How to Age Your Money In YNAB (Simple Explainer)
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- Опубліковано 28 лип 2024
- Age Of Money in YNAB is an important concept but is often-times confusing or misunderstood. Let me show you why the age of money is important, what number you should be aiming for, and how to practically age your money over time.
#YNAB #ageofmoney
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Quick Jump Sections
0:30 - Why Age Of Money Matters
1:42 - How Age Of Money Is Calculated
2:55 - What Age Your Should Aim For
4:15 - More Important Than Age of Money
7:04 - How To Age Your Money
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Quick Jump Sections
0:30 - Why Age Of Money Matters
1:42 - How Age Of Money Is Calculated
2:55 - What Age Your Should Aim For
4:15 - More Important Than Age of Money
7:04 - How To Age Your Money
"Imagine your checking account as one massive stack of dollar bills"
Bold of you to assume it's massive
You win UA-cam today, my friend! I’m trying to be an optimist over here 😂
🤣
You've helped me immensely with YNAB! I found your videos right after I started using YNAB and you explain the everything so well and you make it so much easier to understand. I'm only two months in and I've stuck with this consistently for the first time. Usually I try to budget and it goes out the window by week two. Your explanations made YNAB not so confusing and I'm actually loving budgeting now! Thank you so much!
Woot woot! That’s so awesome really glad to hear that the videos have helped and that you’re sticking with it.
Thanks for watching!
Your YNAB videos have been a total game changer for my budget. Since I found you in December and got serious about budgeting, I’ve gotten my age of money up to 19 days. Slowly but surely, we’ll get there!
Woo! That’s so awesome Allison. Super proud of you. You’ll definitely get there :)
Just paid off my 2 cars debt thanks to the YNAB! Feels amazing having zero debt. 40 days age of money here. I’m addicted to the YNAB. Thank you for the video.
Woo! Go Greg, that's awesome! Congrats to be debt free my friend :)
I just recently started using YNAB (August 2020). I have found your videos to be very useful to help me learn and be confident in using YNAB. Thanks very much for your efforts!
Glad to see another video! Like most people in this thread, YNAB didn't make sense to me until I found your content. Thank you so much for making it! I started YNAB again in January after starting and stopping it a few years ago and I've stuck with it so far and can really feel how it's changing my mindset. Appreciate you!
Hey thanks Corie! I'm so glad that the videos have been helpful for you. I really appreciate you taking the time to comment :) Happy YNABing!
hi good to see you! still don't use YNAB but the principles still apply. having at least a month of expenses in the bank before the next month hits brings such a peace of mind. you never know what can happen in life so its good to have that cushion. hey look at you and your subscribers!!!! way to go!!!
Hey Kari! Good to see you too. Going to try and get more consistent here with the videos :)
And yes. Getting a month ahead brings a ton of peace!
Thanks as always :)
You really got me with the thumbnail! I thought that was really you for a second!
Haha well it is me! Just with an age filter 😜
Looks like the ice man
Carrie Parsons lol it got me too. I was like what happened to him??
@@simplifinance5154 :)
So helpful! Thanks for this.
Nick, Thanks for all these videos. You are SO helpful. It is because of your videos that I am using YNAB. It was so confusing before I started watching them and I wasn't going to do it. But, now I am and things around here have become a lot smoother already and we've just started. Thanks, again.
Awesome Laurie! So so glad to hear that the videos have been helpful for you. Thanks for taking the time to comment and let me know :)
Happy YNABing!
Been a couple months the last time you released a video. 😭 So glad you released another one. Missed not having a new video. Also the video was great!! Great as always!!! 👍😁👍
Haha I know!! I'm trying to get back into a weekly groove here. I actually have another one coming at you this morning! Thanks for watching Blake, and for noticing my absence. That means a lot!
Hey! I was just binge watching your other YNAB videos. This video is right on time :-)
haha glad it came at the right time then! :) Thanks for watching!
I was just trying to figure this out yesterday! Thanks for the video!
