Absolutely agree! ❤ everything you say makes so much sense! I often watch the videos with my budget on the side and make changes as I go! I love Hannah’s tips and updating my budget.
I think it’s just easier to manage an emergency fund category than budget into the future for the following reasons: 1. I don’t know what kinds of emergencies will occur so I can’t define a category for all of them beforehand 2. It’s a lot more overhead to juggle money across multiple months. I find that budgeting month to month and depositing whatever is left into the emergency fund is more efficient.
I found the concept of "what are you saving for?" mind blowing. I work in the financial services industry and have started asking customers what they are saving for. NO ONE KNOWS! Giving them homework to sit down and figure out what the money is for also gives them freedom and permission to spend it when they actually have a real need to use it. LOVE THIS!
We used to budget a few months ahead, but found we were less in touch with our money and more likely to overspend, so we only fill up one month ahead, and keep a small emergency fund to help cover another month. Our age of money is 60 days but happy with that as we aggressively ‘spend’ our savings to tracking accounts. And if we faced income loss we’d trim our spending, eat down the balance of our pantry, pull out of long term savings, and if need be, lean on family and community.
Interesting! I find the opposite - to me I’m less likely to touch it if it’s budgeted in the future than if it’s just in a future or emergency category in a lump sum.
I'm with Cassidy, but know people with SUPER successful budgets in both camps!! Whatever gives you the most peace and clarity, I'd say! It just hit me that I was trying to do ONE thing in TWO different ways. So I decided which I liked better and ran with that one! 🌻 Hannah
We do a bit of both. We have a SGW fund (Sh*t gone wonky fund) & car repairs, home repairs, 3 types of Educational funds (tutoring, curriculum, bonus funds for outings with our homeschool groups), etc. Plus debt fund (as we are paying off some Surprise! You get to pay off this new debt)… I’m also figuring out how to streamline our budget in a way that make a bit better sense for our family. Considering we have to pay for a new roof with this latest hail damage that came through… That SGW fund will be covering the cost of our deductible.
Love the change in focus!! That “what is the savings/emergency fund even for” question was the first big breakthrough I had with YNAB. I had never questioned what exactly that money was there for, and being able to break those down into more specific categories was a huge, huge relief. But I appreciate this video because I still hadn’t completely let go of having those savings/emergency fund categories! I think I’m gonna take the plunge and put the rest of it into the categories I have and hide it! Thanks Hannah, love the new laptop lol
Relief is a great word for it! It's like putting a name to a face (or a face to a name?). I never realized how "blurry" those generic categories were until I experienced the security of having more individualized true expense categories. And THANKS, I finally abandoned Apple. This is the new 2022 Granny Smith. Simple and cost-effective. 🌻 Hannah
My brain works like this: all of the things that you prepare for with true expense categories are not emergencies IF AND ONLY IF the categories are well funded. So if I'm just starting out, I like to first focus on a lump sum emergency fund category that I can draw on whenever "emergencies" pop up that aren't fully funded with expense categories. Once this category is funded, I focus on the true expense categories. Only when those are nice and fluffed up will I consider getting rid of that emergency fund category. It makes it so that I don't have to scramble my whole budget moving money around to cover an expense. I just think it's neater somehow.
Me too! My brain gets easily confused when I distribute money to months ahead. Also, we're not yet to having fully funded expense categories. So funding a single large Emergency Fund first makes sense for us. Second will be "fluffing" (I love that) the True Expense categories.
Much agreed on deleting the Savings account, but I do still have an emergency fund (called “Zombie Apocalypse”) with a couple of months income in it. My reasoning to have this instead of budgeting ahead, is that if I do suddenly lose income, I would make some different choices in filling categories with that available “emergency fund” instead of budgeting ahead the way all normal months go. That way that same sum of money can last me quite a bit longer. This helped me a lot when I had to quit my job a few years ago.
That makes total sense! Even if we lost income, we too would go through our future budgeted months and "comb them down" so we could take that money even FURTHER into the future. Totally understand that mentality! 🌻 Hannah
Well done, Hannah! In addition to aging our money and budgeting a full two months ahead and planning for all of our true expenses, I also have a “six month income replacement” category for our household. Before Covid I thought it was unnecessary, but given the lack of wages and out-of-pocket medical expenses that hit my little family in 2020 and 2021, this category will see us through another such catastrophe. (And if we never need it, we’ll roll it into a retirement category down the line.) I get why you’re de-influencing the category, but this is one safety net I refuse to ignore.
Coming from a Dave Ramsey fan, the emergency fund lives strong in my ynab budget.....but this truely makes a lot of sense. A emergency fund category ive been carrying for a decade is really just an emergency slush that SHOULD be covered by my well rounded true expenses...... Very eye opening. And thinking more about it....ive really never used it....unless my true expense catgories couldn't cover the expense.....
I feel the same way. Ramsey taught me to build up the emergency fund, but there have been very few (not sure if I can think of them) actual times that I dipped into it outside of the actual line items I've been saving for in my budget.
Exactly! The Dave Ramsey style emergency fund has been so prevalent in my mind for so many years. This video discussion is blowing my mind! But I recently took a year off of full-time work and barely even dipped into my emergency fund. So what is it there for?😅
I think "Emergency Fund" is the one I get the most pushback when discussing budget categories. I try to clarify that just about everything that would be an "emergency" is really just an inevitable, unscheduled expense, but I really like the idea of asking the question "what emergency am I not already anticipating"... and emphasizing Age of Money is an "emergency" fund... Thanks for another great video!
I think as long as you are PLANNING for emergencies, it doesn't much matter which way you do it or what you call it, as long as you're not duplicating the effort, like Hannah was. I find it simpler to have a lump category (that i call Security, most of it kept in an HYSA) that can cover truly unpredictable expenses, i.e., those outside of my planned "true expenses." The age of money tells me how many months of expenses I have covered without actually having to budget into the future. When the Security category grows larger than i think necessary, and the economic environment is right, it becomes a source of investment funding.
Absolutely! Well said! I didn't even know I was duplicating the exact same efforts till my husband pointed it out. Using your age of money to measure how far your money is taking you is also a great tool and way to find some financial clarity/security! Well done! 🌻 Hannah
I'm with you on being specific about my savings goals. I do that and it is great. I can't get rid of my emergency fund category. I have true expenses categories for expected things like insurance and Christmas shopping, but I want the emergency fund category for the unexpected which can take several forms. In 2012, I got laid off and it took me 11 months to find a new job. That emergency fund saved me. Two months isn't enough for me.
You don't have to only budget two months out. You can budget 12 months out, if you want. Having 12 months budgeted out vs having 12 months of expenses in an emergency fund category is basically the same.
THANK YOU!! Wow, that is such a compliment because I was a lot more "unhinged" in the making of this video than I usually am 😂 Good to know the people enjoy the more "off the cuff" thoughts of my mind! 🌻 Hannah
Following a natural disaster, we had $8k+ in damage. Home repairs & a couple other “savings” categories were able to make the necessary repairs. Because of YNAB. Also made me take a hard look at my insurance policies, making better choices moving forward. Precisely like you illustrated. ❤
Wow!! Amazing work! Rolling with the punches like the pro-iest of the pros. Also, so sorry you had so much damage to deal with 😫 Sounds like it inspired a better insurance pursuit though, which in the end could be very worth it for future emergencies!! 🌻 Hannah
First Hannah: It's "are you picking up what I'm LAYING down" 🤪 I do keep an Emergency Fund category that is back by money in a Betterment account. It is invested in some stock funds but mostly safe bonds and treasury notes. Because it is more volatile than a bank account, I don't want my individual categories going up and down with the markets. In seven years, it was mainly tapped into my first couple years as I got my true expenses fully funded. Then I was in a situation 2 years ago. My brother suddenly passed away. He was single with not a lot of money. I was the only one in my large family that could say, "Put the funeral expense on my credit card (for cash back points) and I'll pay the card off from the Emergency Fund when the bill comes in." I would say that there are still some really weird unexpected expenses.
Uh oh, Matthew... I googled it and... it looks like we're both right. Plus, the double "p" is just more fun to say!! And wow, Matthew!! What a touching story. I can't imagine how it must've felt to provide for your family in such a huge way in such an unprecedented circumstance. So sorry to hear of your sudden loss 😔 VERY impressed at your ability and confidence to step up in such a hugely impactful way, and I hope the good you put out has come right back to you over the last few years!! Financial security isn't just for us-it can benefit SO many that we love! Thanks so much for sharing your story!! 🌻 Hannah
Having my budget fully funded two months ahead gives me *so* much more peace of mind than a generic "emergency fund" ever did. I can clearly see that Future Me could pay rent and buy groceries even if I lost my job. It's fantastic!
Yes! I know that no matter what I can get groceries next month and fill up the car and I won't even need to cancel our Hulu subscription! Feels good 😎 🌻 Hannah
I'm fully funded through to the end of July. I have funds for most "emergencies" but, personally I want to still have an emergency fund of some sort as it gives me piece of mind that I can pull from it if necessary. I've been a YNABer for more than 10 years and yet I still feel better with a EF.
I'm so glad you brought up about the savings because I've been doing this for some time and it has helped have more confidence in knowing I have the money for that specific thing. It's too overwhelming to have it all together into one savings category
I got rid of "Savings" ages ago and really love having particular goals (new car) and robust sinking funds (fix old car) for irregular big expenses. However, I still won't give up the "Emergency Fund" AKA the "Income Replacement Fund" because, honestly, I think most people need 6-12 months of money to protect them in case of injury, illness, or long-term unemployment...and I'm just not going to budget that far out into the future. It's cleaner and easier to have a set amount in the "Income Replacement" category (and keep it tucked somewhere earning interest) than it is to integrate all that money into the regular budget. If we did have a major melt-down, chances are everything would have to be re-assigned anyway.
I've found it's all in how you like to visualize it! I would feel more secure seeing my budget fully funded for the months of April, May, June, July, August, and September than have, say, $25,000 sitting in an income replacement category, because one gives me more personal security than the other, whereas others might feel more comfort in the big lump sum. It would also be easier for me to know when I've hit my spending limit in May or June or July by budgeting into the future and slowly depleting my categories over time, rather than having to deduce if I'm staying on track spending from one larger sum of income replacement money. Whichever way gives you more peace and security, really! 🌻 Hannah
I love it! I don't have a Savings category any more but I do have an Emergency Fund. I love the question: "What emergency am I not already anticipating with my true expenses?" SO SPICY!! I'm going to have to revaluate if I need to delete that category...
I found my emergency fund quite useful last year when my AC part of my HVAC gave out and required complete replacement plus installation via crane onto the roof. Almost $5K required at one chunk, which was definitely different from my normal "condo maintenance." level (replacing light bulbs and batteries.) I think of the emergency fund as covering the "oops, I didn't realise I needed to save for that as well" (a.k.a. asteroid takes out front porch) situation.
When we first started, we made a generic "savings" category because I didn't know what to do with our generic "savings" money! Over the last 5 years, we've created separate savings lines for separate savings goals. It was a great way to ease into YNAB before diving in completely.
