INDEPENDENT ADJUSTERS - YOU NEED A BUDGET
IDecember 1, 2014
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My first few years as an independent adjuster were great. Never before had I made so much money. Coming from an industry where large influxes of cash were rare into one where you could easily realize multiple thousands of dollars in less than a month was a shock.
To say I was naive is an understatement. Not fully realizing that it wasn’t always going to be this way accompanied by my tendencies to spend created a problem.
If you were accustom to a regular check before you began your adjusting career, you probably understand. Having a variable and irregular income creates a number of challenges. Especially when you fail to plan for when claim volume slows.
Having a variable and irregular income creates a number of challenges. Especially when you fail to plan for when claim volume slows.
My wife and I are both planners. We like to know what is going to happen before it does and had become frustrated by not being able to budget our adjusting income properly. So many of the popular budgeting solutions today are tailored to regular paychecks that we ended up with a home-brewed spreadsheet solution.
You Need A Budget (we did)
Luckily, somewhere along the way we heard about You Need A Budget or YNAB for short. YNAB is a simple budgeting software solution that works well for adjusters or any business with a variable income.
We’ve been using YNAB for about a year now and the concept is simple. You are always saving money since you are giving every dollar a job. For example, let’s say you had a few checks or deposits come in for claim vendors and the total was $3,000. Most people would pay bills first, then set aside some for gas and groceries and then probably spend the rest on various other purchases (needed or not). If this is you, you're probably wondering, 'what's the big deal'? Well, YNAB asks you to give every dollar a job so you can only spend within your budget category amounts.
Rainy Day Fund for the Digital Age
We tend to forget major purchases. Not everyone plans for major vehicle issues or tires or braces for the kids. These expenses pop up and most of us tend to spend money that we don’t have or that should be used for something else to cover them.
These expenses pop up and most of us tend to spend money that we don’t have or that should be used for something else to cover them.
This is where YNAB shines. Take the $3,000 example from above. In YNAB you setup categories for braces, tires and vehicle maintenance. Whatever you want, the choice is yours. Next, you simply allocate the funds towards your bills and expenses and then whatever amount is left goes towards your budget (rainy day) categories.
Saving for a new laptop? Setting aside for Xactimate? You can quickly and easily see how much you have set aside and then based on your remaining cash you can budget money into your categories.
How does this help you as an adjuster?
Like many adjusters, I don’t make enough to have anyone manage my accounts full-time. I also don’t have the time to do this from the road, so my wife manages it all from our home office. For years I kept my receipts in various cracks in my vehicle and hoped she had what she needed to piece together my spending (and hoped the government never came looking).
With YNAB, that issue is solved. When I make a purchase, whether gas or a hotel room, I enter the total and appropriate category in the mobile app.
Now, I can see exactly how much money has been budgeted in certain categories before making a spending decision. All of those updates are then pushed back to the desktop software for my wife to see and manipulate as needed.
YNAB is flexible in that you decide where your money goes. Many budget software packages automatically allocate your money into pre-defined categories, but YNAB gives you the flexibility to move money between categories or create a new one on the fly. They even encourage this in their tutorials, because it's your money.
With the option for desktop or mobile entry, you will always have the opportunity to enter your expenses.
The Best for Variable Incomes
Once you have your categories set, it becomes easy to tell every dollar where to go. But what happens if you aren’t making what you need? If you’ve been an adjuster for any length of time you know that we face some seasonal slowdowns. This is why it is important to setup YNAB budget categories to cover several months of living expenses, plus any additional courses, licenses or certifications you need to pay for in the slow times. This way you can pull from the money you have set aside to finish out your budget for whatever time period you establish (we do two weeks).
No matter what amount we make, we know just how to budget it in order to ensure we can meet our immediate expenses. Plus, YNAB lets you specify those ‘toys’ up front and budget towards them appropriately. Which, if you're disciplined, will eliminate extraneous spending.
What’s Not to Like?
There are a few things about YNAB that we’ve had to get used to. For starters, we have had some instances where the mobile app either didn’t update quickly or failed to update altogether. This could lead to a purchase where you spend money that’s no longer there. While this has never happened to us, we did have to learn to make sure the app synced fully before making a decision. YNAB uses Dropbox to keep everything in sync, so the delay may be attributed to something on their end.
While YNAB offers great training videos and documentation, it seems especially confusing when using credit cards as part of your budget strategy. We have a few cards that offer cash rewards and like to use them as part of our gas and grocery budgets to earn reward dollars. It took several views of the training video before it finally ‘clicked’ with us on how to set these up properly in the software.
We tried many different solutions for budgeting over the years. The best we ever found was a spreadsheet, but with all the manual upkeep it became a chore. Even though my wife doesn’t appreciate technology as much as I do, she loves YNAB for its simplicity and efficiency.
We tried many different solutions for budgeting over the years. The best we ever found was a spreadsheet, but with all the manual upkeep it became a chore.
She has tools to reconcile YNAB with our checking account and can set aside money for an unlimited number of small and large future purchases. There is so much power in being able to check a budgeted amount through the mobile app prior to making a purchase that we almost always shop with our phones out to make smart spending decisions.
YNAB is a great solution for any adjuster wanting to wrangle in their finances or just set aside money for the many expenses we seem to forget about. Be sure to check out YNAB and share your experience in the comments.