How to Accrue in Categories

Recently, I’ve spoken to a number of people who don’t incorporate accruing in categories as part of their spending plan. The first requirement of membership in DA is a desire to stop debting. There are no rules about accumulating or working your spending plan in any particular manner.

Why Accrue?

I do it to ensure clarity. When I create my monthly spending plan, I allocate every dollar available to a category. I don’t just pull money from a pile in my bank account when I need it.

In fact, and this is crucial for me, I no longer live by my bank account, which has lied to me too often. I live by my spending plan. My spending plan is reconciled to the penny with my bank account, but my spending plan tells me how much I have in each category. I can tell you that I have 100% clarity about my money by working the spending plan in this manner.

So how do I do this? If I pay a bill annually, I divide it by 12 and put the monthly amount into the associated category. That way, when I need to pay the bill, I am assured that the money is available.

If I want to buy something discretionary and don’t have enough money, I put in a set amount each month until I can buy it. This is what I did to get a passport. I put in $10 a month for over a year.

For me, it is vital that I plan my monthly numbers at the beginning of the month, before spending, just as I plan my daily numbers.

If I don’t plan my monthly spending and don’t accrue, I am just keeping numbers, not living by my spending plan. That leaves me in vagueness and in danger of debting.

Just writing down what I spend isn’t enough.

What I have heard is that people don’t know how to include an accrual piece in their spending plan software. I’m going to show you how this works in YNAB and in Excel.

Accumulating in YNAB

In YNAB, when you allocate money to a category each month, the amount you don’t use in one month is automatically added to the next month’s balance. Here is an example:


(Please note that I cropped the image so it isn’t isn’t exactly as it shows in the actual program, but is appropriate for purpose of example.)

  • In the image, notice how there is a Budgeted (Planned in DA lingo) amount for each category.
  • The Outflows show how much has been spent in each category in the current month.
  • Balance is the accrued amount, meaning what is leftover from the current month, along with any money leftover from previous months.

For instance, in the Household Bills Overage category, I only put in $1/month. This category is in case any of my utility bills are higher than anticipated. You can see that the Balance (accumulated) money in this category is now $12.06. So I have built up a reserve by putting in just $1/month.

Notice that Stamps has $2.25 planned, but I spent $4.50. That is because I had some accumulated money in there. Now, the Balance is zero.

Just think about how great this is as the way to not only save for bills, but for something you want.

For those who use Excel, but do not have categories accumulating, you can download a spreadsheet template that contains this feature. (There is a business version in the sidebar of this blog for downloading.)

Adding an Accumulated Column to Your Excel Spreadsheet

The formula for the Accumulated category is — Previous month’s accumulated + current month’s difference between planned and actual spending.

Here is an example:

In this example:

We are in the month of February.
Cell A33: Category is Food.
Cell B33: Planned spending is $600.
Cell C33-F33 is the actual spending
Cell G33 is the total of how much was actually spent in February.
Cell H33 is the difference between the Planned and Actual spending.

Now, in Cell I33, we have the formula for the accrued money. Note that you can see the formula on the top line of the screenshot in the “fx” field. The formula is the Amount Accrued for January (Jan!I33) plus the “Amt Left Current Month,” which is $50. So there was $200 leftover in January for food.

I suggest you keep a whole year of spending plan in one workbook with each month being its own worksheet. Note that in January of each year, you will have to manually type in the December number for January’s accumulated number formula.

I hope this helps clarify why accumulating in categories is a vital piece to DA recovery. If you have any questions, please feel free to email me at moneysober at gmail dot com.


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