Now THAT'S the good stuff! Love to hear it! Same, it's been so relieving and comforting to see how many different scenarios we're prepared for now in all of our various true expense categories. Thanks for sharing, sounds like you're crushing it! 🌻 Hannah
I agree with the emergency fund with a caveat, especially for my fellow disabled and/or chronically ill folks. Medical emergency fund. I have an "HSA backup" of $450/month. However, I will be taking $5k of my emergency fund and putting it straight towards a medical catastrophe fund. Think ER bills, hospital stays, anything unpredictable that can come with massive expenses in the US. Yes I hit my OOP max with insurance every year. Reality is, Im in the US and I'm disabled. Anything can happen.
Agreed - medical emergency costs can stack up and get out of hand so quickly! For our family of five, having that emergency fund set aside for true emergencies (fire, accident, loss of insurance, illness/injury/death) is critical to feeling financially secure in case of something terrible happening.
Personal finance is "personal," as in not everything said in a YT video is going to perfectly address your specific circumstances. That's where your own wonderful brain can build on the ideas in the video (or article, or book) or reject them and try a different method. And that's fine. Just because some concepts may not work for YOUR circumstances it doesn't mean they're "wrong" or "irresponsible," it just means it's not applicable to you right now (or ever, maybe).
You made a really good argument for budgeting ahead rather than keeping an emergency fund. My only hesitation is that the feeling of scarcity keeps me from overspending. If I had money budgeted months into the future, I may be more likely to go over budget in the current month. I also might not feel as bad about taking money from a less important category in future months than my "emergency fund" category.
It took me so long to find the comment that brings this up! Exactly my thought! The scarcity mindset is what fuels me, but this deleting EF concept is also blowing my mind. And I am curious how many months I can fund into the future (aging money). I'm just starting YNAB though. So, it'll take me awhile to be comfortable with this unconventional yet makes-so-much-sense concept!
Totally Agree! We are the same. Age of money is 274 days. No Savings category or emergency fund. Just months of future spending already funded! Woot Woot. Thanks for the video
What's your process for funding future months? You can only look ahead 2 months in the actual budget. Do you have categories for future months or something?
Hey there! You can actually always look one month *beyond* the last month you have funding in. For example, if I only have money budgeted in the month of April, I'll only be able to click forward into the month of May. BUT, if I also fund some of my categories in May (or, ideally, all of them!), then it "unlocks" June and I can now click forward into June and fund categories there as well! This is how people can continue budgeting even further and further into their future, but *only* if you've taken cate of the prior months first. Kinda helps keep us from getting too big for our britches 😂 🌻 Hannah
@@YNABofficial Oh I didn't know that, that's awesome! I'll have to try that now. What happens if you edit your categories (like deleting, archiving, or changing the goal), does this apply to future months that are already funded as well?
i jumped on the YNAB train just yesterday, but am already transforming my entire financial situation thank to you guys. I have started a "New Home" Savings that i will try to aggressively fund with clear monthly goals, and have stopped building an emergency fund, and instead use that emergency fund to age my money for up to half a year. Once i got that, i will start doing other stuff, maybe even start saving for retirement, who knows!
I do both. I have categories for all kinds of things like car repair and (separately) car replacement, household repairs or furniture or whatnot, vacation, annual membership costs, the lot. But even after using YNAB for many years, it still causes me some anxiety to have every dollar planned in such detail. I tried, I really did. But I finally just gave myself an emergency savings fund (for BIG stuff, like I lost my job) and also a category called "Money I Haven't Decided What to Do with Yet". It just makes me feel better. And, because I still put money into categories for car repair and such, there aren't many things that feel like an emergency now. I'm pretty sure "I can pay my bills and I feel good about how my categories are working" is success in YNAB terms. 😉 Also, Hannah, you're my favorite YNAB blogger/vlogger.
I am glad you brought this topic up because it’s something I have been thinking about as I have been watching my budget for 4 years now. I am inclined to agree with you and have actually been moving money into named categories rather than just savings or emergency fund.
My thoughts on deleting the emergency fund category: That makes perfect sense & I hate it! Haha Hannah you just blew my mind. I need time to come to grips with this...
I've twice tried budgeting my emergency fund (I call it Income Replacement to remind me that it's *only* to replace missing income) into upcoming months, but each time I felt disconnected from what was happening with my money, and didn't feel like I could easily tell if I was building up a bigger buffer or spending it down.
That’s what I’m most concerned about too. I really like budgeting one month out for big stuff (like rent) but I don’t think I could do much more than that without getting overwhelmed
@@HaveaBiscuitt Perhaps there needs to be an easily accessible number at the top of each month displaying how much money has been assigned into that month. A quick total so you can see exactly how much you have pulled forward at a glance. May help
Ooh, you actually *can* find that number pretty accessibly on the web app! If you go to the right-hand side of the screen, drop down the "Assigned in the future" box. Here I can see in the month of April what I've assigned to May, June, and July! Also, if you haven't before, click the "Ready to Assign" amount at the top of your budget, and it will give you SO many budget detail breakdowns, like "assigned in the future" and other helpful tidbits-it can even let you know if you have accrued some overspending in the future. You can learn more about the Budget Header from this article! support.ynab.com/en_us/the-budget-header-an-overview-BkmiuJ_C9 🌻 Hannah
I made this argument on Reddit a few months ago and the peanut gallery did not think having so much saved across categories was an emergency fund. If you have inclusive, specific categories I very much think you do. And in fact, most would cut spending to essentials if there were income loss-- meaning that money in your categories would stretch further. And because of YNAB's flexibility you can change your categories as needed because your priorities change when you have income loss. I'm glad I'm not the only one to see it this way. Thanks for making it popular maybe 🎉
Yes!! If we DID ever lose one of our income sources, I would absolutely "edit" the future too. But it's cool to know that, as of right now, we have such a buffer built up that we wouldn't even HAVE to eat out any less or buy the dog less toys (even though we'd probably instinctually and wisely do *both* of those things) for two whole months. To me, that's even MORE security than a one-sum emergency fund that doesn't tell me what I'm allowed to use it for (or if it includes the occasional latte, because yes, I AM THAT PERSON). Likely, we'd "shave" a lot of unnecessary categories and move that money even FURTHER into the future and into our more essential categories, so even MORE security than I had five minutes ago. But, sometimes it's just about how our brains work. Some feel more comfortable seeing one BIG security blanket. I feel better knowing I have a solid security blanket for each possible category of "the less expected" in my life 😂 🌻 Hannah
@@YNABofficial in January I wrote out all our expenses and income to figure out a monthly cap to what we should spend. I used to budget into the next month but now I'm trying out the "next month" category and I labeled it with the amount needed to fund the next month. Really there's no difference in doing it one way or the other but you're totally right about our brains. I needed to try something new just to keep the budget feeling fresh and challenging lol. When I figured out our monthly numbers, I also created a list of the essential expenses and came up with that number for an emergency situation. It's really easy to do a quick total of my accounts divided by that number and have a good idea of how many months our money could last. I'm 2.5 years into YNAB and I love that we keep learning and adapting along the way ☺️
Oh, I totally get that! A "refreshening" can help with accountability and excitement, for sure. Sounds like you're doing a GREAT job of thinking ahead, preparing for the future, and building your secure financial foundation! Couldn't be more proud. 😊 🌻 Hannah
@@YNABofficial honestly couldn't have done it without YNAB, you!, and Ben and Ernie. I primarily used the videos you guys put out to get started, learn more, etc. You are awesome at what you do and your videos are so fun 🥰 Thank you!
I truly can't say! They're pop-up sales, even to us, so we're not sure when the next one will be happening! I'm looking forward to the next one, too! 🌻 Hannah
Interesting video!! Budget nerd here. I am 54 y/o and have loved banking/budgeting/numbers since I was a kid! YNAB has been a big deal in our financial life, my hubs and I love it. The topic of holding an emergency fund, for YNAB'ers, really all comes down to how we categorize and allocate our money. (At least, that is my take on what you are saying here). You and your husband have an emergency BUT...an "emergency fund" can be money earmarked under "emergency fund" in one lump sum ......OR it can be money earmarked under "home, vehicle, medical" in various sinking funds PLUS money allocated for next months bills, etc. >>KEY takeaway....the emergency fund is there; it is just spread out over many funds. Great topic Hannah!
Absolutely! The emergency fund is just *actually* applied to and curated for your actual life! Imagine an emergency fund that came with it's own fully funded groceries category for each month, a specific car repair category to always have your back, guaranteed three month's worth of rent-that's what budgeting ahead in YNAB is! The perfect emergency fund. 🥰 🌻 Hannah
10:28 I’ve been using YNAB since 2007. I put money in an Emergency category back then and we have never touched it. That’s 16 years!! Like you said, we have all kinds of categories for future stuff that are kind of like “mini emergency funds”. Thanks for the “light bulb” moment. Now we have more money to use somewhere else! By the way, we have been completely debt free since 2008. Thanks to Jesse and the YNAB team for helping make our dreams come true!
This is *exactly* the reason why I find this suggestion dangerous. You say you have "more money to use somewhere else." Are you still prepared with liquid cash for a loss of income for the period you decided 16 years ago would be necessary in the event of a job loss? It sounds to me, instead, like you've just decreased the amount of emergency money you have available. That could be fine if you think your emergency fund was too large, but I think this suggestion could mask what's happening for a lot of people.
We got annoyed budgeting into the future more than the very next month. Now we just have a category called future months with a $$ goal of how many months ahead we want to be.
I have a similar category I called "Expenses Overflow". I started it, because my income is lower than my basic expenses in 5 out of 6 months, and 50% higher in the 6th month. So, I load up the Expenses Overflow category when I get that extra money, and move it over to cover my bills during the leaner months. Hopefully, I will earn enough to cover my true expenses, soon. But that system is keeping me afloat.
Personally I like to have a separate bank account for my savings (of course I have a goal for that 😉) and put it in YNAB as a tracking account. This way it doesn't show the money in my budget and I'm less likely to use it for other things than my savings purpose 😁
Very interesting....I am definitely going to give this some thought as I have the big EF but not really any guidelines. I just remember getting burned 6 years ago by an uninsured emergency medical bill of $15k and I told myself I would never be without an Emergency Fund again. 😢
Zero interest?! That's amazing! Personally, I'm not opposed to that-just treat it like a new monthly bill for a few months, and it'll be wrapped up in no time! Just, of course, always make sure it gets it's rightful (and prioritized) spot in the budget! And I'm all about those buffers! True expense funds for LYFE! 🌻 Hannah
This is interesting. I have a "Backup" category where it's been accumulating quite big and untouched for a long time, but I don't budget farther than a month ahead. I still have a personal debt, but it will be paid off next month, so I think I'll revisit this technique after that. What a great way to start 2024 😂
When you're a senior living on $17K the "emergency fund" has to cover a lot of categories first-come-first-served that there's no $ to fund individually.
