Personal Finance

Understanding ‘Age Of Money’ In YNAB

Are you wanting to gain a better understanding of YNAB’s age of money feature?

I recently confessed that after a long term love / hate relationship with the budgeting software YNAB. I’m a full-time user, and lover of the software, I finally ‘get it’ so to speak.

YNAB is different from other budgeting applications on the market but actually aligned to real-life spending much better.

Where To Find Age Of Money In YNAB

One of the ways in which you can track your financial security in YNAB is via the age of money which you’ll find on all screens within YNAB in the top right-hand corner.

Here you can see my personal age of money right now is 7 days. It’s been a rough couple of weeks… months… okay, the entire year has been a financial nightmare, but still…

How Is YNAB Age Of Money Calculated

YNAB’s Age of Money is calculated based on the time between an income and that income then being spent.

For example, if you recieve £1.00 on Monday the 1st October, but actually don’t have much in your bank account and have to use that £1.00 to pay a bill on Tuesday the 2nd of October then your Age of Money would be 1 day old.

It’s taken exactly 1 day between you receiving the money, and spending the money.

However, if you recieve £1.00 on Monday the 1st October but have plenty of money in your bank to cover your bills, then you wont need to spend the £1.00 straight away, in fact maybe you only need to spend it when you get a bill on the 30th October and you’ve used all the money you previously had.

In which case your age of money would be 29 days old. As the money has lasted from the 1st through to the 30th.

YNAB has a video explaining more about the Age of Money here.

What Is The Optimum Age Of Money In YNAB

If you have a one day Age of Money you’re having to spend the money you recieve straight away to pay financial dependencies.

This doesn’t make you very financially stable.

Instead, you’ll want to try and achieve a high age of money. This provides you with a great buffer in case your income drops or you have an unexpected rise in expenses.

However, if your age of money is too large, you might find you have too much money floating in your accounts that aren’t earning the interest it could be if it was in savings for example.

YNAB reccomends aiming to achieve a 30 day age of money.

This allows you to recieve money in, for example, September, and actually budget it for Octobers expenses. As September was already taken care of by Augusts wage, for example.

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However, the optimal age of money, in my opinion, is actually more personal. I’d say achieving 30 days minimum is great, but you may also want to try and achieve a higher age of money if you have a large number of dependencies etc.

Again you can read more about this from YNAB themselves here.

So, that’s YNAB’s fourth rule, age your money explained. If you’ve any questions feel free to leave me a comment below. If you’ve not already sign up to YNAB today for a 34-day free trial.

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