Awesome! So glad it was helpful.
Thanks for the explanation, Nick! I ended up hiding the Age of Money via the Toolkit for YNAB setting so I could focus more on just getting my budget set-up and my spending figured out. I'm one month into YNAB and this is the first time in a long time I'm not counting down the days till I get paid. I'm still a while from fully breaking that paycheck to paycheck chain, but slow and steady it what I'm aiming for.
Awesome Misti! I totally get the hiding it. Glad to hear you're working to get ahead. Just keep after it my friend :)
SO Clear! Thanks Nick!
No problem! Glad it helped :)
Great videos Nick. You've made learning YNAB much simpler and more fun.
Do you have any resources on how to budget with two people (i.e. husband and wife)? I couldn't find anything within your 14 available YNAB videos.
I'm unsure as to whether we should create separate budgets or have one together. I'm thinking the latter would be more ideal to save for a house down payment, retirement, vacations, etc. If you have any specific videos covering this I'd be interested to see your take.
I just got to 50 days in my age of money!!
Instead of budgetting the current month's salary towards upcoming months, if I transfer left over amount to savings, what will happen to Age of Money?
Hi Nick. Love your videos. I've been using YNAB for about 4 plus years though have only been using the new version since October. Should my goal be to continue aging my money past 30 days? Right now I've been been budgeting up to 3 months out. Or should I stick with 1 month ahead and just put the rest in savings?
I was as high as 13 yesterday which was really good for me, I added some money I had received to my YNAB, paid some shopping afterwards and it fell to 1. I felt so discouraged!
Don’t get too discouraged! That’s normal when you get paid. Just hang in there and be patient. You’ll get there. It took us a long time :)
Nick! What happened to the cool intro with the bouncy jingle where you scrabble over some rocks and your gal peers up that massive tree? Much as I usually despise intros, yours was snappy enough to enjoy.
What is that tune called, anyway?
Hey, thanks for noticing! This was actually a test to see if people would notice/liked it. I was afraid it might be a little too long, so I was experimenting without the intro. I appreciate you noticing.
As for the song, it's called All Of Us by Daxten.
Here's a link: ua-cam.com/video/H9RPhtwyWLc/v-deo.html
My ultimate goal will be to be using the income from one month to budget for expenses in the next two months and then have a separate emergency savings for 3-6 months. That would be great.
Is the age of money affected by when you allocate it into categories or when you spend from that category? Also, if I enter my paycheck in advance (fudge the date then update it once payday hits) does that affect my money age? And assuming I’m being financially responsible, is there any other reason not to do this? Im asking cuz this helps me plan out my finances since I’m paid bi-weekly as opposed to twice monthly. A large portion of one paycheck goes to my mortgage and it doesn’t always hit on the same week of the month.
Thanks again Nick! One year down and still learning.
Another great video, thanks Nick!
No problem! Glad it helped!
Awesome video Nick.
Can you make a video on how to track this aging money buffer if you invest it in some high liquidity assets? I live in Argentina, a country with insane inflation, and it's necessary. But even an American can benefit form this, since dollars that sit in your checking account are kind of a waste.
Hey Gaston! Good question, personally if you're investing or saving money outside of YNAB, I still wouldn't worry about that money for the AOM calculation. The AOM is mostly helpful when it comes to how much you keep in a checking account and making sure you're staying a month ahead.
I just wouldn't even try to do that. Even with insane inflation, I would personally still keep a month of income in checking to help with cashflow.
Hope that helps!
Say you have an extra $500. Would you recommend that you age your money first or pay extra on debt first?
Thank you! Well explained.
Thank you for watching and commenting!
How does this work with when you want to try to pay off some debts faster?
Checking my Age of Money regularly ... I'm on 13 days ... OMG!!!
What about payments on the 1st. I tried to set up one for a bill due April first, and it gave me some weird tracking transaction since it’s March. Even if I made the payment, should I not log it in YNAB until the actual 1st of April, in this case. And thank you for all you do. Must have watched your tutorials an avg. of three times and I’m still not there.