Really great video! After much pondering on the Emergency Fund discussion, I've decided to keep that category because I think it's important to have the budget accurately reflect the different accounts you have. In your example situation, it seems like all of your monies are in a single account, like a checking (or maybe cash, like what the dinosaurs used), but if the money is in an actual high-yield savings account, it's job is to sit there and accrue the 4%. I find, also, that if I don't separate out the savings category, I tend to think I have more disposable dollars with which to fund. So if I do ever go over on groceries, I'm tempted to just cover overspending with whatever other category has something available, and since there would be plenty available, I don't feel like anything is amiss. Anywho, there are a couple of ponderments.
Hey Timothy! My husband and I actually both have our own checking AND savings accounts! It's not the account itself that's the issue-if your savings account accrues you interest, absolutely let money grow in there! It's more so a question of how you think about your savings dollars-do they all sit in one singular category in your budget called "savings" with no particular job or direction, or are they broken up into many, more-specified savings categories, like car repairs, home repairs, down payment, retirement, new car, etc? We've LOVED the clarity of breaking our savings dollars up into different jobs for us-it let's us know what our savings are actually able to accomplish for us, while still giving us plenty of "growth" metrics and confidence in future emergencies/expenses. And we don't worry about accidentally "spending" our savings dollars, because we essentially disregard which account our money is sitting in. As long as we have enough in our checking account to cover our typical monthly spending, all our other money can sit in a savings account until it's needed, for all I care! Hope that makes sense! It can be hard to initially differentiate between "accounts" and "categories", but once we realize the accounts the dollars are sitting in don't matter nearly as much as the categories they sit in in our budget, it all starts to bring more clarity to our savings! 🌻 Hannah
Probably one of the most helpful and influential videos made in awhile (excuse the pun). I too came across this revelation this month kinda similarly when I realized my “car repair” category was less after creating car registration, tire rotation, oil change and new tires categories.
I'm a teacher and don't get paid over summer. I have five (!) separate categories for summer, labeled for each of the 'paydays' I'm not getting a paycheck. Then when that date hits, I'll remove the money and fund the categories I need to, as if it were a real paycheck. Does this make sense? Should I do that, or is there a better way?
If it works for you then I think that's great!! If you're looking to have less categories then you could combine them into one with the total amount needed as the target. Then you can either 1. Take out the amount for each paycheck like you're doing already (I would put the amount you take out every payday in the name) or 2. When you get to the month before summer you can release all of the money and budget ahead for the whole summer. (I personally prefer to keep all my money in the same month and have a "next month" category just because of the (to me) weird things ynab does if you overspend, but I know it works for a lot of people. (I use to be a Head Start teacher and know exactly how hard those summer months were, I so wish I had YNAB back then. Lucky you! )🎉
I do something similar but I just have one category that I use to cover the summer. To Hannah’s point, you know exactly when to use that category, so that seems like it’s they good savings categories to have.
I think that makes total sense, and I also agree with Savanna-whatever works best for YOU is the best. I love the idea of funding five "fake" paychecks for the summer all year long! That way you don't have to adjust your lifestyle during the summer, but rather you've been adjusting your lifestyle all year long in order to have a smooth, consistent lifestyle over the summer! Also, it's still kind of wild to me that teachers don't get paid over the summer. As if you're not putting in thousands of after-school hours all during the school year, and probably doing plenty of prep throughout the summer months as well! I hope that changes one day. Teachers should be salaried all year round! 🌻 Hannah
@@YNABofficial Thanks everyone! To be fair, most districts I've worked in have our salary spread out over 26 biweekly paychecks, so the pay doesn't stop in the summer. However, my current district only pays the 21 checks throughout the school year, which is A-okay with me because I'm disciplined enough to put the money I'll need into a high yield savings account until I need it!
I think this is my 5th time watching this video over the last week. I LOVE my "6-Month Emergency Fund" category that I set a careful target for (October '23 baby!) by seeing how much we've spent in the last 4-5 months... But THIS is challenging my thinking... Still not ready to delete and re-assign, but getting close. I guess, one thing I like about the separate category is that, because of the target we set, we know if we are "on track" to meet that goal by our desired date. Not sure I could do that without it... 🤔 However, here is an idea: create the 6-month emergency fund category with a target. We can track our progress that way. But, once the target is met, THEN RE-ASSIGN the money FROM that category INTO six months of regular categories. 💥
I did this last year and quite frankly it got too granular. So I collapsed it into Appliance Replacement, Furniture Replacement, Car Down Payment, Reno Kitchen, Reno Bathroom. This replaced 20 ish categories. Emergency I think has value because it is for 'unforeseen emergencies' which means you can't plan for it. That said I do cap it at a certain $$$ Value.
The whole emergency fund concept makes so much sense. I’ve been pondering this and I think this decided it for me. Now to have this conversation with my husband at our budget date.
You could even watch this video together if that helps! The more I thought about, the more I just realized we've been building our perfect emergency fund this whole time by budgeting into the future! Should income loss or a totally unprecedented emergency actually happen, we can always roll with the punches and rein in our spending a little bit in those future months, but with budgeting ahead I know EXACTLY how far my money can truly take me! 🌻 Hannah
OK, wow, I admit, both of those had me jaw-dropped. At my 60+ years of age it's counter to decades of "financial advice" I've heard pretty much all of my life. But I 100% get what Hannah is saying. It's making me re-think my categories and how I fund them. As well as how far into the future to fund, right now that being only the next month. I struggle against the idea, that has gotten stuck in my head, that any given category only needs as much money in it as I am guessing it will need. And everything else just goes into that blobby/nebulous "savings" category. I am so grateful that I am able to look this far into the future with my income and expenses. And YNAB definitely helps me sort it out. I'm definitely going to review my categories!
I found YNAB earlier this week - and sucking all this in. I have to admit, it feels like a fire hose at times. Now that I’m starting to grasp the four rules - this right here made it all click. It’s a totally different way of thinking about money - but it makes complete sense. Just getting started on this journey - and wanted to thank you for making it all click for me.
YAY!! Oh my gosh, I'm so glad to hear that. It was a total game changer for me, too. I can actually visualize the depth of security my money gives me, which is so huge. Hope the method continues to click for you and energize you!! There's definitely a rush that comes with aging your money and getting further and further ahead in the budget-it's so easy to fall in love with it! 🌻 Hannah
Wow, I just got rid of my Savings account a few months ago because of the reasons you mentioned! One of those "ah ha!" moments. I like to have my Emergency fund as one big lump rather than dividing it into all the separate categories so I don't think I am ready to get rid of it right now.
Oh man...seeing and hearing these insane high numbers makes me feel both discouraged yet hopeful. I am stabalizing my income right now, on top of a potential job change, returning to school and very high rent on top of other bills. I'll get there someday, but i will say that not having a meager 8 cents in my bank account as i wait 2 days for my paycheck to come through is something I'm very proud of. And i get to go on a little vacation in july fairly comfortably:)
(For the record, I always use fake budgets for demoing, so don't be discouraged!! You will ABSOLUTELY be there one day, especially if you keep prioritizing those true expenses and funding your future! Hope the job change is an EXCITING and empowering one!! YAY to vacation! Sounds like you've been putting in a lot of hard work and the down time is deserved!) 🌻 Hannah
Having the emergency fund category to start with is probably helpful in the beginning. Once when our budgeting muscles get more developed and we assign money months ahead of time, then I'll feel comfortable deleting the emergency fund category. We're only about half a month ahead on our budget as we're trying to aggressively pay off credit card debt!
I agree! When you're just building up the budget and aren't quite a month ahead yet, having that back-up safety net would be a huge sigh of relief! These days, though, I feel like I have 14 safety nets built right into my regular, everyday budget!! Thought it certainly didn't happen overnight-took many months (years?) of consistent budgeting and planning for those "one day" expenses. 🌻 Hannah
I'm in disagreement with alot of Ynabbers on this one. I like having a nice chuck of money labeled emergency fund (3 Months of income.) The catch is...we have a very specific definition about what constitutes an "emergency." So we have money for things like a job loss or emergency house repair and are now funding our true expenses OUTSIDE of the the EF. I love the level of peace and security this brings our household.
That's important! I think my biggest hang up on the emergency fund is that most people *don't* have a defined set of guidelines regarding when to use it. The fact that you have very intricately defined when it's allowed to be used is the key. I like budgeting into the future instead because I'm such a visual person, it helps me see *exactly* how far each dollar could take us in case of job loss! I can't do the math on one big lump sum quite as quickly 😂 🌻 Hannah
This makes so much sense! I’d rather have an emergency group category so I can add the categories in bc I’m the type of person that will put off adding money to it if I don’t feel it’s an immediate emergency.
You finally solve my biggest issue with the budget, Today's topic is like you step up or step out from the budget. I will say Emergency Fund IS the name of the Budget (due to the aging) and Goals is the GROUP for all the emergencies I might anticipate. Thank you so much.
interesting about the emergency fund - ok move the money to your categories into the future in case of job loss...but it's often recommended to have 6-12 months of living expenses - budget doesn't go out that far - right now it only goes to July
Mind blown. I love love love this idea. Why why why do I have an emergency fund when I can just get a month (or more) ahead? Thank you, as always, Hannah!!
Love this!!! I do have a lot to think about. I just retired and our financial advisor is recommending I hold off as long as possible from withdrawing from my IRA-and instead use up the money I have saved “in case I got laid off for 6 months.” The thought of taking that Emergency Savings category and assigning to future expenses months away is blowing my mind!
Right?! Same. But it makes just as much (if not far more..?) sense, right?! Funding a detailed "emergency" plan that reflects the actual spending you do in your actual life instead of funding one "in case of emergency" category. A new perspective that I'm not sure how I didn't figure out sooner?! 🌻 Hannah
I'm with you on the months ahead instead of the emergency fund, my goal is to get 6 months ahead (currently at 2.5) and the specific savings categories. However, I still keep a category called "savings account buffer" that I try to keep at 2k. The purpose of this is for things like when I loan friends $, or I pay for something that my job is going to reimburse me for in a couple months. Or y'know, those true emergencies that I haven't thought to budget for yet!
So I've had some real issues with eliminating the Emergency Fund (3 months of future income) category and it has to do with the functionality in YNAB. I have really liked YNAB and will continue to use it but a huge frustration I have is with how difficult it is to move money from one category to another. It's not particularly intuitive and you end up having to memorize the number when retyping it somewhere else. When you budget into the future, YNAB assumes that all deficits should come out of the furthest month out that is budgeted. So if it's May and I have June, July, August all budgeted and I over-budget in May by $100, the -$100 shows up on the August page. Because of this I've opted to simply hold 3 months of income in one category and then I use last months paycheck to pay for next months things as they come in. The other frustrating piece of this is that if you increase a budget target you now have to manually go through and adjust the assigned amount for every future month you've already budgeted. With all this extra work, I say skip it.
What a great video, thank you... Bonus that it gives me a good starting point to figure out some categories for my teens instead of just a lump generic "Savings" account...intentional savings categories are a much better life preparation tool!
