Maximize Your YNAB: Smart Strategies for Extra Funds

Financial planning can feel like a long game. You set your priorities and work at them little by little. It can take time to save up for future expenses like retirement and vacation or even for a larger purchase. But sometimes, you get a cheat code! That can be a tax refund, a reimbursement or (if you’re paid bi-weekly), a three paycheck month when payday lines up just right.

If you’re a budgeter (and even if you’re not!), you may wonder about the best way to use this extra money.  There are several ways to use your windfall to increase your financial security. Some options may be mathematically the most strategic option, but the best choice for you is the one that feels best to you. Whether you build an Emergency Fund, pay down debt or get a month ahead is up to you.

Depending on where you are in your budgeting journey, here are a few ideas on what to do with a windfall. Remember— it’s totally okay to use a combination of these!

This can look two different ways in YNAB (check out our recently updated help doc here to see more about the “how”). One option is to click ahead to the next month and start assigning money into the categories in the future month. If you get a paycheck and you don’t need any of that new money that’s in Ready to Assign, click ahead to the next month and start funding your categories there. When you get paid again, you’ll do the same thing. Each time you have money you don’t need in the current month, click ahead and assign it in the next month where you haven’t fully funded yet.

The second option is to create a holding category for your future cash. This is the setup I use and I love my Next Month’s Money category. I know exactly how much my monthly pay is and it makes me so happy to see that full month of cash sitting in the budget, waiting for next month. Before I roll over to the new month, I move the contents of the Next Month’s Money category to Ready to Assign. Then I click ahead to the new month and start assigning!

When I help my kids with their budget, I always recommend that they create a category for an impulse purchase–even if they just spend the money right away. Taking the time to intentionally assign money is important. Create a category in your budget and assign the money for that purchase to the category. This is more powerful that covering overspending later–you’re choosing how you’ll spend your money before you spend it.

No matter what you do with your windfall, the key is to actively decide how to save/spend it rather than letting it roll into your account balance. 

If you don’t already have a budgeting system, a three paycheck month is a great time to get started. Check out a free 34-day trial of YNAB and start giving those new dollars jobs!