Hi @nick, Thanks for all your amazing YNAB Video!! They have been very very helpful! There is something i don't understand... We don't live above our means when it comes to our fixed expenses and most our leisure, however we have projects that reach way way out into the coming years 1-2 years + from now, so with all our projects budgeted for with all the relevant goals, our under-budgeted number is significantly above our earned monthly income, like unachievable, which kinda makes sense to me as they are long long term projects and for some of them expensive projects. Of course we don't manage to fund them all monthly but we budget money that we have spare to them, maybe I missed something and we should really only budget for what we can allocate as opposed to a list of all our project with (or without budgeted) amounts, can you please enlighten me ?
Second question about aging our money, I don't know which is the best startegy... we can afford to monthly budget for our yearly living expenses and as mentioned above some of our bigger project, we also budget monthly to go into a emergency savings which we aim to cover 90 days + of our fixed expenses (so technically age our money by 90 days), but rather than allocating it to the following month and so on, we just budget it into our emergency savings that same month if that makes sense, so it's technically the same thing, but i guess with this method we don't have a breakdown of our emergency savings, I am just not sure which is best to do and I guess this way YNAB can't track our aging money days. If you are still reading, thanks so much in advance!!
As regards 1/. You may not be using the most appropriate target type. You may be over funding these categories instead of following the First Rule - give every dollar a job. Ie every dollar you actually have.
2/ you will see in the report your age of money. I have all my annual expenses budgeted for-see targets again- and this means that a huge sum builds up. This gives me an age of money of 120+ days. But I have not actually set aside money for next month’s expenses/categories, be they monthly spending eg food or next month’s contributions to the numerous annual expenses ( subscriptions, Christmas, birthdays, professional fees, insurance premiums etc). Age of money is how long between earning money and that same money being paid out. They calculate it by the average of yr last 10 transactions. I agree it isn’t too clear and in fact sent in a query about it. Since I have money on hand , I could technically fund the next 3 months’ necessities if I had no more money coming in - but not be able to contribute to the True Expenses =sinking funds.
Question: If I owe debt on say a credit card and I am no longer adding to that debt only paying it down, what should my priority be when I have money left after funding all my budget categories for the month? Should it be aging my money and paying some of next month's bills with this month's income OR should it be throwing that all at my debt to try to get rid of it faster? I realize this is a personal choice, but I just do not know which is the wiser choice. Thank you! I hope you are able to see this comment and respond.
How do we get the set up that has the underfunded amount? I've been using YNAB for not even a week an im wondering if that screen layout takes awhile to process? I downloaded the toolkit and the right side of my screen doesn't look anything like your does? I'm wondering if the Toolkit has been changed since your video?
I just started ynab and find it super confusing. It’s just not “clicking”
At what point do you start putting money into the next month? Is it after you already fund savings goals and pay debt?
For example… If you were still funding your six month emergency fund would you put all of your excess into the emergency fund before worrying about becoming a month ahead?
Likewise if you were in baby step two or debt repayment mode would you take all of your excess and put it towards debt without becoming a month ahead?
I would love to become a month ahead but it seems like we never have any excess money because we use everything extra to fund our savings… Saving for a house, currently pregnant etc.
It’s frustrating though because we are technically paycheck to paycheck and I would love to be one full month ahead.
Another element to this is… Our income is highly variable.
So we are unable to “set goals” for anything besides our absolute fixed expenses. Everything else that is variable like groceries, healthcare, even pet care… Sinking funds etc.… One month we may have a few extra hundred dollars to fund those and the next month we may have no extra money at all & be super tight on groceries. So I have only been using goals for fixed bills and filling in the rest as we get it. Would love a video on that topic!
Rachel Spohn I wouldn’t fund the six month emergency at all - unless your job is in danger? Set that aside until you are a month ahead of your budget. Then put whatever extra each month in the budget toward the six month fund.