With YNAB, I've definitely swapped from having the frustratingly specific spending categories with generic savings that felt pointless, to now having very broad spending categories with much more detailed savings. But I do keep a significant bulk of my savings account in a 3 month "Income Replacement" category at the very bottom of my budget to basically anchor the whole thing because that's a comfort to me.
This is the most useful YNAB video I've ever watched - and after using YNAB for years, it's really opened up a few new ideas - especiallybudgeting in future months (never done it).
WOO HOO!! I will take that as the biggest compliment of my day! So glad it helped get the wheels turning in brand new ways! Sure did for me too! 🌻 Hannah
🥰 Thank you! Was genuinely nervous to put such controversial thoughts out there, but I just realized I was trying to do ONE thing TWO different ways, and I just needed to pick ONE and run with that instead of trying to maintain them both! 🌻 Hannah
If your emergency fund is only meant to cover loss of income, then aging your money might work well for you (I don't like to budget into the future so I prefer to keep funds for loss of income in its own category). But "emergency" can refer to any unforeseen large expense and you're not always going to have a sinking fund set up to deal with those. Yes you can anticipate that your house or car might need repairs and create funds for those. But in the past 3 years we've had 4 or 5 large expenses come out of left field that we never would have anticipated, such as a funeral for my brother-in-law who passed suddenly, or elder care attorney for my parents. Can I handle that by just moving money from other categories? Of course, but I'd prefer to have a fund just labeled "emergency" for those times when life just punches you in the mouth. It helps me maintain visibility over the fact that I really never know what's going to happen, and keeps me from poaching that money for other things such as my leaky shower.
That makes total sense! I'm so sorry to hear about those unexpected events 😔 I think in our case, we would likely just take money built into the future and bring it back into the present, since our emergency fund is essentially what we have budgeted out for future months. It's just another way of rolling with the punches when life's priorities change! But I can also see how having an emergency fund in that circumstance felt like a no brainer. It really just comes down to how you like to view your money and your savings! 🌻 Hannah
I agree with this completely (for most people). I would say this is advice that should be at least considered by everyone. Some other reasons I have decided to get rid of my emergency fund is that I am fortunate enough to be putting money into other post-tax investments like general brokerage and Roth IRAs. In the event of a capital 'E' Emergency that cannot be addressed by your already budgeted funds, those investment funds, which are tracked outside of YNAB and intended for retirement / financial independence purposes, can be tapped as well. Sure, not ideal, but neither is a true Emergency! There are always trade-offs, and some people may not feel comfortable with this. When I have too much money sitting in a high interest bank account, it is still losing value, and I prefer to have it invested.
Totally agree with you on this point Hanna! When I first started YNAB-ing years ago it drove me crazy that my budget savings category didn’t match my savings account balance. Then one of these videos, not sure when or who-who’s?- anyway I realized that the categories are the savings as you’re saying as I type this… Today I use those Views to “hide “ those savings. Love you Hanna look forward to all your videos
Yes! If you REALLY want your savings account balance to match your savings categories' total dollars, you can always stick all of your various savings-type categories into a savings category GROUP, and then just make sure that the total available balance of that savings category group matches your savings bank account balance. Did that make any sense?! Did I just say savings four hundred times?! But the point is, as long as all your dollars have a job, it doesn't actually much matter which bank account those dollars live in! (As long as you always have as much in your checking as you typically spend in a month, of course 🙃) 🌻 Hannah
I just signed up to YNAB, and I am watching all the videos! I have an emergency fund and am totally on board with deleting it! You have conviced me! Just not quite yet. I think I need to age my money first and continue to transform my financial situation with the YNAB method. This is such a solid argument and I am excited about my financial future! Thanks Hannah!
Be careful. I followed the advice as it makes sense, but when I deleted my "emergency fund" account and category that had very little transactions or movement, it lead to a bunch of issues in my budget that I had to fix... I'm new to YNAB, so it only took about an hour to fix, but my Aged Money metric dropped from 17 to 4 days after the change. I guess this is now a better reflection of how far out I've assigned funds, so I'm rolling with it and simply tracking the "Emergency Fund" in an unlinked savings account that is not part of my budget since it won't ever be assigned to anything in the near future. My other savings accounts that have a specific job are in my budget.
Odd @@MarkNattress. Since my comment is 3 months old, I've already done it and had no issues with the change. It's been incredible to have my emergency fund have jobs, in fact! Not sure what happened to your account, maybe you should have contacted YNAB support?
Ok logistical question here: After my mind was completely blown by this concept (thank you 😊) I eliminated my E fund and assigned those dollars to the appropriate categories in future months. I got a paycheck today and I got a say, I have no idea how to go about this. I have a fear that it feels like I have more money than I do, but when/how do I assign to future months when new money comes in? This idea makes perfect logical sense so I want to make it work! Thanks again, Hannah!
For us, we don't overcomplicate it-when a new paycheck comes in, we just fund the budget from the top to bottom, as far as the money will take us. Now, we're able to do this because we're not stuck in the paycheck-to-paycheck cycle anymore-if we were still stuck in that cycle, we would fund based on top priority first (things like mortgage payments and bills with due dates), and then eventually get around to funding our other less important categories. BUT, since we are more than a month ahead, whenever we get a new paycheck we just click into whatever month we're currently funding (for us right now, it's July!), and just start with the very top category in our budget and work our way down until eventually (and a few paychecks later) the whole month is funded. We also structure our budget so that bigger, more important expenses are at the top and will get funded first (like bills, utilities, living expenses like groceries and gas) and less important categories that take less priority live at the bottom of the budget (like fun money, dining out, haircuts, etc). Let me know if this makes sense or if I missed your question! The real beauty is that once you're a full month ahead and feeling secure in your money, you really don't need to worry as much about what order your funding the future month-just fund away! 🌻 Hannah
This was a really helpful question and answer for me! I had no idea I could go months into the future with my current savings and then apply new paychecks to future months. 🎉
2 months is not enough for me. I like a bulk amount that just makes me feel safer. Medical emergency, loss of a job, some crazy thing we didn’t think of. Just seeing it in my bank gives me peace. 😅
I definitely understand removing the emergency fund when you have that much money and can budget months ahead, however as someone who is still paycheck to paycheck (working on fixing past financial mistakes), I need to have an "emergency fund" or "income replacement fund" as some have also called it. I do have specific categories for vacations, car repairs, etc but I move that money into my savings account (connected to the budget) so it can acrew interest.
Ben (OG Ben) got me onto calling my little sum a prudent reserve while I also work on fixing past mistakes... But I think back-up bucket also sounds cool now I explain it to people. I think when you're working on rule 4 you need that little pile as a catch all buffer. But every budget is different so, my 2c worth.
Oh, I totally understand that!! Makes sense!! Sounds like you're handling everything super well given the circumstances. Looking forward to the day where you can start budgeting ahead into the future! 🌻 Hannah
Glad to hear you do have some true expenses building as you pay off your debt. This is part of the magic of YNAB. I had a lot of debt when I started and couldn't believe how much easier it was to pay off debt when that wasn't my only obsession and I didn't have to keep going into debt to take care of a car repair or an unscheduled event of some kind.
Great thoughts! My question: if you do run into an emergency and need to use what is budgeted in the future, what is your process for moving that money to cover an expense in the current month? Do you go into the future month and move the money needed back into to be budgeted and then apply it on the overspending in the current month?
Yup! I would literally pop ahead into June or July's budget and zero out some of the "assigned" amounts in some categories I care less about having funding-this will send those dollars back to your "Ready to Assign" category at the top of your budget. Then I'd just click back to the current month, and redistribute all those "Ready to Assign" dollars back into the present! Easy peaze, lemon squeeze. 🌻 Hannah
I’ve always had a “Savings” and “Emergency Fund”… but now that you explain it like that it makes sense. So, I’ve decided to ditch (read hide, for the sake of keeping the previous history) these 2 categories and rather try embracing my true expenses more. Fingers crossed 🤞🏻
Hannah, I love, love, love your videos' Unfortunately, I've been off the YNAB wagon. It's been a rough year cumulating with a breast cancer AND kidney cancer diagnosis for me. My hubby retired last year and is willing to take over YNAB from me but I like doing it but I'm months behind reconciling our accounts. I'd like to get more pro-active because I'm one of the trackers verse budgeter. I'm going to go watch more videos, like 3 ways to Organize your budget! Thank you for your engaging videos!
Considering you are now monthS ahead on your finances, could you do an updated “getting a month ahead” using some of what you said on this video & any new or old advice. Thank you!!
I appreciate this so much! This has been a change in the making for a few months now. The more realistic & detailed I've gotten with my categories, the more I've been wondering what my emergency fund is for!? I've got some reassignments to tackle this weekend! Thank you Hannah and team for reinforcing this concept!
The best content maker I’ve ever known. Every video is a masterpiece.
Agreed!
Oh my gosh 😐 You are so kind!! That made my whole week! Month! Thanks for the encouragement!
🌻 Hannah
Absolutely agree! ❤ everything you say makes so much sense! I often watch the videos with my budget on the side and make changes as I go! I love Hannah’s tips and updating my budget.
Hanna has never failed to impress and inspire and I love her humorous style
I agree !!
I think it’s just easier to manage an emergency fund category than budget into the future for the following reasons:
1. I don’t know what kinds of emergencies will occur so I can’t define a category for all of them beforehand
2. It’s a lot more overhead to juggle money across multiple months. I find that budgeting month to month and depositing whatever is left into the emergency fund is more efficient.
I found the concept of "what are you saving for?" mind blowing. I work in the financial services industry and have started asking customers what they are saving for. NO ONE KNOWS! Giving them homework to sit down and figure out what the money is for also gives them freedom and permission to spend it when they actually have a real need to use it. LOVE THIS!
We used to budget a few months ahead, but found we were less in touch with our money and more likely to overspend, so we only fill up one month ahead, and keep a small emergency fund to help cover another month. Our age of money is 60 days but happy with that as we aggressively ‘spend’ our savings to tracking accounts. And if we faced income loss we’d trim our spending, eat down the balance of our pantry, pull out of long term savings, and if need be, lean on family and community.
This is what I do too! For me it's the right balance
Interesting! I find the opposite - to me I’m less likely to touch it if it’s budgeted in the future than if it’s just in a future or emergency category in a lump sum.
I'm with Cassidy, but know people with SUPER successful budgets in both camps!! Whatever gives you the most peace and clarity, I'd say! It just hit me that I was trying to do ONE thing in TWO different ways. So I decided which I liked better and ran with that one!
🌻 Hannah
We do a bit of both. We have a SGW fund (Sh*t gone wonky fund) & car repairs, home repairs, 3 types of Educational funds (tutoring, curriculum, bonus funds for outings with our homeschool groups), etc. Plus debt fund (as we are paying off some Surprise! You get to pay off this new debt)… I’m also figuring out how to streamline our budget in a way that make a bit better sense for our family. Considering we have to pay for a new roof with this latest hail damage that came through… That SGW fund will be covering the cost of our deductible.
How do I condense my categories? There isn’t an edit button as was illustrated in an old video
This answered so many questions I had about whether to prioritize emergency fund or putting money toward future months' budgets. Thank you!
