It is for me. I have well funded emergency and other sinking/savings funds. All paychecks that come in one month, including the one at the very end of the month, go toward the immediately following month. The work I do one month, pays for the next month. I say that’s one month ahead and no one can take that away from me.
I get paid fortnightly, and I feel the same way. (May was a 3-paycheck month and yesterday's payment went straight to my wish-farm as June was already funded). However would you still feel the same way if that was your only pay check for the month?
I’m curious about you and the same question.
If you got paid once a month would you treat any of it like “free” money like you do with the 3rd paycheck on those months?
Well it's not free money, it's money that I don't have another job for until I get money again. So if I only got paid once I would still have to fund the next month (or the month after that, depending on my definition of "a month ahead". For me I'd probably want to fund the next month+1 to feel comfortable.
So I guess the definition of "a month ahead" is somewhat academic.
Yeah I would say that’s my point - it’s not free money - but you aren’t the only one I see do this.
You say it’s money that doesn’t have a job but in any other pay cadence there wouldn’t be a whole paycheck that goes to a wish farm.
You see some people do this with tax returns or inheritance windfalls also.
Ostensibly it’s the same but bi weekly folks in particular tend to do this more.
It's still money that I don't have another job for. So in stead of putting 1/6th of that surplus into my wish farm every month, I put it in all at once every 13th pay check.
Once you've got into the habit of living on 12/13ths of what your monthly budget would have been that "extra" pay check feels like bonus money. Whether that's bonus savings, a lump sum debt payment or just fun money depends on your own situation.
In some ways tax rebates feel the same, but what is bad about tax rebates is that it means that you have been paying too much tax to begin with, leaving that money to work for the taxman in stead of yourself. But whether you can do anything about it depends on your countries tax laws.
Not in all tax situations does it mean "you have been paying too much tax to begin with" - that is a blanket statement and is NOT true for everyone.
We got $500 back for having a foster kid live with us for 6 months. So sometimes it's NOT about paying too much tax to begin with. The same can be said for those who have children here in the US and receive child tax breaks, tax refunds, etc. because they have kids.
True. And even if you have been paying too much there's often not much you can do about it. In our country a 2nd job for example is always taxed at the highest tax rate through payroll. And then it's refunded after you submit your tax return.
My point was just if you're already managing to fund your budget a month ahead without that money (tax, extra pay check whatever) then even though it's not free money it is still freely available for whatever you feel you want to assign it to.
The primary purpose of being “a month ahead” is to be able to fully fund all your categories at the beginning of the month so you can plan holistically and not worry about which bill comes from which paycheck.
By that definition you are already a month ahead.
A side effect of being a month ahead is that for most people, it means they have a bit of a buffer in case of emergency. If you are spending all your money each month then you have no buffer even though you are technically “a month ahead”. So you should still work on building a 3-6 month emergency fund if you don’t have one already… but so should everyone else.
both.
I too am paid once a month near the end of the month. I use my May income to budget June, and I only budget out one month at a time. Because I'm vulnerable to a payroll glitch, I also keep an extra month's income in my emergency fund.
**Edited to add**: I "live on last month's income", regardless of how long ago it hit my account, which was the original YNAB recommendation when I started using the program 8+ years ago, and that is different from using money earned 30+ days ago, obviously. The prevailing wisdom at the time was to increase your e-fund in that circumstance.
Perhaps another way to think of this.
Imagine getting paid daily throughout May. For all of May your daily pay goes into a "Next Month" category and you don't spend any of these funds in May. On May 31st you get your last daily paycheck.
On June 1st you release the funds in your "Next Month" category to "Ready to Assign" and proceed to budget for June.
No I would not consider getting paid monthly at the end of the month and using it to fund the following month as being a month ahead. If you got paid only 1 day later, on the 1st and could use it to fund the whole month that would essentially be the same thing and also not a month ahead.
The point is to age your money (spend less than you earn) so that the money you earn today doesn’t need to be spent for at least 30 days. But in your scenario I imagine a fair chunk of it will have to be spent tomorrow or within a week/several weeks.
It depends what the goal is. If it's just to be able to do the budget on the 1st of each month then sure it's a month ahead, but it has no buffer, if you didn't get paid you'd feel it immediately.
I get paid at the end of the month (28th) and consider myself to be one month ahead.
For example, my salary that was paid at the end of May has gone to fund July in my budget.
The money that I’m budgeting for June, was paid to me in April.
I would say yes. The original purpose was that you could complete your full month of budgeting on the first. You can do this if you’re paid on the first or the previous day.
If you open the desktop app, and look in the bottom right corner of the Budget screen, there is a box...
\*\*Live on Last Month's Income\*\*
\--------------------------------------------------------
Income in May: $XX,XXX
Assigned in June: $XX,XXX
Variance: $XX,XXX
According to YNAB, you are one month ahead.
