What Is the Ideal Age of Money? | YNAB (2024)

Many a YNABer has noticed that little number in the corner of their budget and asked: what is age of money? What should my age of money be?

Well, YNAB's Age of Money tells you how long your dollars have been in your possession before you spend them. If your age of money is 14 days old, that means you're spending money you earned two weeks ago. Once your age of money hits 30-50 days, you're living on last month's money and are no longer strictly living paycheck to paycheck.

Let's dive a little more into this concept through YNAB's Rule Four:

The idea is that you have money before you need money. For example, if your money is 30 days old, it’s been sitting in your bank for 30 days because you haven’t yet had a reason to spend it.

And 30 days is an excellent age of money. It means you’re a month ahead (a.k.a., living on last month’s income), and it’s an enviable position to be in. If a bill arrives, no problem. Pay it! If an emergency pops up? No worries, just hit your ‘Car Repair’ or ‘Medical Deductibles’ categories. You. Are. Covered.

But, once you’ve hit 30 days, should you continue to age your cash? Let’s consider that.

How Old Is Old Enough?

Some of us are inclined to age our money as much as possible, especially if we’ve worked hard to overcome financial struggles in order to finally build some breathing room into our budget. If you’ve ever worried about how to keep the lights on and put dinner on the table, then there’s nothing quite like the feeling of extra dollars in the bank, right?

But, how old is old enough—put another way, how secure is secure enough? Well, it depends on your income and tolerance for risk:

How Do You Get Paid?

On one end of the spectrum, there are people who count on the steady drip of equally-sized, directly-deposited paychecks. On the other end, there are salespeople, freelancers and small business owners who get paid different sums at irregular intervals.

If you’re paid like clockwork, you’re probably comfortable with a lower Age of Money than a freelancer, for example, who may need to live on the cash in the bank for a bit longer until their next gig pays out.

What’s Your Risk Tolerance?

Risk tolerance is highly individualized. How much money do you need in the bank to feel at ease? Once you’ve paid your bills and lived your life, where do you need your bank balance to be so that you can sleep peacefully at night? This number will be different for everyone.

For example, if you’re an experienced budgeter who’s carefully curated a budget category in order to save for every possible spending situation—and stashed away money in each—then you may feel comfortable with a lower Age of Money than someone who is newer to budgeting, or who has slightly more generalized categories with a catchall emergency fund.

Check out our comprehensive guide to learn how to break the cycle of living paycheck to paycheck.

But, Why Not Just Save-Save-Save?

Saving is great, we highly encourage it, but just consider the opportunity cost of stashing all of your extra pennies in the bank:

How’s Your Quality of Life?

Looking at your current lifestyle, are you satisfied? If you had to dramatically cut corners to achieve your Age of Money, it might be time to loosen your purse-strings a bit. I’m not suggesting you blow through your cash, but if you’re sacrificing so much that you’re not enjoying life, then you’re missing out on the whole point of budgeting. So, ask yourself, is it high-time you prioritized some of life’s pleasures—like travel, favorite hobbies or perhaps donating to your favorite charity?

Are You Missing out on Even More Dollars?

Money in the bank is great, but could some of your savings be freed up for investing? What if you gave some of those dollars the job to recruit more dollars? Wealth-building isn’t just for the rich—we all need a healthy retirement fund—so consider investing.

The Perfect Age For Your Money

There is no right or wrong answer when it comes to your Age of Money. It completely depends on your comfort level and circ*mstances. Remember the goal: to improve life—to find the special blend of spending and saving that eliminates your stress and leaves enough wiggle room to replenish your quality-of-life categories.

Ready to learn even more about managing your money? Check out our free workshops!