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Living on Last Month’s Income


I started my YNAB (You Need a Budget < not an affiliate link) trial and have viewed the “getting started” video (several people said these classes really helped).

So far, I’m not sure this is for me. But there is one aspect of YNAB that I am getting really excited over: living on last month’s income.

Now, this isn’t rocket science or anything. I don’t know why the thought hadn’t occurred to me before being introduced to YNAB. I’ve even had people mention it in the comments before when I’ve talked about our variable income (the main problem with doing a zero-based budget at Dave Ramsey suggests). But it always just seemed so daunting and scary to try to save up enough money to live off of last month’s income.

But now I see the light.

Doing this will solve so many of my budgeting “issues.”

First and foremost, it resolves the issue of not knowing exactly how much we will be making during the month. Also, I’ve mentioned how I’ve had a hard time waiting until the end of the month in order to make our snowflake payments out of any surplus funds we have from the month. Now I’ll have all the funds up-front so I can make these payments immediately at the beginning of the month. And it is my hope that it will make sticking to my budgeted categories easier because there is ONLY “x” amount of money, and that is it (currently, I’ve tried to do that with the money envelopes, but it hasn’t stopped me from swiping my debit card when needed for the girls’ birthday even though I was out of money).

By living on last month’s income I’ll know, from the beginning of the month, exactly how much can be paid toward each variable expense. That money will get budgeted and/or spent and then I will literally be left with only “x” amount for groceries or spending money, so going over budget is not an option. If I really need more money in a category (like gasoline), then I’ll have to take the money from another category where I’ll have to get by with less (like personal maintenance). I like this flexibility, and yet the rigidity of the structure, too.

What I’m not “sold” on yet is the actual software, itself. I can’t even explain why, but I don’t like the way the system is all set up. I much prefer my usual Excel file spreadsheet. But that could just be a “comfort” thing. I will, indeed, use the YNAB software for a month to give it an honest chance.

Honestly, though, I’m excited about the whole “living on last month’s income” thing. I think it will be a positive change for me, and the saver in me likes that it essentially provides one additional month as a “buffer” should worst-case-scenario happen that disrupts work.

But, from a debt perspective, what does this mean?

I’m still crunching the numbers (hope to get a budget update up later today, Friday at latest), but I’m thinking this will probably mean no (or very small) snowflake payments this month. Instead, I’d be setting that extra money aside until I can build up enough to live on for a full month. The YNAB class said it takes most people 4-6 months, but with all our extra income lately, I think we can do it in 2 months. We shall see.

In the meantime, I’m going to create a new subaccount of my Capital One 360 savings called “one month’s income.” I’ll use it as the place where I stash the extra money until we get to one full month’s income (and, thereafter, it will be used for storing our income until the start of the following month). Make sense?


Have you ever lived on last month’s income? How long did it take you to build up a full month’s income? What were positive experiences? Negative experiences? What do you think of YNAB?


  • Reply Angella |

    I can’t wait to get to a point where we have an entire months worth of income in the account and can live on last months income! It really does make the most sense. Unfortunately lately we keep getting hit with expenses so I’m not quite there yet. One day!! I hope you share more about YNAB. I’ve always been hesitant to try it, because of the cost. I mainly use my own spreadsheet, but I’d love to know more info from an “insiders” view!

    • Reply Ashley |

      I’ll definitely give my perspective along the way. You can get a free 30 day trial so you could do it along with me if you like!

  • Reply Kili |

    Sounds like a really good idea to live off of last months income. And the way you’re attacking things I’d be disappointed if it took you 4 – 6 months to have it set aside 😛 you can totally do it in two months!!!

  • Reply scarr |

    After reading about YNAB here, I decided to give it a try. I am a week and a half in – I agree with you about the software (not really my thing) and the concept (super cool to live off of last month’s rent).

  • Reply Sue |

    I’m the opposite – I LOVE YNAB – we are still on the free 34 day trial but will definitely be purchasing it. I can’t wait until we get another paycheck so I can adjust all the numbers – to me it actually makes budgeting fun 🙂

  • Reply hannah |

    Love love love living off last month’s income. If everyone did that, we’d have a lot less people living paycheck to paycheck with zero savings in the bank!
    I think too many people decide that it’s too hard to do, so they don’t even TRY. But as you said, having that extra cushion makes me feel great.

