…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?