Do I Have to Give EVERY Dollar A Job?
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- Опубліковано 28 чер 2024
- The short answer is yes. But why? Ben and Ernie dig into the reasons why giving every dollar a job is essential to creating a stress-free life around money. As Ben explains, the point of YNAB is to ruthlessly root out self-delusion, and be honest about both what you want your money to do for you and what tradeoffs you will have to make to accomplish that.
When you leave money in the Ready to Assign category, you are putting off making decsions about tradeoffs, and thus obfuscating the real purpose of that money. It's even the same with cash buffers in checking accounts or emergency funds held outside YNAB -- these wads of cash actually obscure what your goal with the money is, because it's unclear how much of it is allocated to each job. That money can create a false sense of security, when you assume that the amount is big enough to handle any emergency that could arise. What if the water heater, the fence, and the roof need to be replaced in one year? The totals can really add up, and leaving cash in an amorphous blob in a checking or savings account does not give you clarity on what and how much it can cover.
So, to truly follow YNAB's Four Rules is to, first, give every dollar a job, and start making tradeoffs. Understanding your tradeoffs helps you get clarity on what you really want your money to do for you!
Share your YNAB wins with Ben and Ernie!
budgetnerds@ynab.com
Timestamps:
00:00 Intro
02:10 Yes, you need to give every dollar a job
17:44 Understand what you really want
24:18 What is WAM?
26:05 What about tracking accounts?
39:42 YNAB Wins
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I'm here for Ben being overly protective of rule 3 and "angry" at people for ruining it 🤣
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My unusual financial goal is actually health goal. I’ve always been disciplined around money, but needed a way to stay motivated and disciplined with health goals. Because I’m such a budget nerd and love playing around in YNAB, I decided to tie my health goals to budgeting. Each month I assign a certain amount to my “reward fund” category. If I achieve my health goal (e.g., exercised 30 minutes = $2), I move money from the “reward fund” into one of my fun spending money categories (clothes, travel, etc.). If I don’t achieve my goal, then I move the leftover money from the “reward fund” to my charitable giving category, so that it still has a job. Moving the money at the end of each day has created a routine that helped me better track and stay accountable to my health goals. And, even if I don’t make my health goals, I don’t feel too bad because the money goes to a good cause. It also allows me to prioritize my health goals (goals that are more important to me equal more money).
Leaving dollars in unassigned is totally a commitment and trust issue for all the reasons you listed. I think that the buffer category is perfectly acceptable during the first while you figure YNAB out, especially for whoopsies. But after a few years, you’ve nailed down all your true expenses, you’ve got the job loss funds and you trust your category amounts, it’s time to let go of the buffer and trust yourself. It’s kind of like learning to swim. At some point you have to let go of the floatie and swim for yourself. Thanks Ben and Ernie for another enlightening episode!
Perhaps it's not unique, since it falls under the ubiquitous "save for vacation," but here goes:
My friend and I were supposed to study abroad in Barcelona together Fall 2020. Unfortunately 2020 happened, and basically the whole concept of "abroad" was cancelled. But in fall 2025 we! are! reclaiming! Barcelona! And we are NOT going to skimp on a single thing! Since she's in grad school, I'm going to be doing the vast majority of the funding for this, and I've set a BIG goal--20% of my annual income (in an admittedly low-paying, fresh-out-of-school job, but still!) for the most extravagant vacation of our lives. COVID took a lot from us, but we WILL make it to Barcelona!