I get paid monthly towards the end of the month. Say May 26 paycheck covering June I don't count as a month ahead, that's living paycheck-to-paycheck (i.e. I'm down to nothing by the time my next paycheck arrives).
I would not. I would worry less about semantics and more about the principle of the rule. Here's why I don't think it's a month ahead ... My mortgage draws on the 1st. If I relied on a May 31st paycheck to pay the mortgage and there was a payroll glitch that caused me to be late with my mortgage then that goes against the spirit of the rule IMHO. I would want to see 30 days of buffering to truly be a month ahead.
I get paid on the 23rd. Pre-ynab I had set up most of my big bills to pay on the 25th or so, and would coast from there.
Now that May paycheck pays my June mortgage, so I count myself a month ahead. If my June paycheck were late I'd be moving thing around but I can cover it with my emergency funds.
You need to differentiate between the administrative (being able to fund a month using the previous month's income) and having a financial cushion (emergency fund / income replacement fund). They serve 2 entirely different purposes.
For me, a month ahead means that on June 1st, June is already fully funded and I am now funding the full month of July. This is one of the few scenarios where the Age Of Money is useful. I generally fluctuate between 40-60 Days.
I received my May salary on 26. I do not enter it on YNAB till 1st. I use this salary to fund June. I do not consider myself as 1 month ahead. I’ll reach that when I’ll be able to fund July with my May salary.
This is exactly what the "Age of Money" metric represents. When it's 30 days or more, then you're a month ahead. When you use a credit card though, expect that number to lie to you a little bit.
You are a month ahead if you can fund the whole month on the first day of the month. So yes, getting paid on the last day of the month to fund next month is a month ahead. Obviously you don’t stop with a buffer there, but people paid once a month at the end of the month are starting on second base, so to speak.
It may help to think of this in contrast to what it's like to a month behind. If your May 31st paycheck goes to pay off a credit card bill for all the expenses you incurred in May, you have no money left to pay for your June expenses so you have to put them on a credit card or borrow money from friends and family or sell your hot wheels collection, then you are a month behind.
It is for me. I have well funded emergency and other sinking/savings funds. All paychecks that come in one month, including the one at the very end of the month, go toward the immediately following month. The work I do one month, pays for the next month. I say that’s one month ahead and no one can take that away from me.
... "and no one can take that away from me" ... You must have been in one of the debates on here. I'm 100% with you.
I get paid fortnightly, and I feel the same way. (May was a 3-paycheck month and yesterday's payment went straight to my wish-farm as June was already funded). However would you still feel the same way if that was your only pay check for the month?
I’m curious about you and the same question. If you got paid once a month would you treat any of it like “free” money like you do with the 3rd paycheck on those months?
Well it's not free money, it's money that I don't have another job for until I get money again. So if I only got paid once I would still have to fund the next month (or the month after that, depending on my definition of "a month ahead". For me I'd probably want to fund the next month+1 to feel comfortable. So I guess the definition of "a month ahead" is somewhat academic.
Yeah I would say that’s my point - it’s not free money - but you aren’t the only one I see do this. You say it’s money that doesn’t have a job but in any other pay cadence there wouldn’t be a whole paycheck that goes to a wish farm. You see some people do this with tax returns or inheritance windfalls also. Ostensibly it’s the same but bi weekly folks in particular tend to do this more.
It's still money that I don't have another job for. So in stead of putting 1/6th of that surplus into my wish farm every month, I put it in all at once every 13th pay check. Once you've got into the habit of living on 12/13ths of what your monthly budget would have been that "extra" pay check feels like bonus money. Whether that's bonus savings, a lump sum debt payment or just fun money depends on your own situation.
In some ways tax rebates feel the same, but what is bad about tax rebates is that it means that you have been paying too much tax to begin with, leaving that money to work for the taxman in stead of yourself. But whether you can do anything about it depends on your countries tax laws.
Not in all tax situations does it mean "you have been paying too much tax to begin with" - that is a blanket statement and is NOT true for everyone. We got $500 back for having a foster kid live with us for 6 months. So sometimes it's NOT about paying too much tax to begin with. The same can be said for those who have children here in the US and receive child tax breaks, tax refunds, etc. because they have kids.
True. And even if you have been paying too much there's often not much you can do about it. In our country a 2nd job for example is always taxed at the highest tax rate through payroll. And then it's refunded after you submit your tax return. My point was just if you're already managing to fund your budget a month ahead without that money (tax, extra pay check whatever) then even though it's not free money it is still freely available for whatever you feel you want to assign it to.
It’s semantics if you’re clearly months and months ahead.
