Add Days of Buffering

With the move to the web-based version of their software, the YNAB folk shook up their core 4 Rules and replaced “Live on Last Month’s Income” (aka The Buffer) with the Age of Money [AoM] metric. The AoM looks backward in time offering a general view of how long a dollar sits in your budget before it gets spent.

The Toolkit for YNAB developers have attempted to bring back some of the missing emphasis on building a buffer by offering the Add Days of Buffering setting [DoB metric].

The DoB metric is meant to calculate, roughly, how long your existing funds would last at your current daily average spending rate. In other words, if your income stopped today, how many days would your current cash reserves last at your current spending rate.

But this setting does more than just show how many days your current stash of cash would last (say that 3 times fast!).

If you hover your mouse over the DoB display, additional information is displayed in the Tooltip text.

The DoB metric and the extra tooltip info adds even more value but there’s one additional setting you can adjust to get the most out of the Days of Buffering: adjusting the time period used in the DoB calculations.

There are five radio buttons included in this setting ranging from indefinite (considering the entire history of your budget file) to as little as one month (effectively only the last ~30 days of spending history). This setting is particularly helpful if you’ve experienced any major life changes over the life of your budget file.

My current budget file begins on January 1, 2013 (data prior to that got lost in software updates, computer updates, and platform changes). That means I’m got nearly 9 years of budgeting and spending data in YNAB. Over those 9 years, we’ve seen some major changes in spending priorities and patterns — from sending kids to college to covering big medical expenses to drastically accelerating our mortgage payoff. Where we were once a family of 4 with a mortgage, car payments, and tuition, we’re now a debt-free empty-nested couple.

Adjusting the time period considered in our DoB calculations returns some very different numbers…

As demonstrated in the screenshot below, it is possible to have a negative buffer. This happens if you’re in credit card debt. If you’re actively working to reduce/eliminate your debt, you might want to use this setting in conjunction with the Add Days of Buffering – Exclude Credit Cards setting.

I go back and forth between thinking of the Days of Buffering as a valuable source of information and a fun novelty. I guess, in reality, it is both — depending on what you glean from the information and, more importantly, how you use it to change your behavior or inform your decisions.