating on how their build of the software was so tied to their specific budgeting philosophy.

# ¿ Jul 16, 2013 02:43

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Hip Hoptimus Prime posted:

Yeah, I think paying off the Mac makes the most sense.

As for YNAB...I don't think I can use it. It's way too confusing. I went back through again because I felt like it was wrong. Our monthly income combined is $4,963, and I just didn't think it was right that we couldn't fund savings accounts *and* pay off the smallest credit card this month when we have a more than decent income. So I wound up deleting everything I already had entered in YNAB and started fresh, and it turns out that we could pay off that small card and save and go to the wedding/pay the computer guy...so I just did all that.

I think for my own sanity though, from now on I'm doing pen and paper and the envelope system. Or maybe I'll pick it up and use it again when we're closer to being debt free.

IF you want, put some screenshots of what your budget categories are and how you're dividng them up. In addition, when you're getting YNAB started, a good idea is to just put your current balances and budget that out. It'll give you a good idea of what you have going for you for the first cycle. Once you get your first paycheck, put that in, and budget out what you are going to need to spend in that first pay check.

Did you get a chance to go through the YNAB method webpages? They're helpful in getting the system set up.

# ¿ Jul 31, 2013 16:54

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

You want to do two things, just to get you started:

1. Its good that you know what you need to save each month. Its not how you really use YNAB though. What you can do is the following:

Now I know how much I need budget (for the irregular bills, its essentially $152/12)

2. Now, the idea behind the software is that you only budget the money that you have. That can mean your savings accounts or you can leave them off from your budget. If you do add them to your budget, then you want to create Savings Categories:

That effectively takes your savings account out of your monthly budget considerations.

In addition, since I only have $207 left in my checking account for the month but I'm getting paid on Friday (to budget out for August), this is what my July budget might look like now:

Notice how I have now put away the budgeting for the savings goal ($5000) and I'm only budgeting my remaining cash? The next time I get paid ($2500 for August 2nd), it'll look something like this now:

Next, I need to budget what I know I need to pay as well as some of my budgeted items (I'm taking your values in this case):

Lets say by the end of the month, you end up not spending as much on restaurants as you thought but you end up spending slightly more on your groceries:

A few things - You had $15 budget left over for Groceries from last month and you had $25 budget left over for restaurants from last month. Despite that, you spent $500 in groceries, putting you over budget by $35 and you actually ended up spending $175 at restaurants.

YNAB is supposed to be flexible. In this case, you can do something like this to readjust your budget:

Some people might not enjoy this little aspect of the software, but it allows you to make adjustments to your budget and also figure out what you might have to sacrifice in order to meet your financial goals.

Another example - lets say your car catches on fire and you need a new car. You need to pull that money from somewhere. You can do something like the following:

Not really a great example, but its something you can do.

Edit: Apologies, I'm not the greatest at explaining things.

# ¿ Jul 31, 2013 18:06

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Briantist posted:

One of the great things about the "flexible" aspect of YNAB is that it means less pressure to estimate everything correctly when you're starting out. You're going to overestimate on some categories and probably underestimate on a lot more. It sounds weird but in the beginning, you're kind of just learning how much you spend and on what. Once you have the knowledge, then you start realizing where you can cut easily, where you need to change difficult habits to cut stuff more effectively, etc.

Your goal/motivation right now is to get out of debt, but don't let that dissuade you if it seems like you're not doing it quickly enough. Having intimate knowledge of where your money is going, even if it takes a month or 3, is going to be essential for getting rid of the debt and then making sure that you continue good practices afterward.

This is a good point - the flexibility allows someone who's not really used to budgeting get more involved with their finances and also allows you to "roll with the punches."

Honestly, if you're a bit confused about how to use YNAB, just watch the webinars and maybe attend one of their intro classes. It'll help you understand the software and the method:

http://www.youneedabudget.com/method

# ¿ Jul 31, 2013 21:16

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

YNAB is meant to budget the money you have, not the money you think you might have in a few months or next year.

I've run projections through YNAB before, but I never keep them on my permanent budget. I do this just so I can make some decisions early on about what I might need to pay and what sacrifices I need to make. I don't keep this on the YNAB budget though because the numbers do get screwy. What's going to happen is that you're going to end up with what looks like an enormous increase in net worth, even if by that point, you don't actually have that money (since you'll be spending based on your budget).

# ¿ Aug 7, 2013 18:07

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

A little nitpicky, but can you put a purpose to each checking/savings accoutnt? (because that's what you seem to have there)

# ¿ Sep 25, 2013 17:19

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Old Fart posted:

We get it, POTC. You hate YNAB, and you have disdain for people who don't think the way you do.

As with tuyop, it helped me understand the envelope system before I even knew what that was. And it got me to stop looking at the bank balance far better than spreadsheets ever did, although even that took up to a year of use before that switch happened.

I also wonder why I was so stupid and didn't have that lightbulb moment years or decades sooner, but there you have it. Being raised and living in a culture of debt, I just never had any cash beyond the current paycheck, and credit cards were seen as what I could afford as a monthly payment. That can take quite a while to un-do in your brain, and YNAB is very good and user-friendly with leading you there.

The more you trash YNAB, the more people will defend it. In a way, you are their biggest advocate.

The best thing I've done for my little brother is get him started budgeting right out of college. I really wish I had an older brother to kick my rear end when I was coming out of school. I'd definitely be in a different position financially.

# ¿ Jan 17, 2014 18:49

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# ¿ Apr 26, 2024 14:39

Shadowhand00: Jan 23, 2006; Golden Bear is ever watching; day by day he prowls, and when he hears the tread of lowly Stanfurd red,from his Lair he fiercely growls.; Toilet Rascal

Boris Galerkin posted:

Yeah but work usually doesn't pay for it entirely in my experience. Wikipedia says they typically cover 75% of the premiums and leaves you with the rest.

They'll still take it out pretax (or out of your paycheck). Its usually not a specific budget item for people who get it automatically deducted.

# ¿ Feb 24, 2014 04:41

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > How to Create a Budget