I’m not really budgeting right now…

…and I can’t decide if it’s a problem, or rather, how much of a problem it is.

If you’ve been around for a while, you know that I’ve been a big fan of YNAB. I stopped linking to it with my referral, because I didn’t have any interest in making the transition to their subscription-based web service; instead, I’ve continued to use the desktop software, and still love it.

One of the things that’s great about it is that it lets you allocate income into a variety of sinking funds. You can set up your own categories, but I have things like “personal/health,” “maintenance/repairs,” and “travel.” So, if I make say $1000 in a month, I have to allocate $400 to rent, but I could spread the other $600 out among these sinking categories and not necessarily spend it, but let it build up until I’m hit with a car repair or whatever. Some people do this kind of thing with a million savings accounts, which also works, but I do like the simplicity of letting the software handle the categorization instead of spending a lot of time transfering $$ from one account to another. (I do enough of that with the savings accounts I DO have.)

But despite my recognition that this is a superior budgeting system, last year I quit doing it in order to build up what I was then calling my down payment fund and now call my life fund. Instead of letting the sinking categories build, I diverted any spare cash to that savings account, and cash-flowed all my expenses every month. I’m still doing that, because I want to keep building up the life account, and I don’t have enough income every month to do that AND the sinking funds. Actually, it’s been an expensive enough summer that I’m not even really doing the life buildup. I put $300 in last month and am putting $300 in this month, which is way off the pace I wanted to be going at. But if I decided I was ok with keeping the life fund at around $10,000, I could actually go back to budgeting the YNAB way — I could take that $300-500/month of ‘give’ in my budget and spread it out to the sinking funds. I guess I’m a little worried that doing this would encourage me to spend the money on things less essential than a car repair or (this month’s big expense) dental work. It’s a lot easier to subtract $50 from the maintenance budget and move it into slush to cover an entertainment outlay, than it is to actively take $50 out of my savings account.

On the other hand, when I think about budgeting properly, with sinking funds, instead of just putting all available cash in a big savings account and spending the rest, I feel more grown-up. Maybe I should let that guide me?

9 thoughts on “I’m not really budgeting right now…

  1. Ms. Steward says:

    Thoughts:
    I think budgeting is most useful if you need it to keep you in line and to force you to consider your spending. I consider that of ongoing use to us, since we aren’t at a level where we are on what Frugalwoods calls frugal autopilot yet. (link: http://www.frugalwoods.com/2014/09/29/put-your-life-on-frugal-autopilot/)

    If you ARE on frugal autopilot, though, I don’t see where it’s necessarily a problem, because you’ll have the self-monitoring to make sure you’re not using sinking fund cash in a ridiculous way.

    1. thesingledollar says:

      That’s a really useful way of looking at it. I think I maybe thought I was on more frugal autopilot than I really was, and that this summer has shown me I could still really use some budgeting categories to keep me honest!

      1. Ms. Steward says:

        We have up and down spells, still, where we do really good at getting on target, and then we have a bad week or month and, if we’re not careful, it can blow up the whole thing. I have found those happen less and less over time, though. So, for us, the budget stays.

  2. Amy says:

    I flip back and forth about setting up saving accounts for specific goals. Things go really well for 2 to 3 months and then something comes up where I end up having to consolidate all those accounts and use them for one big auto repair or medical/dental bill. Ugh! I hate all of the transferring back and forth!

    1. thesingledollar says:

      This is totally where I’ve been in the past! I think I might try, cautiously, letting the category balances build up for a while. But I’m worried that I’ll just have to undo it in order to pay for my annual big car repair!

  3. Jason says:

    I think that focusing on one account isn’t a bad thing at the moment. I have a similar mentality. I want to have different accounts for different things, but focusing on one item until you get it fully funded has great appeal and power to me personally. I think what gets me is the small amounts. Intellectually I know they will grow over time, but I want the psychology of seeing it build sooner. Good luck.

    1. thesingledollar says:

      Oh, I hear you. I want everything to be fully funded right now!

  4. Linda says:

    I’ve been using YNAB consistently since the beginning of the year, after 2-3 years of sporadic use. I think I FINALLY get it, and it has been a game changer for me. Like you and others commenting, I have several categories I want to fully fund yesterday. I feel anxiety when I see the small increments in each category after I get paid. However, keeping track this way IS showing me progress. The ability to set goals and see even that I am 5% or 30% funded in any one category gives me hope. Within the categories, some take priority over others, and I am throwing more at them now until they are fully funded. I do love to see that 100% funded visual!

    1. thesingledollar says:

      I love goal-setting too! I’m going to meet one of mine this coming month and I’m looking forward to the 100% bar.

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