Isn't this really just the same thing as saving some money from each pay check until you have an equal amount to a months income saved in your checking account? If it isn't then please explain how it isn't because this aging money thing seems to be complicating up the whole matter.
How do Savings Goals factor into aging your money? I could probably budget three months ahead if I don’t fund my savings goals and only did my fixed/living expenses. When you are first starting out and trying to budget your money ahead, are you factoring in fully funding your savings as well? Or should you put off savings until you get ahead on your fixed/living expenses?
+1
Give some notion tutorials!
Haha I love notion! But I’m still only a couple of months into using it. Still pretty new. But it’s an incredible tool :)
I'm guessing if your trying to pay down debt then aging your money won't happen as quickly as someone focusing on getting ahead on future Bill's?
I've never figure out this concept of YNAB. Now that's not true anymore! Thanks!
ps: May I suggest a topic for a video? How to input expenses that you share with your wife 50/50 when sometimes she pays and sometimes you pay and at the final you equalize that to discover how much one needs to pay to the other. I really appreciate some ideas to not lose track of how much I'm really expending with rent and food and so on. Thanks again!
I think it's much easier to YNAB together. The whole concept of paying my wife to equalize the budget blows my mind. The money is ours, not mine and hers
@@jmtyndall Thanks for your opinion. Let's put this as a roommate then. When one paid for something sometime and vice versa. How do I input that in YNAB without loose the track of your expenses for real? Because in some situations looks like you spend a lot in rent but nothing in food.
Good idea for a video. I have questions. Do you spend from separate bank accounts (so she pays the rent one month because it’s then a full payment at one time - rather than both of you sending a half payment each month) or is there some way you can calculate all the payments and send each half of your payments into a new bank account for all the bill paying?
Having an emergency fund and sinking funds actually skew the AOM number though :(
Yup! It does. That’s why I say ultimately just pay attention to when you can get a full month ahead. No so much to the number.
@@mappedoutmoney Which is basically what the Buffer system was for in previous versions of YNAB.
What happens when you're able to fund the next month fully? What should you be doing with your income at that point? I've noticed now that YNAB only seems to let you go forward one month. Maybe it's a silly question but just trying to think ahead. Thanks so much!
You can absolutely budget further if you'd like, but there a few things you may want to do instead.
Once you're a month ahead, you may want to fund an emergency fund of 3-6 months of expenses.
This may seem like the same thing, but it's a safety net for many potential pitfalls that you don't necessary want to assign to specific costs yet.
After getting a month ahead and funding a 3-6 months emergency fund, there are many things you can do. Most will invest excess income in some way, be it IRAs, 401k/403bs, mutual funds, or something else like real estate investment.
The choice, (and to quote captain planet) the power is yours!
Nick, is it better to 1) fund an emergency fund or 2) budget a few months into the future? On the one hand, I’m less likely to take dollars out of my E fund for spending. On the other hand, I feel like having it labeled as an “E fund” is just a way to have a pile of dollars with no specific jobs.
Your E fund has a job, replacement income in case of job loss, or to pay for various emergencies that come up unexpectedly.
I like to have 1 month buffer in my budget which is kept in my checking account just to ensure we don't overdraft if a bill comes a day or two early. Emergency fund is kept in another account and separate.
How does it look in the budget? E fund is in an "E fund" category, buffer is in a "next month" category. I find if you budget into the future and then overlook some overspending then YNAB tends to "steal from the future." If you're budgeted several months ahead, it's much harder to see when ynab does that
Like jmtyndall said, there’s good reasons and jobs for both!
I personally would prioritize some baseline emergency fund (like $1-$2k) and then focus on getting a full month ahead in YNAB. Then go back to the e fund.
But we all definitively have our own personal desires. That’s what makes personal finance personal :)
Nick: I like the format of this spreadsheet and learned how to use it in the trial. Now I have subscribed the software is totally different and I cannot find how to use the spreadsheet in this different format. Did I download a wrong App.? I have an iPad and I am totally frustrated trying to figure out how to use this different spreadsheet. I need HELP. THANK YOU.