I’m just here for the way Ernie says “vague” 😂
People make fun of the way I say a lot of words, but I didn't know vague was one of them. Now this will forever be on my radar-thank you 🤣 ~Ernie
yes, otherwise you are half-assing the system, if you want it to work you must follow all the rules
My unique financial goal:
- Create or add to an endowment fund aimed toward helping low income people attend college. The specific goal amount hasn't been set yet (I'm just getting started) but I know it will be tens of thousands of dollars and every dollar I can put towards it now adds up over time.
my unusual financial goal:
This may or may not count as unique since it technically falls under the boring "saving up to buy something" category, but I play the violin as a hobby and it's my dream to one day get my "forever" violin, an upgrade to my current one, which I got when I was 13yo. As far as musical instruments go, a good acoustic violin can get quite expensive, and I'm aiming to spend ~$10,000 on my eventual purchase, and hopefully this will cover the violin, a new violin bow (separate purchase at this quality level), a quality violin case, and tax. It might be a lot of money for an instrument but it really isn't, but it's also a lofty enough financial goal that will take some time to save for since any extra money usually go toward other life expenses first.
Very cool goal!
Love this goal!!
I like the way Ben says "you're missin out" at 22:25. You're missing out on the empowered feeling of really understanding your desires & feeling the reality of tradeoffs.
Yes!!! Well said! ~BenB
I think the reason you should assign everything is exactly what Ben was talking about: you should really examine what you want as finacial goals-- that way you are in charge, not just letting life happen to you.
_Do I Have to Give EVERY Dollar A Job?_
But I don't wanna overwork my preciousss babiesss... [gollum voice] ( oДo)
So I created a holding category 'The Money Spa' to give them a break from the daily hustle to recharge. 👌
Love it 😂
Alright, I'll allow it just because you used the gollum voice. 🤣~BenB
Our kind of non-unique goal/unique strategy is to pay off our low interest 15-yr mortgage a couple years early, before I turn 50, without sacrificing retirement savings. We agreed it didn't make much sense to do extra payments now with our cash earning 2x the mortgage interest rate. So I created a category group for mortgage payoff with several individual month categories with targets for funding by that month. The unique part is we're only funding that group with cash back rewards and checking/savings interest. After doing this for a couple years we have around 3 payments total saved and it's eliminated any questions about where we budget these smaller monthly incomes. We're well on target to pay it off by 50.
One of our Savings Goals right now is a “🍀 Stay Ready” fund. If luck is preparation meeting opportunity, we want to be prepared for opportunities like the interest rates in 20/20 or another once-in-a-lifetime opportunity that might pop up and require some liquidity.
LOVE that category name
I have something similar, but it’s been slushed in to a “cushion” account where I put money other people owe me, tracked via Splitwise. I probably should separate these out, I love your account title!
My unique goal is full-time RV life traveling the country (before actual retirement age). We did it successfully for 3 1/2 years, but then had to replace our truck. We knew it was coming, but enjoyed traveling while we could. Now we’re settled back down for a few years to replenish the coffers before we head out again.
You guy's are making me rethink my buffer category, the buffer was there for "just in case" and you're right it's not really a category I'm not truly assigning all my money. Great video guy's.
Great topic guys... were you spying on my account?! lol My ready to assign dollars are hiding in a category called Uncategorized Expenses... and you're right Ben, it's stressing me out. When the time comes to spend those dollars, it'll be a much harder decision where to assign them... and even more so as the balance grows!
Do it, my friend! You can always change your mind later. ~BenB
Mine is called CYA WHO KNOWS lol
I took the plunge and delete the account buffer category. I decide to do it because it was not assigned a true category. That money is still doing its job and also being a month ahead.
I just discussed this in depth with my ynab coach! Thank you. Yes, rule out self delusion!
We have a small buffer line item in our subscriptions categories because some the the subscriptions are in US dollars and the exchange rate changes all the time. :) (We're in Canada)
Totally make sense! I think that's got a very specific job! ~BenB
My husband really wants a 'serendipity' fund and I find it so frustrating! 🤣
Separate from emergency fund and 6 months job loss fund, I have a bereavement/legal fund. After my e-fund and job loss categories are filled, I will work on the bereavement. With older parents, I don’t want to have to worry about money while grieving. Estate planning is otherwise done.