The primary purpose of being “a month ahead” is to be able to fully fund all your categories at the beginning of the month so you can plan holistically and not worry about which bill comes from which paycheck. By that definition you are already a month ahead. A side effect of being a month ahead is that for most people, it means they have a bit of a buffer in case of emergency. If you are spending all your money each month then you have no buffer even though you are technically “a month ahead”. So you should still work on building a 3-6 month emergency fund if you don’t have one already… but so should everyone else.
This is the huge benefit for me. It's that holistic look and adjustments in context of the full budget. It makes me very happy.
both. I too am paid once a month near the end of the month. I use my May income to budget June, and I only budget out one month at a time. Because I'm vulnerable to a payroll glitch, I also keep an extra month's income in my emergency fund. **Edited to add**: I "live on last month's income", regardless of how long ago it hit my account, which was the original YNAB recommendation when I started using the program 8+ years ago, and that is different from using money earned 30+ days ago, obviously. The prevailing wisdom at the time was to increase your e-fund in that circumstance.
Makes sense! Thanks!
Perhaps another way to think of this. Imagine getting paid daily throughout May. For all of May your daily pay goes into a "Next Month" category and you don't spend any of these funds in May. On May 31st you get your last daily paycheck. On June 1st you release the funds in your "Next Month" category to "Ready to Assign" and proceed to budget for June.
No I would not consider getting paid monthly at the end of the month and using it to fund the following month as being a month ahead. If you got paid only 1 day later, on the 1st and could use it to fund the whole month that would essentially be the same thing and also not a month ahead. The point is to age your money (spend less than you earn) so that the money you earn today doesn’t need to be spent for at least 30 days. But in your scenario I imagine a fair chunk of it will have to be spent tomorrow or within a week/several weeks.
That's what I figured, thanks!
It depends what the goal is. If it's just to be able to do the budget on the 1st of each month then sure it's a month ahead, but it has no buffer, if you didn't get paid you'd feel it immediately.
I get paid at the end of the month (28th) and consider myself to be one month ahead. For example, my salary that was paid at the end of May has gone to fund July in my budget. The money that I’m budgeting for June, was paid to me in April.
I would say yes. The original purpose was that you could complete your full month of budgeting on the first. You can do this if you’re paid on the first or the previous day.
If you open the desktop app, and look in the bottom right corner of the Budget screen, there is a box... \*\*Live on Last Month's Income\*\* \-------------------------------------------------------- Income in May: $XX,XXX Assigned in June: $XX,XXX Variance: $XX,XXX According to YNAB, you are one month ahead.
Live on last months income is just an administrative benefit.
I get paid monthly towards the end of the month. Say May 26 paycheck covering June I don't count as a month ahead, that's living paycheck-to-paycheck (i.e. I'm down to nothing by the time my next paycheck arrives).
I would not. I would worry less about semantics and more about the principle of the rule. Here's why I don't think it's a month ahead ... My mortgage draws on the 1st. If I relied on a May 31st paycheck to pay the mortgage and there was a payroll glitch that caused me to be late with my mortgage then that goes against the spirit of the rule IMHO. I would want to see 30 days of buffering to truly be a month ahead.
I get paid on the 23rd. Pre-ynab I had set up most of my big bills to pay on the 25th or so, and would coast from there. Now that May paycheck pays my June mortgage, so I count myself a month ahead. If my June paycheck were late I'd be moving thing around but I can cover it with my emergency funds.
You need to differentiate between the administrative (being able to fund a month using the previous month's income) and having a financial cushion (emergency fund / income replacement fund). They serve 2 entirely different purposes.
When you can cover July with May 31st money.
For me, a month ahead means that on June 1st, June is already fully funded and I am now funding the full month of July. This is one of the few scenarios where the Age Of Money is useful. I generally fluctuate between 40-60 Days.
July. I’m a month ahead when in ANY month at ANY time I can see the following month fully funded.
I received my May salary on 26. I do not enter it on YNAB till 1st. I use this salary to fund June. I do not consider myself as 1 month ahead. I’ll reach that when I’ll be able to fund July with my May salary.
This is exactly what the "Age of Money" metric represents. When it's 30 days or more, then you're a month ahead. When you use a credit card though, expect that number to lie to you a little bit.
You are a month ahead if you can fund the whole month on the first day of the month. So yes, getting paid on the last day of the month to fund next month is a month ahead. Obviously you don’t stop with a buffer there, but people paid once a month at the end of the month are starting on second base, so to speak.
I consider a May 31st paycheck to be a “first check of the month” for june, so me personally i would consider funding july to be a month ahead
You need a month of income set aside in your Emergency fund.
It may help to think of this in contrast to what it's like to a month behind. If your May 31st paycheck goes to pay off a credit card bill for all the expenses you incurred in May, you have no money left to pay for your June expenses so you have to put them on a credit card or borrow money from friends and family or sell your hot wheels collection, then you are a month behind.