  • Reply Maria |

    When YNAB first came out, it WAS a spreadsheet but Jesse and his crew spent a very long time building it up to the Desktop and now mobile versions, so I can see why you would be hesitant about the cost but its completely worth it. I think of it as an investment in my financial well-being.
    I’ve used YNAB from the very first and I completely love it. To live off last month’s income is such a comfort. Essentially you have a one month buffer!
    YNAB is down to earth and realistic.
    I do hope you give it a chance because it really will change the way you think about your finances. 🙂

  • Reply Stacey |

    I really, really like YNAB’s software, and I’ve used it for about two-ish years now. I don’t do the living on last month’s income thing, although I can see where that could be very helpful, especially for those with those who don’t know their month-to-month income.

    I find it really helpful for keeping track of the non-regular bills, like various insurance, Christmas savings, hair appointments, etc. I can look at the total I should have in my budget and quickly see if my checking account has that money…or have I been cheating. 🙂 And I can’t “forget” any of those bills, since it’s all listed in the budget.

    When I buy things with my cards, it’s just a habit that when I get home, I take the receipts out of my purse and stack them in front of the computer. Next time I’m on the computer, in go the numbers into YNAB. Easy and quick. Like you, I don’t operate well with the envelope system. LOL I can keep up with receipts better than envelopes.

    I like how portable the program is, too. I’ve got it on my laptop and tablet, and while the app doesn’t have all the bells and whistles the PC program has, it does the job when I’m out of town and want to keep up with my money (and what I’ve spent). Freedom from receipts! 🙂

    I’m really glad that they give such a long trial, so you can really see if it works out for you.

  • Reply Tania |

    I’ve tried to think it, but to be honest, I can’t. If I can’t visualize/understand/think it, I can’t make it happen. I know it sounds extremely silly, but I’ve tried. I get $2k a month, so if I collect $2k ahead, I can start living on last month’s income… but what’s the difference from that to just saving $2k and living in the current income? I know it’s a great idea, but it just doesn’t seem to compute for me.

  • Reply Jen |

    I LOVE YNAB!!! You are actually why I signed up for the free trial. I started it yesterday so that I would be beginning at the start of the month. This is one of those life changing moments, I believe. Watch all the videos and look at all of the info in the support section. It makes it a lot easier to wrap your head around. I already have the $$ set aside to purchase the program. I plan to ask friends who use the program for a referral link ($6 off and $6 back to them 🙂 ). Good luck!

  • Reply Slinky |

    I love the idea of living off last month’s income too. I’ve been doing it for years now. I’ve only used an older version of YNAB, but I didn’t really like it either. My issue is that it always felt super focused on just this month. A lot of budget programs are like that though. I prefer to see the big picture. If I’ve got a bunch of goals or larger planned purchases, I want to see my budget for many months out so I can decide that I can do this here and save $X there and I’ll have enough for this other thing by next April and then I can work on this other thing, etc. Looking ahead, I can see that increasing my budget for something by $25 a month pushes back other goals by months! If you only ever look at the current month, you never see the effect on the future. YNAB was way too clunky and cluttered for that type of view.

    I also didn’t like the way it handled going over budget. If you were over, that amount got taken out of next month’s spending and the overage just disappeared. I agree that it has to come from somewhere, but this can make it look like you continually went over budget for months rather than having one weirdly large emergency expense that you slowly pay yourself back for. It’s demoralizing to hit every budget category and still see big red numbers on top because of something 4 months back. Chipping away at a negative in one category seems much more palatable to me.

    In the end, I was still using excel along with YNAB, only I was constantly trying to translate YNAB weirdness back to my excel budget so I could still do my long term tracking. Giant pain in the rear. I might have stuck with it if some of the behaviors were more customizable.

    • Reply Ashley |

      I think I’m going through similar issues trying to use/reconcile the YNAB software and my Excel file. I know the idea is to switch entirely to YNAB so I wouldn’t be dealing with the excel also, but I’m not ready to totally abandon my Excel and its definitely a pain to try to keep up with both! I’m only 1 week deep though, so we’ll see how I feel at the end of the month.

  • Reply Candice |

    I am slowly starting to do this. I found that it was too hard to start by saving an entire paycheck so I just started by budgeting a bit of the next month’s expenses from the current paycheck. (NOTE: I’m not noble and this actually began out of necessity when I realized my rent and a few other bills were due before I got my first paycheck of the month.) I started with just my rent and a few bills and have gradually begun to add new bills each month. Even though I hate living paycheck to paycheck, my current massive debt repayments (I rolled my snowball down up a hill to gather more snow 🙂 each month mean that’s how I’m living anyway so hopefully this will get me to a place where even with those huge payments I’m not still living paycheck to paycheck.

  • Reply Tennille |

    I just started YNAB myself and so far I am liking the idea of it but am finding some of the set up a little confusing.

So, what do you think ?