🥰🥰🥰
🌻 Hannah
Love the change in focus!! That “what is the savings/emergency fund even for” question was the first big breakthrough I had with YNAB. I had never questioned what exactly that money was there for, and being able to break those down into more specific categories was a huge, huge relief. But I appreciate this video because I still hadn’t completely let go of having those savings/emergency fund categories! I think I’m gonna take the plunge and put the rest of it into the categories I have and hide it! Thanks Hannah, love the new laptop lol
Relief is a great word for it! It's like putting a name to a face (or a face to a name?). I never realized how "blurry" those generic categories were until I experienced the security of having more individualized true expense categories.
And THANKS, I finally abandoned Apple. This is the new 2022 Granny Smith. Simple and cost-effective.
🌻 Hannah
My brain works like this: all of the things that you prepare for with true expense categories are not emergencies IF AND ONLY IF the categories are well funded. So if I'm just starting out, I like to first focus on a lump sum emergency fund category that I can draw on whenever "emergencies" pop up that aren't fully funded with expense categories. Once this category is funded, I focus on the true expense categories. Only when those are nice and fluffed up will I consider getting rid of that emergency fund category. It makes it so that I don't have to scramble my whole budget moving money around to cover an expense. I just think it's neater somehow.
Me too! My brain gets easily confused when I distribute money to months ahead. Also, we're not yet to having fully funded expense categories. So funding a single large Emergency Fund first makes sense for us. Second will be "fluffing" (I love that) the True Expense categories.
Much agreed on deleting the Savings account, but I do still have an emergency fund (called “Zombie Apocalypse”) with a couple of months income in it. My reasoning to have this instead of budgeting ahead, is that if I do suddenly lose income, I would make some different choices in filling categories with that available “emergency fund” instead of budgeting ahead the way all normal months go. That way that same sum of money can last me quite a bit longer. This helped me a lot when I had to quit my job a few years ago.
That makes total sense! Even if we lost income, we too would go through our future budgeted months and "comb them down" so we could take that money even FURTHER into the future. Totally understand that mentality!
🌻 Hannah
Zombie Apocalypse ❤❤❤
Zombie Apocalypse is frickin' brilliant! I named mine "Can't Touch This". And of course I continue the song in my head. Never out loud. 😂😂😂
Well done, Hannah!
In addition to aging our money and budgeting a full two months ahead and planning for all of our true expenses, I also have a “six month income replacement” category for our household. Before Covid I thought it was unnecessary, but given the lack of wages and out-of-pocket medical expenses that hit my little family in 2020 and 2021, this category will see us through another such catastrophe. (And if we never need it, we’ll roll it into a retirement category down the line.)
I get why you’re de-influencing the category, but this is one safety net I refuse to ignore.
Coming from a Dave Ramsey fan, the emergency fund lives strong in my ynab budget.....but this truely makes a lot of sense. A emergency fund category ive been carrying for a decade is really just an emergency slush that SHOULD be covered by my well rounded true expenses...... Very eye opening.
And thinking more about it....ive really never used it....unless my true expense catgories couldn't cover the expense.....
I feel the same way. Ramsey taught me to build up the emergency fund, but there have been very few (not sure if I can think of them) actual times that I dipped into it outside of the actual line items I've been saving for in my budget.
Exactly! The Dave Ramsey style emergency fund has been so prevalent in my mind for so many years. This video discussion is blowing my mind! But I recently took a year off of full-time work and barely even dipped into my emergency fund. So what is it there for?😅
I think "Emergency Fund" is the one I get the most pushback when discussing budget categories. I try to clarify that just about everything that would be an "emergency" is really just an inevitable, unscheduled expense, but I really like the idea of asking the question "what emergency am I not already anticipating"... and emphasizing Age of Money is an "emergency" fund... Thanks for another great video!
I think as long as you are PLANNING for emergencies, it doesn't much matter which way you do it or what you call it, as long as you're not duplicating the effort, like Hannah was. I find it simpler to have a lump category (that i call Security, most of it kept in an HYSA) that can cover truly unpredictable expenses, i.e., those outside of my planned "true expenses." The age of money tells me how many months of expenses I have covered without actually having to budget into the future. When the Security category grows larger than i think necessary, and the economic environment is right, it becomes a source of investment funding.
Absolutely! Well said! I didn't even know I was duplicating the exact same efforts till my husband pointed it out. Using your age of money to measure how far your money is taking you is also a great tool and way to find some financial clarity/security! Well done!
🌻 Hannah
Alright so that intro had me dying lol. Hannah is hilarious!
I'm with you on being specific about my savings goals. I do that and it is great. I can't get rid of my emergency fund category. I have true expenses categories for expected things like insurance and Christmas shopping, but I want the emergency fund category for the unexpected which can take several forms. In 2012, I got laid off and it took me 11 months to find a new job. That emergency fund saved me. Two months isn't enough for me.
You don't have to only budget two months out. You can budget 12 months out, if you want. Having 12 months budgeted out vs having 12 months of expenses in an emergency fund category is basically the same.
Might be the best Hannah video. Made me rethink my savings categories and resolve to make changes.
THANK YOU!! Wow, that is such a compliment because I was a lot more "unhinged" in the making of this video than I usually am 😂 Good to know the people enjoy the more "off the cuff" thoughts of my mind!
🌻 Hannah
Following a natural disaster, we had $8k+ in damage. Home repairs & a couple other “savings” categories were able to make the necessary repairs. Because of YNAB. Also made me take a hard look at my insurance policies, making better choices moving forward. Precisely like you illustrated. ❤
Wow!! Amazing work! Rolling with the punches like the pro-iest of the pros. Also, so sorry you had so much damage to deal with 😫 Sounds like it inspired a better insurance pursuit though, which in the end could be very worth it for future emergencies!!
🌻 Hannah
First Hannah: It's "are you picking up what I'm LAYING down" 🤪
I do keep an Emergency Fund category that is back by money in a Betterment account. It is invested in some stock funds but mostly safe bonds and treasury notes. Because it is more volatile than a bank account, I don't want my individual categories going up and down with the markets. In seven years, it was mainly tapped into my first couple years as I got my true expenses fully funded. Then I was in a situation 2 years ago. My brother suddenly passed away. He was single with not a lot of money. I was the only one in my large family that could say, "Put the funeral expense on my credit card (for cash back points) and I'll pay the card off from the Emergency Fund when the bill comes in." I would say that there are still some really weird unexpected expenses.
Uh oh, Matthew... I googled it and... it looks like we're both right. Plus, the double "p" is just more fun to say!!
And wow, Matthew!! What a touching story. I can't imagine how it must've felt to provide for your family in such a huge way in such an unprecedented circumstance. So sorry to hear of your sudden loss 😔 VERY impressed at your ability and confidence to step up in such a hugely impactful way, and I hope the good you put out has come right back to you over the last few years!! Financial security isn't just for us-it can benefit SO many that we love! Thanks so much for sharing your story!!
🌻 Hannah
Having my budget fully funded two months ahead gives me *so* much more peace of mind than a generic "emergency fund" ever did. I can clearly see that Future Me could pay rent and buy groceries even if I lost my job. It's fantastic!
Yes! I know that no matter what I can get groceries next month and fill up the car and I won't even need to cancel our Hulu subscription! Feels good 😎
🌻 Hannah
I'm fully funded through to the end of July. I have funds for most "emergencies" but, personally I want to still have an emergency fund of some sort as it gives me piece of mind that I can pull from it if necessary. I've been a YNABer for more than 10 years and yet I still feel better with a EF.
I'm so glad you brought up about the savings because I've been doing this for some time and it has helped have more confidence in knowing I have the money for that specific thing. It's too overwhelming to have it all together into one savings category
I got rid of "Savings" ages ago and really love having particular goals (new car) and robust sinking funds (fix old car) for irregular big expenses. However, I still won't give up the "Emergency Fund" AKA the "Income Replacement Fund" because, honestly, I think most people need 6-12 months of money to protect them in case of injury, illness, or long-term unemployment...and I'm just not going to budget that far out into the future. It's cleaner and easier to have a set amount in the "Income Replacement" category (and keep it tucked somewhere earning interest) than it is to integrate all that money into the regular budget. If we did have a major melt-down, chances are everything would have to be re-assigned anyway.
I've found it's all in how you like to visualize it! I would feel more secure seeing my budget fully funded for the months of April, May, June, July, August, and September than have, say, $25,000 sitting in an income replacement category, because one gives me more personal security than the other, whereas others might feel more comfort in the big lump sum. It would also be easier for me to know when I've hit my spending limit in May or June or July by budgeting into the future and slowly depleting my categories over time, rather than having to deduce if I'm staying on track spending from one larger sum of income replacement money. Whichever way gives you more peace and security, really!
🌻 Hannah
I love it! I don't have a Savings category any more but I do have an Emergency Fund. I love the question: "What emergency am I not already anticipating with my true expenses?" SO SPICY!! I'm going to have to revaluate if I need to delete that category...
I found my emergency fund quite useful last year when my AC part of my HVAC gave out and required complete replacement plus installation via crane onto the roof. Almost $5K required at one chunk, which was definitely different from my normal "condo maintenance." level (replacing light bulbs and batteries.) I think of the emergency fund as covering the "oops, I didn't realise I needed to save for that as well" (a.k.a. asteroid takes out front porch) situation.
When we first started, we made a generic "savings" category because I didn't know what to do with our generic "savings" money! Over the last 5 years, we've created separate savings lines for separate savings goals. It was a great way to ease into YNAB before diving in completely.
Now THAT'S the good stuff! Love to hear it! Same, it's been so relieving and comforting to see how many different scenarios we're prepared for now in all of our various true expense categories. Thanks for sharing, sounds like you're crushing it!
🌻 Hannah
I agree with the emergency fund with a caveat, especially for my fellow disabled and/or chronically ill folks. Medical emergency fund. I have an "HSA backup" of $450/month. However, I will be taking $5k of my emergency fund and putting it straight towards a medical catastrophe fund. Think ER bills, hospital stays, anything unpredictable that can come with massive expenses in the US. Yes I hit my OOP max with insurance every year. Reality is, Im in the US and I'm disabled. Anything can happen.
Agreed - medical emergency costs can stack up and get out of hand so quickly! For our family of five, having that emergency fund set aside for true emergencies (fire, accident, loss of insurance, illness/injury/death) is critical to feeling financially secure in case of something terrible happening.
Personal finance is "personal," as in not everything said in a YT video is going to perfectly address your specific circumstances. That's where your own wonderful brain can build on the ideas in the video (or article, or book) or reject them and try a different method. And that's fine. Just because some concepts may not work for YOUR circumstances it doesn't mean they're "wrong" or "irresponsible," it just means it's not applicable to you right now (or ever, maybe).
You made a really good argument for budgeting ahead rather than keeping an emergency fund. My only hesitation is that the feeling of scarcity keeps me from overspending. If I had money budgeted months into the future, I may be more likely to go over budget in the current month. I also might not feel as bad about taking money from a less important category in future months than my "emergency fund" category.
