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Creating a Budget Goal in YNAB

I haven’t met a single person who uses YNAB so I hope someone stumbles on this post and finds it useful. YNAB is how I got my finances on track, it’s how I started paying down debt, and saving and investing towards financial independence. Creating a budget goal in YNAB is easy and incredibly useful as I’ll outline below.

 

A Budget Goal in YNAB

A budget goal might be to save for an emergency fund or for house down-payment. It might be a sum of money to pay down your car or your student loans.

I recent create a budget goal in YNAB to pay for the $5,000 fine which I’ll owe to the medical board for being a naughty physician.

I also have an ongoing budget goal in YNAB every year for property taxes. I owe roughly $2,000 every November. So I make sure that I set aside a little bit extra every month to meet that goal.

By using the budgeting goal tool in YNAB I don’t have to think about it – YNAB reminds me every month how much extra I need to set aside so that I have enough by end of the yea.

 

YNAB Budget Goal Tool

You click the “Create a goal” on any of your categories. You might have an Emergency Fund category or a Student Loan Debt category.

I created a Medical Board Fine category and have assigned it $5,000 which is how much I’ll owe – negotiated down from $10,000. The medical board agreed to let me pay it in 2 installments, over 2 months.

 

Setting a Budget Goal

From the screenshots above, I selected the first option, Target Category Balance, and set it to $5,000.

I could choose the second option, Target Category Balance by Date, if I wanted to have a certain amount by a particular time. I do this for my property taxes every year.

Finally, the last option is a monthly funding goal. This is good if you’re trying to set aside $1k a month in your investment account which is something I do.

I’ll go over how to do each of these 3 methods, briefly.

1. Budget Goal by Balance

Setting a budget goal based on a particular balance is the most common option. It’s what I use for one-time budget goals.

I enter the $5,000 in the Target Category Balance. 

Then when I add some money to that category then the YNAB software will let me know how far along I am.

I can add some notes to it as well. This will help remind me if I forget.

I added $384.50 which is what I got paid from Doctor on Demand just yesterday. Since I already have my month budgeted for, I don’t need the money for anything else.

2. Budget Goal by Balance by Date

If I did the same thing for this category but set a date for September, then it would look something like this.

Since I only have 2 months to save for this goal, the software is letting me know that I need to budget another $1,282.17 in order to get to my $2,500 goal for the month. Easy.

3. Monthly Funding Goal

Even though I am done with saving and investing, I’ve decided to set aside another $1,000 a month as long as I earn an income doing telemedicine.

By choosing the 3rd option, Monthly Funding Goal, I let YNAB remind me every month exactly how much more I need to save to meet my goal.

 

Automating your Budgeting

Automating your budgeting as much as possible will make it less tedious. By setting a budget goal in YNAB, the software will do all the calculating and thinking for you.

Once you get your paycheck, you just have to decide where to deploy those dollars in YNAB.

If I get paid $1,200 then I’ll set 20% aside for taxes since I am self-employed. Then I look through each of my categories for the ones hi-lighted in yellow, indicating they are underfunded. I add a little to each category and I’m done.

 

Student Loan Budget Goal

This is how I paid off my student loans. I set a goal of $8,000 every month and YNAB would remind me exactly how much more I needed to contribute to the category each month.

Once I met the $8,000 budget goal in YNAB then I was done. I could spend the rest any way I wanted.

Even if you only set aside an extra $1,000 every month towards student loan debt, it’s a great feeling when you accomplish that budget goal in YNAB.

Every time I see that green check-mark, I get a little happy inside. But that’s probably because I’m a little weird.

 

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