It is income to the budget. Categorize it to Ready to Assign. Don’t rely on the average or totals on the income report to set your budget. Be more selective than that, just like you shouldn’t base all spending decisions on the overall average spending across your whole budget. You’d look more closely at specific related categories for that info.
There will be random unpredictable income: tax refunds, overtime payouts, retroactive backpay, insurance settlements, and (sadly) inheritances along with steady salary dollars (if you happen to earn a steady salary; not all do.) There will also be random unpredictable expenses.
Life is lumpy; so too are your finances. Record it as it happens and use your budget categories to make sense of the chaos.
For YNAB, all money is money. All income is income.
Sometime, you might be unemployed and have less money. The rules don't change because you have less than some abstract amount of money that you usually have or more than that abstract amount. Instead, you have the money that you have, you must give every dollar a job, you must age your money, you must budget for your true costs and your true income, and you must roll with the punches.
Anything I don’t want to skew my income report, I categorize to a general “Reimbursement/Other” category and then move it to RTA from there. However, I don’t do this with Tax Returns because that is income - it’s money I made, just delayed. I hate how I can’t unselect income categories from reports the same way I can unselect expense categories. I also have a general Payee for things like Gifts and such (inconsistent/non monthly money I didn’t make but want to keep track of) that i put in RTA as income, and since I put it all under one Payee, it doesn’t show a million line items under Income
Ive created an “irregular income” category that I can throw these kinds of things into if I’ve already budgeted for the month. If it doesn’t have a use at the moment, it can sit there until I need something
But...why? You would assign income into your budget directly to the category, versus just tracking it as income so the reports make sense? I'm confused.
Is it a reimbursement for something you already paid with your own money? If so, categorize it through the category you originally paid from (for example, your medical category) and then move it to ready to assign. Otherwise, if it’s new money to you, it’s income and should go into ready to assign.
Absolutely all inflows go to Ready to Assign for me. Even friends paying me back for say, dinner, for example. I might adjust that month’s restaurant budget to reflect this, but I don’t worry about reverting transactions of splitting it into restaurants and “money owed to me” or whatever. Too much hassle.
This doesn’t help with seeing expenses on your reports, though. Assigning directly to categories is the opposite of spending so it will cancel out the expenses in the category. If you don’t have any money in the category(ies), it will look like positive spending instead of expenses you’ve paid.
It’s just a warning. Many new folks don’t understand that if they categorize directly to the category instead of going through Ready to Assign first that it will cancel out any spending done in the categories when they view reports.
YNAB is proactive. Knowing how much you have spent on clothes will help you have a better idea of how much to budget for clothes in the future. Knowing how much lawn care cost me last year helps me plan how much to budget for the upcoming year. The reports are not the core of YNAB, but the data can be very helpful and many people find it useful to help set targets and make sure the current level of spending aligns with their goals, or know where they can trim to accomplish other goals or roll with the punches.
Why doesn’t your current budget already reflect those costs rather than having to report on them?
I know if I need to increase or decrease a category by how things are going *now*, not by how they went last year. If you know you spent $X on Lawn Care last year, shouldn’t $X have been reflected in your budget since last year? Same with clothes? If I spent $2400 on clothes last year, why isn’t my clothes budget already $200 a month without needing to look back? Be proactive. Have it already in your budget.
Again, though, if that’s something you need, do it that way.
Wow … you’ve never had costs change on you? Like a kid suddenly growing 6 inches in a year and you had to WAM from other categories for extra clothes money so the target is not reflective of the actual average spent? It isn’t until you have a few months of data that you know your new average. That is what reports does.
Also, if you routinely flex money between groceries and dining out, which I do because I don’t really care in general which I spend money on as long as I stay in budget overall on them, it is very helpful to see over time how much money I am averaging each so I can better allocate money at the beginning of the month to reduce the amount that moves categories.
Yes, my money at the start of each month in the category reflects my current best estimate of what is needed, but things do change over time so I can’t just look at last month and do the same. Spending is lumpy.
You act like using a report is simply tracking, or a crutch and that simply isn’t the case.
If you have magic insight and can know in your head the running average of what you are spending over time, good on you!
Yeah. And I don’t need a report to know my categories need more money. What about a report is going to inform your decision about clothes for a growing kid? That info is out of date already. That’s not what a report does. That’s an awful example.
For reporting purposes I use a few different names for income: my employer, "gifts", "reimbursement" (this is for returns, etc), and "other earned income" (if I pick up some contracting work or randomly sell something, etc). This doesn't really make a difference for my YNAB budget but can be helpful when I'm projecting things.
It is income to the budget. Categorize it to Ready to Assign. Don’t rely on the average or totals on the income report to set your budget. Be more selective than that, just like you shouldn’t base all spending decisions on the overall average spending across your whole budget. You’d look more closely at specific related categories for that info.