It took me so long to find the comment that brings this up! Exactly my thought! The scarcity mindset is what fuels me, but this deleting EF concept is also blowing my mind. And I am curious how many months I can fund into the future (aging money). I'm just starting YNAB though. So, it'll take me awhile to be comfortable with this unconventional yet makes-so-much-sense concept!
Totally Agree! We are the same. Age of money is 274 days. No Savings category or emergency fund. Just months of future spending already funded! Woot Woot. Thanks for the video
What's your process for funding future months? You can only look ahead 2 months in the actual budget. Do you have categories for future months or something?
Hey there! You can actually always look one month *beyond* the last month you have funding in. For example, if I only have money budgeted in the month of April, I'll only be able to click forward into the month of May. BUT, if I also fund some of my categories in May (or, ideally, all of them!), then it "unlocks" June and I can now click forward into June and fund categories there as well! This is how people can continue budgeting even further and further into their future, but *only* if you've taken cate of the prior months first. Kinda helps keep us from getting too big for our britches 😂
🌻 Hannah
@@YNABofficial Oh I didn't know that, that's awesome! I'll have to try that now. What happens if you edit your categories (like deleting, archiving, or changing the goal), does this apply to future months that are already funded as well?
Chase, great questions.
Hannah? Maybe a video on this forward funding? I'm such a visual person. 😊
i jumped on the YNAB train just yesterday, but am already transforming my entire financial situation thank to you guys. I have started a "New Home" Savings that i will try to aggressively fund with clear monthly goals, and have stopped building an emergency fund, and instead use that emergency fund to age my money for up to half a year. Once i got that, i will start doing other stuff, maybe even start saving for retirement, who knows!
I do both. I have categories for all kinds of things like car repair and (separately) car replacement, household repairs or furniture or whatnot, vacation, annual membership costs, the lot. But even after using YNAB for many years, it still causes me some anxiety to have every dollar planned in such detail. I tried, I really did. But I finally just gave myself an emergency savings fund (for BIG stuff, like I lost my job) and also a category called "Money I Haven't Decided What to Do with Yet". It just makes me feel better. And, because I still put money into categories for car repair and such, there aren't many things that feel like an emergency now. I'm pretty sure "I can pay my bills and I feel good about how my categories are working" is success in YNAB terms. 😉
Also, Hannah, you're my favorite YNAB blogger/vlogger.
I am glad you brought this topic up because it’s something I have been thinking about as I have been watching my budget for 4 years now. I am inclined to agree with you and have actually been moving money into named categories rather than just savings or emergency fund.
My thoughts on deleting the emergency fund category: That makes perfect sense & I hate it!
Haha Hannah you just blew my mind. I need time to come to grips with this...
😂 It's only one way of thinking about it, but definitely an eye-opening one!!
🌻 Hannah
I've twice tried budgeting my emergency fund (I call it Income Replacement to remind me that it's *only* to replace missing income) into upcoming months, but each time I felt disconnected from what was happening with my money, and didn't feel like I could easily tell if I was building up a bigger buffer or spending it down.
That’s what I’m most concerned about too. I really like budgeting one month out for big stuff (like rent) but I don’t think I could do much more than that without getting overwhelmed
@@HaveaBiscuitt Perhaps there needs to be an easily accessible number at the top of each month displaying how much money has been assigned into that month. A quick total so you can see exactly how much you have pulled forward at a glance. May help
Ooh, you actually *can* find that number pretty accessibly on the web app! If you go to the right-hand side of the screen, drop down the "Assigned in the future" box. Here I can see in the month of April what I've assigned to May, June, and July!
Also, if you haven't before, click the "Ready to Assign" amount at the top of your budget, and it will give you SO many budget detail breakdowns, like "assigned in the future" and other helpful tidbits-it can even let you know if you have accrued some overspending in the future. You can learn more about the Budget Header from this article! support.ynab.com/en_us/the-budget-header-an-overview-BkmiuJ_C9
🌻 Hannah
I made this argument on Reddit a few months ago and the peanut gallery did not think having so much saved across categories was an emergency fund. If you have inclusive, specific categories I very much think you do. And in fact, most would cut spending to essentials if there were income loss-- meaning that money in your categories would stretch further. And because of YNAB's flexibility you can change your categories as needed because your priorities change when you have income loss. I'm glad I'm not the only one to see it this way. Thanks for making it popular maybe 🎉
Yes!! If we DID ever lose one of our income sources, I would absolutely "edit" the future too. But it's cool to know that, as of right now, we have such a buffer built up that we wouldn't even HAVE to eat out any less or buy the dog less toys (even though we'd probably instinctually and wisely do *both* of those things) for two whole months. To me, that's even MORE security than a one-sum emergency fund that doesn't tell me what I'm allowed to use it for (or if it includes the occasional latte, because yes, I AM THAT PERSON). Likely, we'd "shave" a lot of unnecessary categories and move that money even FURTHER into the future and into our more essential categories, so even MORE security than I had five minutes ago.
But, sometimes it's just about how our brains work. Some feel more comfortable seeing one BIG security blanket. I feel better knowing I have a solid security blanket for each possible category of "the less expected" in my life 😂
🌻 Hannah
@@YNABofficial in January I wrote out all our expenses and income to figure out a monthly cap to what we should spend. I used to budget into the next month but now I'm trying out the "next month" category and I labeled it with the amount needed to fund the next month. Really there's no difference in doing it one way or the other but you're totally right about our brains. I needed to try something new just to keep the budget feeling fresh and challenging lol. When I figured out our monthly numbers, I also created a list of the essential expenses and came up with that number for an emergency situation. It's really easy to do a quick total of my accounts divided by that number and have a good idea of how many months our money could last. I'm 2.5 years into YNAB and I love that we keep learning and adapting along the way ☺️
Oh, I totally get that! A "refreshening" can help with accountability and excitement, for sure. Sounds like you're doing a GREAT job of thinking ahead, preparing for the future, and building your secure financial foundation! Couldn't be more proud. 😊
🌻 Hannah
@@YNABofficial honestly couldn't have done it without YNAB, you!, and Ben and Ernie. I primarily used the videos you guys put out to get started, learn more, etc. You are awesome at what you do and your videos are so fun 🥰 Thank you!
Ok I have a question.. when is Ynab going to have a Ynab store with Ynab merch? Been waiting for a hot min.
I truly can't say! They're pop-up sales, even to us, so we're not sure when the next one will be happening! I'm looking forward to the next one, too!
🌻 Hannah
Interesting video!! Budget nerd here. I am 54 y/o and have loved banking/budgeting/numbers since I was a kid! YNAB has been a big deal in our financial life, my hubs and I love it. The topic of holding an emergency fund, for YNAB'ers, really all comes down to how we categorize and allocate our money. (At least, that is my take on what you are saying here). You and your husband have an emergency BUT...an "emergency fund" can be money earmarked under "emergency fund" in one lump sum ......OR it can be money earmarked under "home, vehicle, medical" in various sinking funds PLUS money allocated for next months bills, etc. >>KEY takeaway....the emergency fund is there; it is just spread out over many funds. Great topic Hannah!
Absolutely! The emergency fund is just *actually* applied to and curated for your actual life! Imagine an emergency fund that came with it's own fully funded groceries category for each month, a specific car repair category to always have your back, guaranteed three month's worth of rent-that's what budgeting ahead in YNAB is! The perfect emergency fund. 🥰
🌻 Hannah
10:28 I’ve been using YNAB since 2007. I put money in an Emergency category back then and we have never touched it. That’s 16 years!! Like you said, we have all kinds of categories for future stuff that are kind of like “mini emergency funds”. Thanks for the “light bulb” moment. Now we have more money to use somewhere else!
By the way, we have been completely debt free since 2008. Thanks to Jesse and the YNAB team for helping make our dreams come true!
This is *exactly* the reason why I find this suggestion dangerous. You say you have "more money to use somewhere else." Are you still prepared with liquid cash for a loss of income for the period you decided 16 years ago would be necessary in the event of a job loss? It sounds to me, instead, like you've just decreased the amount of emergency money you have available. That could be fine if you think your emergency fund was too large, but I think this suggestion could mask what's happening for a lot of people.
We got annoyed budgeting into the future more than the very next month. Now we just have a category called future months with a $$ goal of how many months ahead we want to be.
I have a similar category I called "Expenses Overflow". I started it, because my income is lower than my basic expenses in 5 out of 6 months, and 50% higher in the 6th month. So, I load up the Expenses Overflow category when I get that extra money, and move it over to cover my bills during the leaner months. Hopefully, I will earn enough to cover my true expenses, soon. But that system is keeping me afloat.
Personally I like to have a separate bank account for my savings (of course I have a goal for that 😉) and put it in YNAB as a tracking account. This way it doesn't show the money in my budget and I'm less likely to use it for other things than my savings purpose 😁
When you first said no emergency fund I was like nooooo, but at the end I was like damn great points
Why thank you 🥰😎
🌻 Hannah
This video just blew my mind! I am off now to assign my "emergency" dollars to other categories. Thanks, Hannah!!
Very interesting....I am definitely going to give this some thought as I have the big EF but not really any guidelines. I just remember getting burned 6 years ago by an uninsured emergency medical bill of $15k and I told myself I would never be without an Emergency Fund again. 😢
I have an emergency medical procedures category. I also have an emergency fund that I’m not quite ready to give up yet!
Zero interest?! That's amazing! Personally, I'm not opposed to that-just treat it like a new monthly bill for a few months, and it'll be wrapped up in no time! Just, of course, always make sure it gets it's rightful (and prioritized) spot in the budget!
And I'm all about those buffers! True expense funds for LYFE!
🌻 Hannah
This is interesting. I have a "Backup" category where it's been accumulating quite big and untouched for a long time, but I don't budget farther than a month ahead. I still have a personal debt, but it will be paid off next month, so I think I'll revisit this technique after that. What a great way to start 2024 😂
Congratulations 🎉
When you're a senior living on $17K the "emergency fund" has to cover a lot of categories first-come-first-served that there's no $ to fund individually.
Really great video! After much pondering on the Emergency Fund discussion, I've decided to keep that category because I think it's important to have the budget accurately reflect the different accounts you have. In your example situation, it seems like all of your monies are in a single account, like a checking (or maybe cash, like what the dinosaurs used), but if the money is in an actual high-yield savings account, it's job is to sit there and accrue the 4%.
I find, also, that if I don't separate out the savings category, I tend to think I have more disposable dollars with which to fund. So if I do ever go over on groceries, I'm tempted to just cover overspending with whatever other category has something available, and since there would be plenty available, I don't feel like anything is amiss.
Anywho, there are a couple of ponderments.
Hey Timothy! My husband and I actually both have our own checking AND savings accounts! It's not the account itself that's the issue-if your savings account accrues you interest, absolutely let money grow in there! It's more so a question of how you think about your savings dollars-do they all sit in one singular category in your budget called "savings" with no particular job or direction, or are they broken up into many, more-specified savings categories, like car repairs, home repairs, down payment, retirement, new car, etc?