Nick is using YNAB on the website. The app looks different. If you use a web browser to log in to your account through the website, it will look like this. Maybe you already figured this out by now lol
Is it best to have a goal for each category? I noticed there seemed to be one for each on the video.
That’s what I do yes. Check out my goals YNAB video for more but there’s two reasons.
1. It helps you plan your spending and see what your underfunded number is.
2. It speeds up your budgeting by allowing you to quickly fund your categories all at once.
Official YNAB folks call this a “budget template”
But yes, it’s wise to do that!
If you’re tracking your savings accounts inside the budget, does that get included in the age of money calculation? I know you mentioned the checking account in the calculation explanation but wasn’t sure about savings since that money is included in the budget. Thanks for the video!
I’m honestly not sure. But I would make a bet that if your savings are ON BUDGET the answer is yes. That money helps. But if you’re moving money to a tracking account it would show as “spent”.
But that’s a good question. I need to look into that. Thanks Shane!
If your savings account is on budget it is included in the age of money and in my opinion skews the result. For example my age of money is around 150 days but I know I’m basically living paycheck to paycheck with maybe a little left over so my savings has to be affecting the report
Robert Bradford thanks for confirming! I thought that might be the case.
In your position you could transfer money from savings to checking and be able to be a month ahead on the budget. But you may not want to do that which is totally cool.
But yes that makes sense for how it would do that to the number.
Thanks Robert. 👊
Wouldn't it be easier to put my paycheck on the top of the stack of dollar bills, then pull the money I spend from the bottom of the stack?
Haha sure thing! The metaphor still works the same. But yes. Same idea Charles!
Thanks for watching man!
I feel like I have already broken the paycheck to paycheck cycle or maybe I am not understanding this. For example I got paid on April 17th and all of my May categorys are full, including savings, sinking funds ect. BUT I just go ahead and actually pay all of my bills on that date. I don't wait until MAY to pay them so technically it looks like my age of money would be lower than if I were to wait until closer to the due date to actually send out payment so my age of money would be higher. The age of money doesn't seem as important to me as just sending out the payments and being done with it. Am I missing something?
Also THANK YOU for your videos! It really helped me set everything up when I was struggling!
Also, why should I move the available dollars to TBB instead of just letting it rollover?
The answer is they’re both “technically” the same.
As far as age of money is concerned, no, there's absolutely no difference for going to TBB vs rolling over. Either way is fine.
The reason I suggest doing TBB is that I believe there's a psychological benefit to going through the motions of moving unused money to TBB and then into the next month.
It's the act of intentionally dedicating dollars to start actively getting ahead and breaking your paycheck to paycheck cycle. And from what I've seen with people I coach, that mental shift can be powerful and really exciting when you see yourself finally starting to get ahead in that way.
So technically speaking... yes, it's the same outcome. But I like the psychological component. After all, us humans are more emotion than logic most of the time :)
I had the same question and your response makes sense. Also I think it helps me finding categories as sometimes when I have rolled over money in the category, I end up just funding the difference and it appears as "underfunded" even though the category has the full amount I need. I like the idea of funding the month fresh on day 1.
AAOM in YNAB is not useful except for about a 3-6 month period in your use of YNAB. If you have consumer debt - obviously ignore AAOM and pay the debt since you are paying interest on the average daily balance. If you have debt and a 60-day AAOM you are just paying 30 more days of interest. You can use YNAB AAOM for the time it may take after you pay off your debt while you are saving an emergency fund. However, after you have an emergency fund AAOM becomes useless again. Post emergency fund If you follow the pay yourself first principle you would immediately take cash from your check and invest it. Your AAOM will just stay at what you have in your emergency fund ( 3 months) or worse it will drop again unless you can link your investment account. I know you can track your investment account but YNAB is so poor at importing and tracking investments ( especially from M1) so you will give up quick. As a company, YNAB puts so much effort into this less than useful metric. It is simple = just have 3-6 months of expenses saved, and then the AAOM calculation is irrelevant.
