Organize Your Budget, Organize Your Life
Organizing your budget is a bit like organizing your whole life. Your budget is a reflection of your family meals, your kids’ milestones, your aspirations, and that big vacation you want to take for your anniversary. It reveals more than your financial goals; it tells the story of your days and reveals your hopes for the future.
So how do you possibly organize your entire life into some lines of a budget? As demonstrated by the YNAB method, there’s beauty in simplifying. Fewer moving parts in your budget means fewer things to manage in your budget, which means more time to live your life. But occasionally, you may find yourself wishing that you could organize things just a bit more neatly in YNAB.
Organize Your Budget with Subcategories
You’ve organized your spending into categories and grouped those categories together by common themes, but you’re craving that one extra level of clarity. We polled the YNAB Support Team to see when and how they add additional categorization levels into their budgets, and here’s what they said:
For planning complex projects like vacations:
Matt finds that planning vacations feels a little too big for the category notes section, so he creates a new category group for his vacation, then creates categories for each type of expense he’ll have on his trip: flights, lodging, dining out, souvenirs, passport fees, gratuities, tours, etc.
Matt sets targets on each category to help him save, and to help prioritize what’s most important to him about his trip. (He’d much rather set aside money for a national park pass and local breweries than a fancy hotel room.)
Before he heads off on a trip, Matt moves all the money in his individual planning categories to his main Travel category to simplify transaction entry. Then he can delete the planning categories to keep his reports useful and tracking a breeze! Matt also adds custom “tags” (like #Texas2022Flights and #texas2022breweries) to the memo field of these transactions, to help him plan future trips in detail.
This method also works great for planning home renovation projects and holiday shopping!
Want to really get detailed with your planning? Create a new budget for planning your project. Let’s say Matt was planning a cross-country road trip. There’s lots of stops along the way that he needs to prepare for, but Matt doesn’t want to add a ton of categories to his main budget. To plan this, Matt would create a new budget. He’d add an unlinked account, and use the “available” amount of this travel category as the starting balance. Then he’d create a category group for each city on his road trip, and categories under each city’s group to plan lodging, dining out, and things to do.
For tracking similar expenses for different people:
Does a competitive streak run strong in your family? It does in Ashley’s. Ashley only wants one Dining Out category, but she still wants to see who is getting DoorDash’ed taquitos more times than is strictly necessary.
Each time she enters a transaction to her Dining Out category, she adds the name of the person who made the purchase in the memo field (you could also assign each person a colored flag, and classify transactions this way!).
When Ashley inevitably runs out of Dining Out money, she can search her family member’s names or flag color, and use the “selected total” feature to see how many times extra guac was ordered (it was a lot, okay?).
This method works great for your hobbies, too! Have one general hobbies category, and “tag” each transaction with “sewing,” “pastry making,” or “ham radio” to keep track of how much each hobby costs.
For expenses you want to track separately, but fund as a lump sum:
You might find that you do want to track expenses in separate categories, so that you can have granular detail in your spending report, but you want to assign money to each category at the group level.
For example, you have a Fun Money category group, where you track your Dining Out, your Hobbies, and your Entertainment categories. You know you want to spend $200 a month on these, but you don’t care which category gets the money. You can hack a third category level in YNAB by making “Fun Money” a category in your budget, and creating a $200 monthly Needed for Spending target on it.
Then, like Kathryn, create “subcategories” by moving your Dining Out, Hobbies, and Entertainment categories below your Fun Money category, and adding dashes, spaces or emojis in front of the subcategory titles to create the visual appearance of a third level.
Assign money to a general “Fun Money” category to create a pool of funds for the subcategories.
When prompted to cover overspending, move money from your general “Fun Money” category.
Assign money only to the parent category, but categorize transactions to your subcategories. As you spend, you’ll move money from the parent category to your subcategories to cover that spending.
When to use a lot of categories and when to consolidate them
Sometimes it’s best to use YNAB’s existing category structure. There’s power in a simple structure, both in your budget categories and in your accounts, because with simplicity comes transparency.
When Blair started with YNAB, she was fighting her way out of debt and she needed visibility into the areas she knew she tended to spend with abandon–her subscriptions.
It was also important to her to feel secure with the money she’d set aside for these expenses. She knew she wasn’t going to cancel Amazon Prime if she overspent in other areas, so she created individual categories for every single subscription her family used.
There were a lot of categories, but having each listed out separately helped Blair see which ones were really important to her and which ones weren’t! The ones that weren’t got canceled, and that freed up more money each month for her debt paydown.
Learn more about how many YNAB categories you should have.
After living with her budget for a while, Blair learned to trust both herself and the YNAB method, and she felt comfortable consolidating her subscriptions into one category. Blair didn’t need to keep lots of categories forever–just long enough to learn what her priorities were and how to Roll with the Punches when overspending inevitably happens. Once she grew to trust her budget, Blair deleted the individual categories and merged them into one category.
That’s the beauty of the YNAB method! Your budget isn’t fixed in stone. You can change it at any time, make adjustments to your category structure and the details you want to track. Experiment with your category structure and organize your budget to fit the life you want to live.
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