Why We Budget to Zero | Zero-Based Budgeting 

Totally awesome! Happy for you 👏

Yes, that is totally awesome! Thanks for sharing! ~Ernie

I know right? 😂

It's more when it's in the order of Ben & Ernie for me that really does it lol

It essentially because this system creates mental “friction” before you spend. Other budget concepts essentially track your spending after the fact and that’s why it didn’t really work for me.

I've never thought of how scarcity also helps leave money in the budget. That is so true-I love it! ~Ernie

Jonathan! We wrote almost identical posts here. Life changing!

Pre-YNAB, I had no idea that what I was actually looking for was peace of mind! ~Ernie

"I was always able to avoid catastrophe before, but now I'm actually building something." I love that way of putting it! ~Ernie

It's confusing for me too and I'm new at it as well, guess the mindset change is the real challenge here : i guess my new one is : all your essential categories are fund, breathe you. Are okey and you will make it to the end of the month alive 😉

It’s a learning experience I am finding … we learn to add more dollars ( pounds in my case) into that category to future proof for next time. I am new to YNAB but I enjoying tweaking the budget to work for me and rolling with the punches . All the best

It’s money you need to account for, so yes, I have a category called Emergency Fund and I keep it funded to a minimum level. My checking and savings are both places for money, and I give them all a job, including an emergency fund. I also assigned my savings to include all my “true expenses” items (Auto Tag, YNAB subscription, park season passes, gift fund). Basically, at the end of the month, I make sure my savings account balance matches my True Expenses category. Works for me.

@@robhulson I have gotten into a very bad state of confusion in the past to the point I don’t trust MYSELF how to use ynab in regards to reconciling. If I need to transfer $ from savings and/or emergency fund….it seems like ynab gets mixed up (or I do) In the technical understanding of how ynab works. I have restarted my budget so many times. There’s just something I’m not getting. Maybe it’s from the very beginning (in setting up the budget) of the amount of my money I have entered to be budgeted. Also, it may help to inform my emergency fund is at in a bank account. So, how do I address this when the transactions “automatically’ load to my budget awaiting my approval? Sorry for the long text. I just want to get this right finally 😩

Meant to say Emergency fund is not an a bank account

@@beckyenyart8260 in that case you create a cash account in ynab an put the whole amount into your emergency fund category. never touch the category unless you have to dip into the emergency fund or add money to it, in which you will create a transfer transaction from your checking to the cash account.. 🤔 does that make sense? I'm sorry if I just add to your confusion. 😅

@@angelapontororing3552 an actual account like along with the checking and savings? Not a category right?

I think this is why YNAB wants you to get a month ahead. We're a month ahead, so when we go to budget for June, were only using money we made in May, so we're no longer projecting based on expected income. Any money made in June then waits until July to get budgeted, etc. In the meantime, if you aren't a month ahead, I would imagine you keep doing what you're doing, but work your way towards getting a month ahead so that you're not projecting anymore. That's pretty much what we did. Not sure if there's another way to do that. Best of luck!

Victoria, thank you! I will take savings to start this.

Hi Irma, great question! It can be tricky to go from projecting to budgeting. The YNAB method is to only assign dollars you actually have in your bank account RIGHT NOW, so that you know for sure your budget is telling you the truth about what you can afford. That might mean that you can't assign dollars to everything currently in your monthly budget. That's why I always ask this question when I'm assigning dollars to categories: "What does this money need to do before I get paid again?" If I know my electric bill won't come due until after my next paycheck, then I don't have to assign dollars to it right now - it can wait until my next paycheck comes in. But if my internet bill comes due before my next paycheck, then I know I definitely need to assign dollars there. You can still plan ahead using the goals feature in the app (which is basically what you're doing when you project). If you want to learn more about how to do that, I recommend checking out this video, where I walk you through the process: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-An6MwCiWEOY.html Or you could register for our free 20-minute "Set Up Your Budget" workshop to learn more about how to set up a plan with goals: www.youneedabudget.com/free-workshops/ Hope that helps! 🙂 - Ben M

for me, I have multiple savings goals, but I'll choose one to fully fund before moving onto the next so that I can focus and remember what I'm saving for. Kind of like snowball debt payments, but for savings? For example, I want to save for an emergency fund and a new laptop. I decided to focus on the emergency fund first and once that was fully funded, I'm now putting money away for a new laptop. Also, I think many of these things (medical expenses, car maintenance/repairs, new laptop) fall under what YNAB calls "True expenses (you're more than likely going to have to pay for them eventually!), which they recommend having different categories for those things.

Keep the categories and let yourself live in the tension of not always being able to fund them fully. Why? Because that gives you clarity - the reality of your situation is that you don't (right now) have enough income to fund all the things you need and/or want. When the time comes to make a big purchase, you're right that it may require pulling money from other funds, which will set you back in some areas. Rolling with the punches is good, but it only works well if you're honest about all of the things in your life that pop up as "surprise" expenses but are actually ones that should be expected and budgeted for. Stick with it, and I bet you'll find more and more money winds up in those categories - it's amazing what clarity can do for your financial priorities!

​@@rojasch I hear what you're saying... I just don't see creating a "new roof" category just because some day I will need a new roof, because it might never get fully funded... I'm wondering if I said "unplanned medical expenses, car repairs, new furnace, new roof, all fall under 'emergencies'" with a goal of something above the highest potential expense, maybe that's better for the cognitive load on my brain? Of course I'm probably way over thinking it, which is why I'm looking for opinions

@@jazzam0razz oo, I do like the "snowball savings" idea... I'll have to think on this more, but I see a lot of sense in prioritizing which to fill first then roll on to the next one... that could do a lot to solve my anxiety over spreading the contributions across all the categories too thin to be effective.. it's so simple yet it wasn't obvious to me!

@@smstnitc I understand the temptation to do this, but none of those things are actually emergencies. They're all things that WILL happen sooner or later, and they could even happen one after the other or at the same time. It's much better to feel (and be motivated by) the actual scarcity of your budget than to feel artificially secure with a fully-funded "emergency" fund that is only enough to cover one or two real expenses. All that said, there's lots of flexibility in how granular you need to get in your categories. I have a Replacement group with a line item for each major item, each with a goal set. That way it's easy to add another thing when it occurs to me ("Oh! Mattresses are expensive and need to be replaced periodically. I guess I need to budget for that, too.") But you could treat this all as a single line item, as long as you're honest about how much you really need to budget for all those predictable expenses. It's ok to acknowledge you don't have enough money for all the stuff that needs to happen in the next X years. That realistic perspective is what empowers you to make informed choices about your finances. But it certainly is a major shift from how most people approach "emergencies" like a broken fridge!

It's a different brand I got from Target, but maybe that was an inspiration. Isn't it fun? 😁