Also - reading the comments in this shows how AAOM confuses people more than it helps. YNAB should let you flag line items as " operational " so YNAB can identify your monthly required expenses. If YNAB has that expense number and has a set category for your emergency fund they could have a significantly more useful " burn rate and runway" metric.
Thanks for watching and sharing your perspective John!
Do you use a separate YNAB for business Nick?
He does (it's a budget inside the same account).
ua-cam.com/video/wXCrcat9Xoo/v-deo.html
I've been YNABing for a month, and my AoM is currently at 14 days. But I am nowhere NEAR halfway to being a whole month ahead! I'm assuming my AoM growth will slow down significantly in the near future? Is it just growing fast because I'm new to the system?
Hey John! Yes, it's likely that it's growing fast because you still are fairly new to YNAB and getting your accounts settled. It will likely slow down in the near future as you push ahead. Just hang in there and keep going and don't pay TOO much attention to that number. You'll get there my friend.
Thanks for watching!
Thanks for the very informative video!
Got a quick question on AOM calculation... do tracking accounts play a role in AOM? For example, I have an account, where I deposit a certain amount for my daughter and, while I want to track how much she has, I do not want that balance to contribute to my AOM.
Also, before I get yelled at for not keeping that money in an investment fund, I am doubling down on that account as an emergency fund. While I do try to fund an emergency fund, if push comes to shove, I will be dipping into that account until I have 6 months of savings built up.
Hey Dmitry! No, the tracking accounts won't increase the AOM number. However, they will effect the calculation in that it will decrease the AOM number as you move money to a tracking account. That's because in YNAB when you move the money to tracking, it's shown as "Spent" and therefore is gone.
This is why again, the AOM number is somewhat helpful, but shouldn't be the end all be all. Mostly, just pay attention to trying to get a full month ahead.
Hope that helps :)
I'm learning a ton from your videos and lap up all the advice you offer. With that being said, with interest baring debt (student loan), I'm finding myself not even considering the age of money aspect. I totally get the concept and wish I was there, but if I have an extra chunk of money after all my categories are funded, don't I wanna make extra payments to my student loan? (I can see this might be a very subjective question, because some people will benefit psychologically by having next month's expenses covered this month, but some people - like myself - see that we are paying upwards of $125 a month in student loan interest...whereby if we bombard that loan with every extra penny we have today, in the long term we'll be saving thousands.) Anyway, I'm still learning and truly appreciate all your content. (Maybe one day soon I'll have enough extra dough to afford some 1:1 sessions with you.) DRC
I have found that the "Age of Money" number can be kind of misleading. Let me explain
My age of money number is 57 today, and yet I spend my entire paycheck every time I get one.
I have a couple of thousand dollars in my savings, for realtime emergencies (my real emergency fund is in a high yield account), and they are included in my budget. So, I think Plex is seeing that money sitting there month after month and thinks it's part of my budget money.
Is there a way to get a more relevant "Age of Money" number? Maybe make the savings accounts a tracking fund instead of being in budget.
Whad'ya think?
Hey good question Roger!
Yes your on budget savings could definitely be skewing it. Which is why I suggest the best thing to do is just pay attention to when you can use all of this month’s money for next month’s expenses. Once you can do that you’ve made it to the ideal.
If you’re using credit cards this could further skew your age of money number as well because you can be riding the float in your grace period.
As for tracking vs. on budget I wouldn’t base that decision on age of money. Instead I would make that decision on how you like to handle savings (check out my YNAB savings video about that)
But I wouldn’t let age of money dictate that decision. Instead just know that if you have decent savings and/or use credit cards you may need to aim for a larger age of money and simply pay attention to when you can legitimately get one month ahead in the budget.
Hope that helps!
@@mappedoutmoney Thanks for your reply, that makes sense. And, I just reread my original post and I see that I used the word "Plex" instead of "YNAB". I guess you can tell I was doing two things at once. :)
Roger Meston haha all good! I do it all the time.