How is Income Savings (Rollover?) calculated in the Savings Budget?

I must be confused about how income savings/rollover works in the Savings Budget.

Consider the following conditions:

  1. I have an Income category called Paycheck that is set to Track as Savings.
  2. I receive income to that category on the last day of each month.
  3. Funds from that category are available for spending on the first day of each month.

Today, January 1st, I would expect to see at least a partially available amount from my Paycheck category: the expected income from January plus the income rollover from the previous month. Granted, this would be a negative number because the expected income for January is a negative number roughly whose absolute value roughly doubles the expected savings from the previous month.

Before answering my question, you should know that I just transitioned from YNAB and I’m used to a lot of heavy lifting being done for me, so the answer might be painfully obvious.

I think I’m confused about how the Savings rollover works for income. Frankly, my spending habits have been quite bad historically, so I’m wondering if all those transactions are simply draining the available income from month to month.

Is there any calculation being done that’s resulting in $0 Savings balance for my December Paycheck?

I’m a bit confused about this, too. It has to do with how savings, budget, and available interact for income categories. I understand how they function for expenses: savings + budget - actual = available
I’m not tracking, though, for Income categories.

For a category called Paycheck, let’s say I start the month with $10,000 in savings and I budget another paycheck of $3,000 coming in later this month. Currently the actual is $0 because I haven’t been paid yet.

That currently displays in the sheet as:
Savings = $10,000 Budget = $3,000 Actual = blank Available = $7,000

So, budgeting the income looks like it reduces the available amount. I must be missing something…

Should I be budgeting a negative amount? When I do, that changes the available to $13,000, which is closer to what I would expect. I may not be understanding something foundational - no pride here, correct away!

BTW, I do understand that if I use any of the money in that income category, I would need to adjust the balance down by the amount I’m allocating elsewhere.

Hi @DMA,

You are correct that if you have budgeted income that does not have a matching transaction, your available amount will be decreased by that amount. You are budgeting correctly with a positive amount.

How you handle budget and savings in income categories will depend on your budgeting strategy. I follow a zero-based budget (budgeted monthly cash flow = $0), where every dollar of budgeted income will be distributed among my expense categories, with no income between months. Any surplus budgeted income that isn’t required for my monthly expense budget goes to a discretionary spending category.

I treat secondary unbudgeted income sources differently, as I do not count on that as income to cover expected expenses. I adjust the savings balance for those income categories and move it directly to expense categories, generally my discretionary spending category.

In short, for your scenario, in order to use the $10,000 savings in the Paycheck income category, you should reassign the income savings to expense categories savings. For the $3,000 budgeted paycheck, you should disperse that amount amongst your expense category budgets. Whether or not you budget every dollar of income to expenses is up to you, but if you have any unbudgeted income carry over to the following month, you will simply repeat the process.

Very helpful! Thanks.

I have also been doing zero-based budgeting since 2018 (in another tool that shall remain unmentioned). I am making a mind shift for a couple reasons:

  1. The previous tool handled things slightly differently, and
  2. I “semi”-retired so I am living off a combination of a much smaller income, accumulated savings, and disbursements from investments. Thus, expenses may outpace actual income for periods of time.

I do have a “Buffer” category on the Expense side that I have historically used to accumulate deferred spending. I guess I have been trying to figure out if that is the right way in this tool or not. (I was also trying to figure out if this unspent money is properly categorized on the Income or the Expense side.)

A few questions:

  1. Do you “empty” the income categories monthly (so that they show savings =$0)?
  2. Do you use the adjustments tool to move the funds from income to the various expense categories?
  3. How do you ensure that you are not over-allocating the income (other than by being a responsible adult who can perform arithmetic)?

I just want to make sure that I am not abusing, either philosophically or technically, the design of this Savings Budget tool.