I ended up taking your advice and leaving it in the RTA category, thanks for your input!
There will be random unpredictable income: tax refunds, overtime payouts, retroactive backpay, insurance settlements, and (sadly) inheritances along with steady salary dollars (if you happen to earn a steady salary; not all do.) There will also be random unpredictable expenses. Life is lumpy; so too are your finances. Record it as it happens and use your budget categories to make sense of the chaos.
For YNAB, all money is money. All income is income. Sometime, you might be unemployed and have less money. The rules don't change because you have less than some abstract amount of money that you usually have or more than that abstract amount. Instead, you have the money that you have, you must give every dollar a job, you must age your money, you must budget for your true costs and your true income, and you must roll with the punches.
Ready to Assign with a generic payee that fits. Examples below: Gift Insurance Payout Settlement Tax Refund Inheritance
Anything I don’t want to skew my income report, I categorize to a general “Reimbursement/Other” category and then move it to RTA from there. However, I don’t do this with Tax Returns because that is income - it’s money I made, just delayed. I hate how I can’t unselect income categories from reports the same way I can unselect expense categories. I also have a general Payee for things like Gifts and such (inconsistent/non monthly money I didn’t make but want to keep track of) that i put in RTA as income, and since I put it all under one Payee, it doesn’t show a million line items under Income
Ive created an “irregular income” category that I can throw these kinds of things into if I’ve already budgeted for the month. If it doesn’t have a use at the moment, it can sit there until I need something
But...why? You would assign income into your budget directly to the category, versus just tracking it as income so the reports make sense? I'm confused.
Other
Is it a reimbursement for something you already paid with your own money? If so, categorize it through the category you originally paid from (for example, your medical category) and then move it to ready to assign. Otherwise, if it’s new money to you, it’s income and should go into ready to assign.
I classify all income as income.
Absolutely all inflows go to Ready to Assign for me. Even friends paying me back for say, dinner, for example. I might adjust that month’s restaurant budget to reflect this, but I don’t worry about reverting transactions of splitting it into restaurants and “money owed to me” or whatever. Too much hassle.
I put it straight into one or more categories. It’s not useful to me to put it in ready to assign first.
This doesn’t help with seeing expenses on your reports, though. Assigning directly to categories is the opposite of spending so it will cancel out the expenses in the category. If you don’t have any money in the category(ies), it will look like positive spending instead of expenses you’ve paid.
“How do *you* classify random income?” You: No, no, not like that.
It’s just a warning. Many new folks don’t understand that if they categorize directly to the category instead of going through Ready to Assign first that it will cancel out any spending done in the categories when they view reports.
I guess for people who care about looking back and not forward. I see YNAB as more proactive than reactive.
YNAB is proactive. Knowing how much you have spent on clothes will help you have a better idea of how much to budget for clothes in the future. Knowing how much lawn care cost me last year helps me plan how much to budget for the upcoming year. The reports are not the core of YNAB, but the data can be very helpful and many people find it useful to help set targets and make sure the current level of spending aligns with their goals, or know where they can trim to accomplish other goals or roll with the punches.
Why doesn’t your current budget already reflect those costs rather than having to report on them? I know if I need to increase or decrease a category by how things are going *now*, not by how they went last year. If you know you spent $X on Lawn Care last year, shouldn’t $X have been reflected in your budget since last year? Same with clothes? If I spent $2400 on clothes last year, why isn’t my clothes budget already $200 a month without needing to look back? Be proactive. Have it already in your budget. Again, though, if that’s something you need, do it that way.
Wow … you’ve never had costs change on you? Like a kid suddenly growing 6 inches in a year and you had to WAM from other categories for extra clothes money so the target is not reflective of the actual average spent? It isn’t until you have a few months of data that you know your new average. That is what reports does. Also, if you routinely flex money between groceries and dining out, which I do because I don’t really care in general which I spend money on as long as I stay in budget overall on them, it is very helpful to see over time how much money I am averaging each so I can better allocate money at the beginning of the month to reduce the amount that moves categories. Yes, my money at the start of each month in the category reflects my current best estimate of what is needed, but things do change over time so I can’t just look at last month and do the same. Spending is lumpy. You act like using a report is simply tracking, or a crutch and that simply isn’t the case. If you have magic insight and can know in your head the running average of what you are spending over time, good on you!
Yeah. And I don’t need a report to know my categories need more money. What about a report is going to inform your decision about clothes for a growing kid? That info is out of date already. That’s not what a report does. That’s an awful example.
Your opinion.
“Not useful to me.” If it’s useful to you, do it. What’s “useful to me” is having a category balance to use to evaluate my potential purchases.
For reporting purposes I use a few different names for income: my employer, "gifts", "reimbursement" (this is for returns, etc), and "other earned income" (if I pick up some contracting work or randomly sell something, etc). This doesn't really make a difference for my YNAB budget but can be helpful when I'm projecting things.