Budgeting the Start Balance for an Envelope Budget

How do I budget my starting account balances? I have a few envelopes that should be higher. This leads to believe that this template isn’t reconciled either. There should be an error indicating that I have more money that needs to be budgeted. (sum of envelopes < sum of assets)

@jason Can you reference the article below. Specifically the section about Setting Up A Budget for Zero Sum or Envelope Budgeting and Configuring the budget to use rollovers. @heather can chime in with more details.

I tried to follow that twice but it still looks like the template uses transactions only and not the actual bank balances.

For me, it’s important that the rollovers reconcile with the actual cash that I have on hand. I created a dashboard that pulls in real-time account balances and confirms all this. But basically, I took the total of all my liquid cash (checking, savings, cash on hand). From there I set the rollover balances to equal that amount. Just use the r=XXX.XX command in the adjust column for each category.

It gets a little complicated when you figure that it is likely your cash will fluctuate throughout the month while the rollover stays static until the new month. My dashboard takes this into account. One of these days I will post something about my setup. In the meantime, if you still have questions, I would be happy to work with you offline.

Ok, I think this is common enough that a tutorial should be created.

So, I made a reconciliation sheet that compared net worth and the “budgeted income - budgeted expense” to come up with unbudgeted amount. I did a category adjustment of this unbudgeted amount from none -> income.paycheck and that is my new start. This would be a really easy add to the existing template to ensure that users are allocating every dollar to an envelope starting out instead of starting out using only transactional data which doesn’t include existing savings.

Maybe I’m not understanding this correctly but it looks like you may be talking about two different things here. “Budgeted income - budgeted expense” is not directly related to net worth. Net worth would be more closely related to the rollover totals.

Budgeted Income - Budgeted Expense gives me the leftover amount for the month that needs to be budgeted. This should be in the starting account balances already or net worth calculation. So, I take net worth - “Excess budgeted Amount” and this gives me the rollover adjustment needed to start the template.

You should have all of your income budgeted somewhere. Budgeted Income-Budgeted Expense should equal zero. Start with budgets for what you know you will spend a fixed amount on each each month (mortgage, car payment, insurance, internet) and what you think you will spend on but not sure exactly how much, (groceries, gas, electric), then go to what are truly discretionary (restaurants, hobbies, etc.). Some things I set to rollover and some do not. So my car payment is the same every month. I don’t need that to rollover. But, my mortgage payment does rollover. I make 26 payments a year so some months are more than others. Gas rolls over. Electricity rolls over. I use more in the summer than the winter so it evens out. I have a Misc. category that does not roll over into itself (see below). I use that for stupid little stuff where it literally has no other place to go.

I then have a budget category that is Savings. I adjust everything here. Anything, like my Misc. category discussed above that does not roll over into itself, rolls over into savings. This includes income. When my Hulu bill eventually goes up, like it seems to do every month, I take budget dollars away from Savings and move them to Hulu. I also see this Savings category as a way to pay myself each month. Over time as that builds up, I will move money out of Savings and into my brokerage account.

Your original question was how do you know how to set your starting rollovers. That’s different than starting budgets. I did like discussed above, based my starting rollovers on cash I have. So at the beginning of the month when it says I have $XX,XXX.xx in my total rollovers, I can point to every penny of that in one financial institution account or another. That’s comforting when my rollover tells me a I have a certain amount rolled-over for vacation or major home repair, I know the money actually exists.

Set your budgets then take all the cash you have and “fund” those rollovers until it’s all accounted for.

1 Like

Let me add one last quick thing. Most of your rollovers will obviously build month-to-month as you spend less than what you budget. For example, luckily I don’t have major home repairs that often, so the money I budget for them builds over time.

If you budget less than you make, that extra money will appear in your income rollover (assuming you have your income categories set to rollover), but it just sits there. I advocate budgeting everything in the expense categories so you can use the money, even it if goes into savings.

I agree, I think there should be more explanation coming up with the initial rollover amount in the tutorial. I reached my goal of “budgeted expenses == net worth” and can start using the tool but it was a bit rocky getting there. I guess, now I own the spreadsheet and my budget a bit more now.

I don’t understand why you needed to go through all this.

Did you setup the Rollover To for all of your Categories?
Did you set your starting rollovers for your first month’s budget?
Are you sure you’re using the Envelope spreadsheet and not Foundation?

I had to go through all of this to calculate the starting rollover amount (your point 2). The envelope spreadsheet doesn’t include current account balances and you need to build a separate dashboard, to start out, to calculate the initial month’s rollover adjustment.

Is there another way to get started with this template that is easier?

Having to set your initial rollovers is normal, there’s not really a correlation between them and account balances (unless you somehow have a separate bank account for each budget category). But setting up a separate dashboard? I don’t understand why you needed to do that.

When you’re looking at your “Monthly Budget” tab, does the header at the top say “Monthly Budget Dashboard” or “Monthly Budget View?”

This is correct.

The intent is that you can use the short cut commands on the Budget dashboard to set rollover r=$200 to set the starting balance of any category.

It wasn’t built with the intent that it would match to account balances so you do have to monitor the Total Rollover Savings to ensure that it reflects an amount you actually have in one account or another.

The more complex way to think about it wasn’t something we were intent on building into this template because… well… it’s too complex.

@aronos I am moving to the prototype since this template is getting deprecated. I want my budget to match what I have backed by my net worth. This reconciliation is doable, (because I did it), and I would like to make it easier to do this from the same tab as the budget. If my envelopes have 1200$ but my net worth is 1000$, I want the spreadsheet to indicate this. This is what differentiates YNAB. Call it “Savings Reconciliation”, where there is a simple check to make sure that the money you saved in different categories actually exists in your bank accounts.

We have not officially made that decision. Just want to clarify that in case other Envelope Budget users/fans find this thread. We have no intention of that add-on going away, or becoming unavailable, but may promote this new Savings Budget as a better, more performant tool for an envelope style of budgeting.

From the perspective of development energy and investment, we currently have no plans to improve the Envelope Budget add-on capabilities for performance or user experience.