Ernie asked fir money goals...here's mine: to have my money reflect what I value. For example, I value spending time with my kids and grands not eating out. So I put more money into family vacations so I can take my family on weekends away to spend time together and not on Doordash 😅
Having every dollar assigned is the way to force me to confront my choices. Yes, you can have this thing or experience, but what do you want to not have instead? For example, we have just found an ideal name plate for our house -and this has been a long term wish of ours. We haven't got a budget line for it so-is it home maintenance or is it coming out of gifts (a bit overfunded just now)? What choice can we live with and is it urgent?
My unusual finance goal is year off in my 30’s from work and bus buildout!
Oh, man do I love these podcasts!! I’ve had a “big ticket bucket” for years that *in theory* is for a long-term nebulous future goal, like maybe a kitchen rehab? Neither me nor my husband want to do a rehab! We’d honestly rather move before living through another construction project…and our kitchen is fine! We’ve been throwing our extra cash in here, but Instead of that cash being being useful, this category just makes it painless to overspend on other things by WAM-ing from this stupid bucket! This podcast prompted a conversation about what we do want, and I am happy to report that our throwaway category has been laid to rest. Travel wins! And I can already tell you that I will now be irritated by glib spending that hits me in the travels! Thanks for the inspiration!
I think that having an emergency fund or a contingency fund is a job category, it is there to protect the sum of money in case you lose your job or get sick or disabled
I think you're exactly right, Ben - if you don't assign a job, it'll end up slipping away to random purchases.
In another episode, you mentioned how you have categories that just find money or attract money and that's where I put the last few dollars of every paycheck. It's generally less than $10 but it gets filled every single time I get money!
I use tacking accounts for my retirement savings. It is not to be used any time soon, and it's clear to me what it's for.
4:10 - And as someone with ADHD (inattentive type) who suffers from analysis paralysis and FOBO (fear of a better option) THIS is why the decision-making for assigning those last few hundred dollars can get so difficult. Before I know it, it’s been 15 minutes and I’m still grappling with making a decision and I end up keeping the dollars in To Be Assigned. This one little task can feel many different ways to different types of brains.
Oo, basement freezer or random lawn tools, that's a hard one!!!! 😂
A new priority has risen to the surface-a Shark vacuum cleaner! Now I have some really tough decisions 🤣 ~Ernie
I love my Dyson v15 detect (lasers, what's not to love?)
I have a category called “cushion”, which is mainly for spending that someone else owes me, which we’re keeping track of via Splitwise. Maybe I should rename it 🤔
In the past it’s also been used for “opportunities”, including opportunities to improve my mental health in one way or another when it’s urgently required, or for an educational course I wanted that didn’t neatly fit into another bucket. I do see the value in an “opportunity” fund, and that could still be separated out from my Splitwise money 🤔 I’ll have to think more on this.
Great discussion as usual, thanks for bringing these great topics!
I think both are a very solid purposes. If you can separate it out, it might make you feel better aligned. Worth a try anyway! ~BenB
I do use a checking account buffer because I have more bills due in one pay period than the other. After I get a month ahead I guess that will be irrelevant.
is your bills more than your account buffer? you can get ahead of those bills.
It sounds like you're just starting out. Keep at it; the beginning is the scariest part. However, if you stick with it, you'll start noticing that there is money in the bank. With all the money assigned to budget items, you don't feel like you have "extra money" to spend on stuff. It's great.
I started at the same point that you are. Stick to it. The process works.
17:44 - Although it's gotten better, the second-guessing and difficulty with decision-making still persists for me, and I've been a user since around 2016. That said, "understanding what I want" is something I'm working on in all areas of my life, and not limited to YNAB. The part that's hard for me is that in a household of four (me, my wife, and my 13-year-old twins) I'm the ONLY one that knows about and regularly uses YNAB. My wife has zero interest in the learning curve and upkeep it requires (and TBH some days I still get frustrated by the time it takes me to maintain) and my kids are only worried about "how much money they have left in their allowance." 😁So, in addition to the second-guessing and decision fatigue that still occasionally plagues me when budgeting my paychecks, it also comes up when I have to check my category balances before saying yes or no to requests from my family, and the potential fallout of having to explain to them WHY I can't buy them this or that, or why we can't afford takeout. I envy people who have been able to make YNAB work with their entire household and where every family member is tech-savvy enough to have the app and check balances...for me the overhead is simply too high. Would LOVE to see an episode devoted to fellow spouses and parents who are "YNAB loners" in their household and how they manage.
