Starting (Over) On A Budget

December 8, 2017

I have been working with a friend for the past couple months on getting a budget in YNAB. Her situation is pretty complicated, but not untypical. She and her husband have multiple checking accounts, savings accounts, and several credit cards. And they have a busy household so they have a lot of transactions going thru those accounts.

It kind of made my head spin.

But we got her all set-up and made her plan for spending, as well as what to do with future money.

But then life happened, as it does for all of us, and the budget got messy. Some transactions got entered twice within a single account, some got entered in both a checking account and a credit card, and others were not entered at all.

I totally get it because I did similar things when I was starting to budget for reals.

The thing I learned then and over again as I work with others on their budgets is that the math of a budget is usually not the hard part. It’s the habits part of a budget that is hard.

These habits include:

  • Looking at the budget before you spend (or at least keeping a pulse on category balances).
  • Entering transactions in a timely manner.
  • Reviewing transactions automatically imported from your bank.
  • Making adjustments for both accidental and intentional overspending in a timely manner.

Apps like YNAB aim to make budgeting as easy as possible but there is a learning curve for sure. And, even more critically, there is a test-your-commitment curve as well. That’s the toughest part of budgeting, truth be told. It’s why I failed twice on YNAB before I really got on-board and saw my life change.

So when this friend and I reviewed her budget a couple months in, she was overwhelmed by the mess. I was overwhelmed by the mess. We talked thru the strategy to try to clean it up:

  • Take it account by account and verify entries in the accounts in YNAB against her online bank accounts.
  • Reconcile accounts.
  • Rectify any categories that were in the red (we were pretty early in the month).
  • Review her plan for where to budget new money.

I reminded her that budgeting simply is an organization of your current money. Yes, you need to take into consideration what you are going to do with money coming in the future, but you don’t actually organize that money until you have it.

So when she went thru some of the steps above but, given the scope of the mess, was understandably overwhelmed. The only way to fix it was to do #1 very thoroughly and, neither she nor I had the hours to go thru hundreds of transactions and clean house (figuratively).

My recommendation?

Start over.

Yes, she would lose some initial reporting, but that reporting wasn’t very thorough or trustable anyway. And for anyone, not just my friend, the reporting wouldn’t be accurate until after a couple months of realistic budgeting.

The cost of delaying that new start is pretty high. Trying to hobble along on an inaccurate, error-ridden budget (which is not really a budget anyway) will keep compromising your reports and your spending and your emotions about spending.

Even if your budget isn’t a mess, it may still be a good thing to restart. It gives you the chance to really assess your categories and budgeted amounts and say, “yep, still accurate!” or “maybe I’ve started spending too much there.”

And if you haven’t even started budgeting, now is the perfect time to start! It will help you start the ultimate clean-slate—a new year—with a few more shekels and hopefully a lot more hope.

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