What Should I Do When YNAB Says I Overspent?

Introduction

Seeing a red overspending alert in YNAB can be frustrating, but don’t worry—it’s fixable. YNAB helps you adjust your budget dynamically, so rather than stressing about overspending, let’s walk through how to handle it effectively.

Quick Answer (TL;DR)

If you overspend in YNAB:

1. Check if it’s cash or credit overspending (they behave differently).
2. Move money from another category to cover the overspent amount.
3. If it’s on a credit card, understand that debt has increased and adjust accordingly.
4. Plan better for next month to avoid frequent overspending.
5. Use reports to identify spending patterns and make adjustments.

Step-by-Step Guide

Step 1: Identify the Type of Overspending

• Cash Overspending (Red Number): This means you spent more than was available in a category. You need to move money from another category to cover it.
• Credit Overspending (Orange Number): This means you made a purchase on a credit card without having enough funds in the assigned category. The expense still needs to be covered in the future.

Step 2: Move Money to Cover the Overspending

YNAB allows you to reallocate funds from other categories. To do this:

1. Click on the overspent category.
2. Select “Move Money” and shift funds from a category where you have extra. Sinking funds can be a great source of money to cover overspending in other categories.
3. If you don’t have enough in other categories, reduce non-essential spending for the month.

Step 3: Handling Credit Overspending

If the overspending was on a credit card and remains orange at the end of the month:

• It means you have accumulated debt.
• Adjust your future budget to include a debt repayment plan.
• Make use of the “Credit Card Payment” category with intentional funding.

Step 4: Prevent Future Overspending

To reduce the chances of overspending:

• Use sinking funds for irregular expenses.
• Set realistic budgets based on your spending history.
• Check YNAB regularly to track balances before spending.

Step 5: Analyze Spending Trends

YNAB’s reports help identify where your money is going. Look at:

• Categories where you frequently overspend.
• Seasonal trends in spending.
• Ways to adjust your budget for better accuracy.

Personal Insight

When I first started using YNAB, I constantly overspent on dining out. I realized that I needed to increase that budget category rather than pretending I’d magically spend less. Once I made that adjustment, my budgeting became much smoother, and I felt more in control.

Next Steps

Overspending happens, but it’s an opportunity to refine your budget. If you need personalized guidance on avoiding overspending and making YNAB work for you, I offer coaching to help you take control of your finances. Schedule a free call here.