Naaahh I need my 1K Buffer category. If something comes up I want to have some cash at hand and I don't want to clear out other categories. It's for stuff like broken car, broken dishwasher, broken washing machine, something unexpected or even like this month just booking a spontaneous vacation trip. I could budget for all those things in seperate categories but that is too much money sitting there, for things that might never happen. Every cent that is left after budgeting for the month goes into stocks. So having a broad buffer category is the perfect solution for me.
But I never actually use it for random consumer spending though. I don't touch it to order pizza or buy random things. It is really what it is. A Buffer for unexpected bills mostly. I have enough self-control to stick to my rule.
My issue is, I don't follow my budget in YNAB when I make a decision to spend money. I know I should look at it, but I keep thinking I have the money when I clearly do not. And instead of entering my transactions into YNAB when I make them, I keep relying on auto import from the banks on my linked accounts, that winds up getting me in trouble. I think unlinking my accounts might force me to pay more attention to my budget, which is what I am going to start doing now.
Let us know how things go! ~Ernie
I feel like the hardest part of this is deciding to put extra money into tracking accounts, where you are deliberately deciding not to have that money available anymore. Our tracking accounts are the car loan and the brokerage account. I know we should adopt a “pay yourself first” mentality, but it’s hard.
This was the first time I heard the Emergency Fund called the Job Loss Fund and it clicked for me. The emergency fund never really made sense to me, I mean, what counts as an emergency? It was always so vague in my mind. A Job Loss fund with an actual goal makes so much more sense to me
I can't imagine not having ready to assign at zero for any extended period of time. Unless I can't get to it everything goes into a category. Even my 2 cent interest payments go right into a category. That's the best part of YNAB is giving every dollar a job and them working through moving the money when things change.
My YNAB, when is to help with building materials for my new house.
Unusual financial goal: saving to go to Star Wars Celebration in
2026 🚀🎉😁
The question this topic has brought up in my mind is: what about assigning more money than you expect to spend on a category to cover for that float balance
I CAN NOT budget down to complete zero…because assigning odd cent amounts to categories makes me crazy. So, I guess I’m giving every dollar a job, just not every cent a job 😜
You need some sort of change jar category that you keep hidden 🤣 ~Ernie
For me, discovering the YNAB like a discovering fire for the first time by primitive people. I was in a mess with Excel without knowing/seeing a bigger picture of how my money are flowing. I am now at peace. Best part of YNAB gave me big confident on spending (without fear or shame "sometime i lied myself it's ok to spend, deep down knowing i shouldn't") when I am on vacation. Frankly speaking YNAB is not for everyone. It's going to be either you love it or hate it. TBH, I hated it as first until I watch a few videos from YNAB with 3 rules stuff plus other things.
Just wanted to chime in since you mentioned HSAs. They are sneaky awesome! You get a tax deduction for the money you put into your HSA - like an IRA. You can invest that money and it can grow tax-free - like an IRA. And once you hit age 65, you can also withdraw any amount, for any purpose, penalty-free - like an IRA. However, if you go along paying medical expenses out-of-pocket and save your receipts, you can pull money out any time to reimburse yourself, penalty and tax-free - so to the extent of your medical expenses, the HSA could work like a Roth IRA!
Also (sorry) pet peeve: it’s one thing versUS another. A verse is a part of a song.
I have my savings account as a tracking account in my main budget, BUT I have a second budget where I give all those dollars jobs. This has helped my ADHD brain immensely! Before I did this I would constantly WAM from my savings categories, now I'm actually making progress towards savings goals.
