How to Use YNAB's Targets
Targets are at the heart of every successful budget, and now they’ve got some fresh new updates. Here’s the latest and greatest on those monthly targets that inform your every move.
These changes will apply to any Target you set going forward, but if you already have your budget template set up, you won’t have to do anything until you set a new Target.
Here’s what Targets look like:
Let’s take a closer look at these three categories:
- Needed For Spending: fund up to this amount, with the ability to spend from it along the way.
- Use it for: groceries, holidays, vacations, and oh snap—the new car savings!
- Target Savings Balance: save this amount over time and maintain the balance by replenishing any money spent.
- Use it for: down payment, emergency fund, new technology replacement fund
- Monthly Savings Builder: contribute this amount every month, no matter what, until you disable this Target.
- Use it for: savings Targets with an unknown target, like wish farm items, a vacation you hope to take “someday” or a set amount you want to save every month.
That’s the quick overview: let’s take a look at each one of these a little more in depth.
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Needed for Spending Targets
Use this target for your common monthly expenses like groceries, your cell bill, wifi, rent, etc. You set the amount to budget, and you can spend up to that amount without causing the category to become underfunded (and turn that warning shade of red).
It gets even more dialed in. There are three frequency options for Need for Spending target:
- By Date
Here’s what Needed for Spending Target might look like in real life:
- Use a Weekly Spending Target to budget $40 each week to spend on eating out.
- Set a Monthly Spending Target to budget $75 for clothing each month.
- By Date Spending Target: Budget $250 three months from now when your quarterly water bill will come due. This Target will break it out into its monthly cost.
When you choose a Weekly or Monthly Needed for Spending Target, you can choose which day you’d like to have the Target funded by (like $10 every Monday for the ol’ coffee budget or $80 by the 15th of every month for the electric bill).
When using a By Date Target, you can choose to repeat this Target by a chosen frequency (like every three months for the garbage service).
Or another example: let’s say you set a Target to budget $1000 by December 24th for Christmas, and choose to repeat this each year. As you buy presents (it’s never too early to start!), you can spend from that category as you go. Set it to repeat and it’ll start the process over after Christmas.
Bonus: If there are any leftover dollars in a category when a month ends, they will contribute to the next month’s Target when the month rolls over.
Pretty slick, eh?
Savings Balance Target
Yep, just like it sounds: a Target Savings Balance Target allows you to set a specific amount to … wait for it…save in a category. If you spend from the category before the date, or if not enough is budgeted, we’ll remind you to budget more to make up for the spending.
You can even choose a target date and we’ll tell you how much to budget a certain amount each month in order to hit it.
We see people using this Target Savings Balance most often for things like saving for a down payment on a house, building an emergency fund, or maybe padding a new technology replacement fund. You can choose to give it a date and we’ll break out the monthly savings required.
If you don’t choose a date, we won’t remind you, because hey, we have no idea what to remind you about. We’re not magicians, sadly. But we will keep track of your progress.
Monthly Savings Builder Target
Ah, the good old monthly savings builder. This Target will prompt you to budget the same amount each month, no matter what, until you disable this Target.
- Use it for: savings targets with an unknown amount, like wish farm items, a vacation you hope to take “someday” or a set amount you want to save every month.
This is great for things like saving for things when you don’t have a specific number in mind, like stocking up your emergency fund, building up a home improvement budget, auto maintenance, or saving money for something like an HSA, IRA, or brokerage account.
And here’s the beautiful part—you can also spend from this Target without causing the Target to be underfunded. Think of it like this: know your home needs some improvements, and you figure it runs about $100/month: some months more, some months less. Say you want to add shelves in the living room this month: you can spend from this category without the category showing up as underfunded. And if your shelves only cost $40, you’ll have extra next month to grow over time for something bigger (like a new vacuum, or new landscaping).
With these three Target types, you can capture and slay every bill and expense while making those financial dreams come true.
Cheers and happy budgeting.
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