We've LOVED the clarity of breaking our savings dollars up into different jobs for us-it let's us know what our savings are actually able to accomplish for us, while still giving us plenty of "growth" metrics and confidence in future emergencies/expenses. And we don't worry about accidentally "spending" our savings dollars, because we essentially disregard which account our money is sitting in. As long as we have enough in our checking account to cover our typical monthly spending, all our other money can sit in a savings account until it's needed, for all I care!
Hope that makes sense! It can be hard to initially differentiate between "accounts" and "categories", but once we realize the accounts the dollars are sitting in don't matter nearly as much as the categories they sit in in our budget, it all starts to bring more clarity to our savings!
🌻 Hannah
Probably one of the most helpful and influential videos made in awhile (excuse the pun).
I too came across this revelation this month kinda similarly when I realized my “car repair” category was less after creating car registration, tire rotation, oil change and new tires categories.
WOO HOOO!! I influentially deinfluenced. Now that's a feat.
🌻 Hannah
I'm a teacher and don't get paid over summer. I have five (!) separate categories for summer, labeled for each of the 'paydays' I'm not getting a paycheck. Then when that date hits, I'll remove the money and fund the categories I need to, as if it were a real paycheck. Does this make sense? Should I do that, or is there a better way?
If it works for you then I think that's great!! If you're looking to have less categories then you could combine them into one with the total amount needed as the target. Then you can either 1. Take out the amount for each paycheck like you're doing already (I would put the amount you take out every payday in the name) or 2. When you get to the month before summer you can release all of the money and budget ahead for the whole summer. (I personally prefer to keep all my money in the same month and have a "next month" category just because of the (to me) weird things ynab does if you overspend, but I know it works for a lot of people. (I use to be a Head Start teacher and know exactly how hard those summer months were, I so wish I had YNAB back then. Lucky you! )🎉
I do something similar but I just have one category that I use to cover the summer. To Hannah’s point, you know exactly when to use that category, so that seems like it’s they good savings categories to have.
I think that makes total sense, and I also agree with Savanna-whatever works best for YOU is the best. I love the idea of funding five "fake" paychecks for the summer all year long! That way you don't have to adjust your lifestyle during the summer, but rather you've been adjusting your lifestyle all year long in order to have a smooth, consistent lifestyle over the summer!
Also, it's still kind of wild to me that teachers don't get paid over the summer. As if you're not putting in thousands of after-school hours all during the school year, and probably doing plenty of prep throughout the summer months as well! I hope that changes one day. Teachers should be salaried all year round!
🌻 Hannah
@@YNABofficial Thanks everyone! To be fair, most districts I've worked in have our salary spread out over 26 biweekly paychecks, so the pay doesn't stop in the summer. However, my current district only pays the 21 checks throughout the school year, which is A-okay with me because I'm disciplined enough to put the money I'll need into a high yield savings account until I need it!
I think this is my 5th time watching this video over the last week. I LOVE my "6-Month Emergency Fund" category that I set a careful target for (October '23 baby!) by seeing how much we've spent in the last 4-5 months... But THIS is challenging my thinking... Still not ready to delete and re-assign, but getting close. I guess, one thing I like about the separate category is that, because of the target we set, we know if we are "on track" to meet that goal by our desired date. Not sure I could do that without it... 🤔 However, here is an idea: create the 6-month emergency fund category with a target. We can track our progress that way. But, once the target is met, THEN RE-ASSIGN the money FROM that category INTO six months of regular categories. 💥
Girl, you are great! I’ve learned a lot in only three of your videos ❤ Learned to live differently, with peace of mind, fun, and clear goals
LOVE to hear it! Love that YNAB has sparked in you a new way of thinking about your money. Glad you're here!
🌻 Hannah
True expenses are the key. 🔑
I did this last year and quite frankly it got too granular. So I collapsed it into Appliance Replacement, Furniture Replacement, Car Down Payment, Reno Kitchen, Reno Bathroom. This replaced 20 ish categories.
Emergency I think has value because it is for 'unforeseen emergencies' which means you can't plan for it. That said I do cap it at a certain $$$ Value.
The whole emergency fund concept makes so much sense. I’ve been pondering this and I think this decided it for me. Now to have this conversation with my husband at our budget date.
You could even watch this video together if that helps! The more I thought about, the more I just realized we've been building our perfect emergency fund this whole time by budgeting into the future! Should income loss or a totally unprecedented emergency actually happen, we can always roll with the punches and rein in our spending a little bit in those future months, but with budgeting ahead I know EXACTLY how far my money can truly take me!
🌻 Hannah
OK, wow, I admit, both of those had me jaw-dropped. At my 60+ years of age it's counter to decades of "financial advice" I've heard pretty much all of my life. But I 100% get what Hannah is saying. It's making me re-think my categories and how I fund them. As well as how far into the future to fund, right now that being only the next month. I struggle against the idea, that has gotten stuck in my head, that any given category only needs as much money in it as I am guessing it will need. And everything else just goes into that blobby/nebulous "savings" category. I am so grateful that I am able to look this far into the future with my income and expenses. And YNAB definitely helps me sort it out. I'm definitely going to review my categories!
I found YNAB earlier this week - and sucking all this in. I have to admit, it feels like a fire hose at times.
Now that I’m starting to grasp the four rules - this right here made it all click.
It’s a totally different way of thinking about money - but it makes complete sense.
Just getting started on this journey - and wanted to thank you for making it all click for me.
YAY!! Oh my gosh, I'm so glad to hear that. It was a total game changer for me, too. I can actually visualize the depth of security my money gives me, which is so huge. Hope the method continues to click for you and energize you!! There's definitely a rush that comes with aging your money and getting further and further ahead in the budget-it's so easy to fall in love with it!
🌻 Hannah
Wow, I just got rid of my Savings account a few months ago because of the reasons you mentioned! One of those "ah ha!" moments. I like to have my Emergency fund as one big lump rather than dividing it into all the separate categories so I don't think I am ready to get rid of it right now.
Oh man...seeing and hearing these insane high numbers makes me feel both discouraged yet hopeful. I am stabalizing my income right now, on top of a potential job change, returning to school and very high rent on top of other bills. I'll get there someday, but i will say that not having a meager 8 cents in my bank account as i wait 2 days for my paycheck to come through is something I'm very proud of. And i get to go on a little vacation in july fairly comfortably:)
(For the record, I always use fake budgets for demoing, so don't be discouraged!! You will ABSOLUTELY be there one day, especially if you keep prioritizing those true expenses and funding your future! Hope the job change is an EXCITING and empowering one!! YAY to vacation! Sounds like you've been putting in a lot of hard work and the down time is deserved!)
🌻 Hannah
Having the emergency fund category to start with is probably helpful in the beginning. Once when our budgeting muscles get more developed and we assign money months ahead of time, then I'll feel comfortable deleting the emergency fund category. We're only about half a month ahead on our budget as we're trying to aggressively pay off credit card debt!
I agree! When you're just building up the budget and aren't quite a month ahead yet, having that back-up safety net would be a huge sigh of relief! These days, though, I feel like I have 14 safety nets built right into my regular, everyday budget!! Thought it certainly didn't happen overnight-took many months (years?) of consistent budgeting and planning for those "one day" expenses.
🌻 Hannah
Please do a video on funding future months. How to do it. Pros and Cons. Thx!
Search the channel for "month ahead" for a couple videos on that topic.
We do both-we have a leaner emergency fund that we have set aside but then also have a lot of sinking funds.
I'm in disagreement with alot of Ynabbers on this one. I like having a nice chuck of money labeled emergency fund (3 Months of income.) The catch is...we have a very specific definition about what constitutes an "emergency." So we have money for things like a job loss or emergency house repair and are now funding our true expenses OUTSIDE of the the EF. I love the level of peace and security this brings our household.
That's important! I think my biggest hang up on the emergency fund is that most people *don't* have a defined set of guidelines regarding when to use it. The fact that you have very intricately defined when it's allowed to be used is the key. I like budgeting into the future instead because I'm such a visual person, it helps me see *exactly* how far each dollar could take us in case of job loss! I can't do the math on one big lump sum quite as quickly 😂
🌻 Hannah
This makes so much sense! I’d rather have an emergency group category so I can add the categories in bc I’m the type of person that will put off adding money to it if I don’t feel it’s an immediate emergency.
What an truly mind- blowing, informative video. So glad the algorithm recommended you.
Oh, thank you!! Very honored to hear that!!
🌻 Hannah
You finally solve my biggest issue with the budget, Today's topic is like you step up or step out from the budget. I will say Emergency Fund IS the name of the Budget (due to the aging) and Goals is the GROUP for all the emergencies I might anticipate. Thank you so much.
interesting about the emergency fund - ok move the money to your categories into the future in case of job loss...but it's often recommended to have 6-12 months of living expenses - budget doesn't go out that far - right now it only goes to July
YNAB let's you go more than 1 month into the future. The next month is "unlocked" when you start assigning money in the previous month
Literally a penny will open it up. :)
@@littleluce Thanks!
Mind blown. I love love love this idea. Why why why do I have an emergency fund when I can just get a month (or more) ahead? Thank you, as always, Hannah!!
YES Pam! Always here to help spice things up!!
🌻 Hannah
Love this!!! I do have a lot to think about. I just retired and our financial advisor is recommending I hold off as long as possible from withdrawing from my IRA-and instead use up the money I have saved “in case I got laid off for 6 months.” The thought of taking that Emergency Savings category and assigning to future expenses months away is blowing my mind!
Right?! Same. But it makes just as much (if not far more..?) sense, right?! Funding a detailed "emergency" plan that reflects the actual spending you do in your actual life instead of funding one "in case of emergency" category. A new perspective that I'm not sure how I didn't figure out sooner?!
🌻 Hannah
I'm with you on the months ahead instead of the emergency fund, my goal is to get 6 months ahead (currently at 2.5) and the specific savings categories. However, I still keep a category called "savings account buffer" that I try to keep at 2k. The purpose of this is for things like when I loan friends $, or I pay for something that my job is going to reimburse me for in a couple months. Or y'know, those true emergencies that I haven't thought to budget for yet!
So I've had some real issues with eliminating the Emergency Fund (3 months of future income) category and it has to do with the functionality in YNAB. I have really liked YNAB and will continue to use it but a huge frustration I have is with how difficult it is to move money from one category to another. It's not particularly intuitive and you end up having to memorize the number when retyping it somewhere else. When you budget into the future, YNAB assumes that all deficits should come out of the furthest month out that is budgeted. So if it's May and I have June, July, August all budgeted and I over-budget in May by $100, the -$100 shows up on the August page. Because of this I've opted to simply hold 3 months of income in one category and then I use last months paycheck to pay for next months things as they come in. The other frustrating piece of this is that if you increase a budget target you now have to manually go through and adjust the assigned amount for every future month you've already budgeted. With all this extra work, I say skip it.
That second deinfluencing is getting my head blown away!!! I'm seeing that in!