Yeah, there's just something really powerful when you gives jobs to all your dollars-either in one budget or two! ~Ernie
I would not want to live without an Emergency fund/job loss fund/prudent reserve. I recently needed that reserve to assist in paying part of the down payment on a new car after a car being totaled. It would have been so annoying to go through every one of my month's ahead and pull back that money.
I love this video but my problem is since I went from pay check to pay check to a month ahead its hard making the money last for the entire month I don't know if anyone else struggles with this but when it was pay check to paycheck it was easier to make the money last for the month before I was a month ahead all my categories were split in half not anymore. Last two weeks is a struggle sometimes I have only been a month a head for three months so maybe its just a learning curve does anyone else struggle with this?
I have been transferring money every month into a savings account. It is mostly for the annual expenses and furniture for my new house. Should I close the savings account and move it into my checking account because I have categories assigned to those things in YNAB?
Yes. You are deluding yourself. If you don’t give every dollar a job.
I’m hesitant to call an emergency fund a job loss fund because I live in America and an unexpected trip to a healthcare facility is a monetary emergency given our lack of universal healthcare.
Yeah, I mean, fair. You could argue, you could set aside money for your out-of-pocket-max (if you have insurance), but that is often a big chunk of change for a very specific purpose. Maybe that's why I've kept my fund named "prudent reserve." Rule Three is always available though! ~BenB
What if you are happy the way things are and there is nothing you want to buy or save for or if things you want are already covered for the future and it is not just right time for them yet. Then you still have some extra money that you have no idea what job give them to?
I've created a category called "Options". It's for those opportunities or things I don't know exist yet, but when they come around I'll have the ability to move on them if I want. I hope that inspires something for you! ~Ernie
If one is using YNAB for a business, then one could use a tracking account for taxes. Taxes MUST be paid, or bad things will happen, so it makes sense to have a single bank account that can receive money from any source but only ever sends cheques to one payee: the taxman. That's how my father and uncle always did things, whenever income was received then tax money was taken from it and put aside. I think it'd make sense for this to be excluded from the YNAB budget as a tracking account.
I do this, taxe money is not my money.
I don't think it's strictly necessary have a separate account if you have a YNAB category for it, but I can see good reasons for it! And if you do, I agree you should keep it off YNAB since it already has a very clear purpose (like the HSA example). ~BenB
I’ve been using YNAB for half a year and I’ve been getting the hang of my frequent expenses, my monthly expenses, and my true expenses. After all that, I still have a catch all category after I’ve accounted for everything. To give every dollar a job and not let it sit in the catch all category after everything’s been assigned, what should I do? Should I assign dollars to my categories for future months to give the dollars a job? Or should I use mental powers to keep thinking of true expenses categories to give more jobs to the catch all category? Thank you for any suggestions!
Yes, assign dollars to future months so you can get a month ahead! support.ynab.com/en_us/getting-a-month-ahead-a-guide-HJidy13C5 ~Ernie
@@YNABofficial Ernie thank you very much!
But I like the matchy matchy. lol
2:40 I was comfortable in my delusion though lol. Starting with YNAB has taken away my financial peace in that regard. The clarity hurts a bit. No clue if I'll stick with it in 2025.
Yeah, I hear you. I just started YNAB, and as much as I am appreciating it, it also is going to be more work for me and my husband to really have the money talks that he likes to duck out of! 😅
But I am hoping it is growing pain, and that later we will be strengthened.
I have $14,750 sitting in "ready to assign" and everything is funded. Do I advance to the following months and this point and give these dollars a job? I will give these dollars a job eventually, I just don't need to right now. In the middle of the video so maybe my question will be answered.
Personally i would assign that money in the future month because mentally you have already marked that money for that purpose so why not visualise exactly how for that money takes you. If you dont like it you can always change it later anyway
I use a next month category to hold that money
Is it for next month?
Budget ahead at least 90 days. If you know your avg monthly income, you can work towards that goal. My age of money is now at 79 days!
If that money is for next month, I wouldn't keep it in Ready to Assign (for some very practical software purposes). There are a couple ways to handle it. Check out this episode sometime! ~BenB
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