You leave my emergency fund alone!! Fantastic advice that's seriously giving me something to think about...
This video is so refreshing for a newbie like me! Thank you!
Woohoo!! So glad to hear that!
🌻 Hannah
What a great video, thank you... Bonus that it gives me a good starting point to figure out some categories for my teens instead of just a lump generic "Savings" account...intentional savings categories are a much better life preparation tool!
Wow, I never thought about deleting that category. Thank you I will think that one over!
With YNAB, I've definitely swapped from having the frustratingly specific spending categories with generic savings that felt pointless, to now having very broad spending categories with much more detailed savings. But I do keep a significant bulk of my savings account in a 3 month "Income Replacement" category at the very bottom of my budget to basically anchor the whole thing because that's a comfort to me.
Follow your heart! Whatever makes the most sense to you and your financial security is the best plan, always!!
🌻 Hannah
This is the most useful YNAB video I've ever watched - and after using YNAB for years, it's really opened up a few new ideas - especiallybudgeting in future months (never done it).
WOO HOO!! I will take that as the biggest compliment of my day! So glad it helped get the wheels turning in brand new ways! Sure did for me too!
🌻 Hannah
Dang this video is so good, the whole emergency fund thing has got me in shock. But like she’s so right
🥰 Thank you! Was genuinely nervous to put such controversial thoughts out there, but I just realized I was trying to do ONE thing TWO different ways, and I just needed to pick ONE and run with that instead of trying to maintain them both!
🌻 Hannah
OMG. I’ve been saying this for a while now. Don’t just save, put your money in a specific category. Have a goal!
You got it, friend!! Nailed it 🔨
🌻 Hannah
If your emergency fund is only meant to cover loss of income, then aging your money might work well for you (I don't like to budget into the future so I prefer to keep funds for loss of income in its own category). But "emergency" can refer to any unforeseen large expense and you're not always going to have a sinking fund set up to deal with those. Yes you can anticipate that your house or car might need repairs and create funds for those. But in the past 3 years we've had 4 or 5 large expenses come out of left field that we never would have anticipated, such as a funeral for my brother-in-law who passed suddenly, or elder care attorney for my parents. Can I handle that by just moving money from other categories? Of course, but I'd prefer to have a fund just labeled "emergency" for those times when life just punches you in the mouth. It helps me maintain visibility over the fact that I really never know what's going to happen, and keeps me from poaching that money for other things such as my leaky shower.
That makes total sense! I'm so sorry to hear about those unexpected events 😔 I think in our case, we would likely just take money built into the future and bring it back into the present, since our emergency fund is essentially what we have budgeted out for future months. It's just another way of rolling with the punches when life's priorities change! But I can also see how having an emergency fund in that circumstance felt like a no brainer. It really just comes down to how you like to view your money and your savings!
🌻 Hannah
“Gotta make a car go beep beep” 😂
I agree with this completely (for most people). I would say this is advice that should be at least considered by everyone.
Some other reasons I have decided to get rid of my emergency fund is that I am fortunate enough to be putting money into other post-tax investments like general brokerage and Roth IRAs. In the event of a capital 'E' Emergency that cannot be addressed by your already budgeted funds, those investment funds, which are tracked outside of YNAB and intended for retirement / financial independence purposes, can be tapped as well. Sure, not ideal, but neither is a true Emergency!
There are always trade-offs, and some people may not feel comfortable with this. When I have too much money sitting in a high interest bank account, it is still losing value, and I prefer to have it invested.
Totally agree with you on this point Hanna! When I first started YNAB-ing years ago it drove me crazy that my budget savings category didn’t match my savings account balance. Then one of these videos, not sure when or who-who’s?- anyway I realized that the categories are the savings as you’re saying as I type this…
Today I use those Views to “hide “ those savings.
Love you Hanna look forward to all your videos
Yes! If you REALLY want your savings account balance to match your savings categories' total dollars, you can always stick all of your various savings-type categories into a savings category GROUP, and then just make sure that the total available balance of that savings category group matches your savings bank account balance.
Did that make any sense?! Did I just say savings four hundred times?! But the point is, as long as all your dollars have a job, it doesn't actually much matter which bank account those dollars live in! (As long as you always have as much in your checking as you typically spend in a month, of course 🙃)
🌻 Hannah
I just signed up to YNAB, and I am watching all the videos! I have an emergency fund and am totally on board with deleting it! You have conviced me! Just not quite yet. I think I need to age my money first and continue to transform my financial situation with the YNAB method. This is such a solid argument and I am excited about my financial future! Thanks Hannah!
Be careful. I followed the advice as it makes sense, but when I deleted my "emergency fund" account and category that had very little transactions or movement, it lead to a bunch of issues in my budget that I had to fix... I'm new to YNAB, so it only took about an hour to fix, but my Aged Money metric dropped from 17 to 4 days after the change. I guess this is now a better reflection of how far out I've assigned funds, so I'm rolling with it and simply tracking the "Emergency Fund" in an unlinked savings account that is not part of my budget since it won't ever be assigned to anything in the near future. My other savings accounts that have a specific job are in my budget.
Odd @@MarkNattress. Since my comment is 3 months old, I've already done it and had no issues with the change. It's been incredible to have my emergency fund have jobs, in fact! Not sure what happened to your account, maybe you should have contacted YNAB support?
Ok logistical question here:
After my mind was completely blown by this concept (thank you 😊) I eliminated my E fund and assigned those dollars to the appropriate categories in future months.
I got a paycheck today and I got a say, I have no idea how to go about this. I have a fear that it feels like I have more money than I do, but when/how do I assign to future months when new money comes in?
This idea makes perfect logical sense so I want to make it work!
Thanks again, Hannah!
For us, we don't overcomplicate it-when a new paycheck comes in, we just fund the budget from the top to bottom, as far as the money will take us. Now, we're able to do this because we're not stuck in the paycheck-to-paycheck cycle anymore-if we were still stuck in that cycle, we would fund based on top priority first (things like mortgage payments and bills with due dates), and then eventually get around to funding our other less important categories. BUT, since we are more than a month ahead, whenever we get a new paycheck we just click into whatever month we're currently funding (for us right now, it's July!), and just start with the very top category in our budget and work our way down until eventually (and a few paychecks later) the whole month is funded. We also structure our budget so that bigger, more important expenses are at the top and will get funded first (like bills, utilities, living expenses like groceries and gas) and less important categories that take less priority live at the bottom of the budget (like fun money, dining out, haircuts, etc).
Let me know if this makes sense or if I missed your question! The real beauty is that once you're a full month ahead and feeling secure in your money, you really don't need to worry as much about what order your funding the future month-just fund away!
🌻 Hannah
This was a really helpful question and answer for me! I had no idea I could go months into the future with my current savings and then apply new paychecks to future months. 🎉
I totaly agree... with those two deleted you really work with the 4 rules! Thanks!
Valid points. Great content! I guess I need to change a couple categories. Thank you😊
2 months is not enough for me. I like a bulk amount that just makes me feel safer. Medical emergency, loss of a job, some crazy thing we didn’t think of. Just seeing it in my bank gives me peace. 😅
I definitely understand removing the emergency fund when you have that much money and can budget months ahead, however as someone who is still paycheck to paycheck (working on fixing past financial mistakes), I need to have an "emergency fund" or "income replacement fund" as some have also called it. I do have specific categories for vacations, car repairs, etc but I move that money into my savings account (connected to the budget) so it can acrew interest.
Ben (OG Ben) got me onto calling my little sum a prudent reserve while I also work on fixing past mistakes... But I think back-up bucket also sounds cool now I explain it to people. I think when you're working on rule 4 you need that little pile as a catch all buffer.
But every budget is different so, my 2c worth.
Oh, I totally understand that!! Makes sense!! Sounds like you're handling everything super well given the circumstances. Looking forward to the day where you can start budgeting ahead into the future!
🌻 Hannah
Glad to hear you do have some true expenses building as you pay off your debt. This is part of the magic of YNAB. I had a lot of debt when I started and couldn't believe how much easier it was to pay off debt when that wasn't my only obsession and I didn't have to keep going into debt to take care of a car repair or an unscheduled event of some kind.
Great thoughts! My question: if you do run into an emergency and need to use what is budgeted in the future, what is your process for moving that money to cover an expense in the current month? Do you go into the future month and move the money needed back into to be budgeted and then apply it on the overspending in the current month?
Yup! I would literally pop ahead into June or July's budget and zero out some of the "assigned" amounts in some categories I care less about having funding-this will send those dollars back to your "Ready to Assign" category at the top of your budget. Then I'd just click back to the current month, and redistribute all those "Ready to Assign" dollars back into the present! Easy peaze, lemon squeeze.
🌻 Hannah
I’ve always had a “Savings” and “Emergency Fund”… but now that you explain it like that it makes sense. So, I’ve decided to ditch (read hide, for the sake of keeping the previous history) these 2 categories and rather try embracing my true expenses more.
Fingers crossed 🤞🏻
A fresh and logical perspective which is greatly appreciated, thanks!
I spilled my water after the "beep beep" 😂 didn't see that coming
Hannah, I love, love, love your videos' Unfortunately, I've been off the YNAB wagon. It's been a rough year cumulating with a breast cancer AND kidney cancer diagnosis for me. My hubby retired last year and is willing to take over YNAB from me but I like doing it but I'm months behind reconciling our accounts. I'd like to get more pro-active because I'm one of the trackers verse budgeter. I'm going to go watch more videos, like 3 ways to Organize your budget! Thank you for your engaging videos!
Lightbulb 💡 moment. Radical! But makes sense. I think I’m going to do this! Lol😅
Considering you are now monthS ahead on your finances, could you do an updated “getting a month ahead” using some of what you said on this video & any new or old advice. Thank you!!
Oooh! I'll have to consider that! Any specific topics or situations you'd like to see addressed in a video like that?!
🌻 Hannah
Hannah, you are a gift. Love your sense of humor as much as your content.❤
Thanks for making budgeting more fun.
ALWAYS!! 🥰
🌻 Hannah
Really enjoy your videos…laughing and learning all rolled into one. Your paper computer bit…😂
Thank you so much, Todd 🥰🥰 All in a days work 😂
🌻 Hannah
I appreciate this so much! This has been a change in the making for a few months now. The more realistic & detailed I've gotten with my categories, the more I've been wondering what my emergency fund is for!? I've got some reassignments to tackle this weekend! Thank you Hannah and team for reinforcing this concept!
You and me both!! Glad we both got some clarity to our wonderings!!
🌻 Hannah
Having followed your "Ahead in 100" course last year, I have already followed all this advice. YNAB changed my life. Ahead in 100 made it even better!
Yay! Ahead in 100 is a course created by our friend Nick True! We are SO glad to hear he helped make YNAB click for you!! 🥰
🌻 Hannah
@@YNABofficial 😁
Not only I agree, but this opened my eyes to a whole new vision of planning my life😮. Thank you! You have no idea how this helped me!!
YAY! Sounds amazing!! So glad this video could help!! YNAB's totally changed how I view my money and future too. #worthit
🌻 Hannah