How do you know which account to pay your Credit Card from?

I've seen it written many times that YNAB doesn't care where the money is (which account), but only that you've allocated it to a category.
However, I feel like there's a critical point at which I need to know where the money IS that I allocated.
For example, I have 2 accounts: 1 checking, 1 savings.  For simplicity's sake, let's say they both have $100 in them.
I budget $50 to savings, and $150 to my Credit Card spending.
Clearly, that $150 is split between the two accounts. I can't write a check for $150 from *either* account without causing an overdraft fee.
How would I know not to do that? Where can I see WHERE the money is that I've allocated to a budget category?

Thank you in advance for any tips or help on this! :) It is one thing that makes me lose sleep at night...

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  • It's better to think of it this way, the money you want to spend will need to be budgeted towards actual categories (i.e Dining Out, Water Bill, etc). Once the money is spent in that category, the funds will "move" to the CC line in YNAB.

    When it's time to pay the outstanding amount, you can opt to pay part from your checking account and then part from your savings.

    You may have $70 in checking and $95 in savings but YNAB only sees this as "you have $165". This is a shift in thinking that you'll have to make with YNAB. If you prefer to pay your CC from one account, it's probably better to manually move the funds. 

     

    Hope this (kinda) helps, I'm sure there'll be another community member that can explain this more clearly :)

    Like 1
  • In my opinion if you have only $200 and $50 is for savings...then only $50 should be in that savings account and the rest should be in your checking.  

    I have a master category called Savings. It has a couple of subcategories of things I am saving for.  Every other month of so I check that that master category has an available number that matches my balance for that savings account. For example, I had a couple of hundred dollars in a savings category for Christmas. Since I spent that money I might transfer some back over to my checking to cover that expense before I pay my CC bill on the 31st.

    Also, many YNABers have a buffer. (I am somewhat buffered... my two December pay checks will cover everything for January.) As long as I have NO overspent categories at the end of the month I know I have enough in my checking to cover my CC bill (and then some).  

    If I were just starting I would have most of my money in checking. Pay my CC bill at the end of the month per the YNAB category available number. And transfer over anything I budgeted in savings at the end of the month only if I haven't WAMed from it.  

    Hope that all makes sense!  

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      • Jen Trumbore
      • Sometimes I get it, Sometimes not...
      • Alice_Blue_Clarinet
      • 2 yrs ago
      • Reported - view

      ChicagoFlyer I get what you're saying, but if I had 2 checking or 2 savings accounts, then it gets back to my original problem. I see why YNAB wants you to simplify accounts!! LOL I'm down to what I think is our bare minimum for our family - and it does end up with 3 "savings" (one is a HSA, so a bit unique) and 2 checking accounts to work from. 

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  • Hi, Alice Blue Clarinet

    Which account to pay from is a cash-flow question, not a budgeting question.  Those of us who choose to use many accounts have an extra step when paying bills and spending. First, we check the YNAB category to ensure we have the funds budgeted for the purchase or payment, then we check the account balance to ensure adequate funds are in the account we want to use.

    Before you transfer to your credit account, before you do a cash withdrawal, before you pay a bill, you check the balance in the account you want to use. You can make two payments, as mentioned by pureneon , or you can transfer enough from one account to the other in order to make one payment.

    It's the $20 bill in your pocket example.  If you have $20 in your left pocket and $20 in your right pocket, but you have to pay $35 for lunch at the restaurant, which pocket is your lunch money in?  The answer is both....or neither....if you decide to whip out your credit card for lunch and use the $40 in cash to fuel up your car.

    If you are running your main transaction account a little thin, such that it is causing you to have to double-up transfers, you might need to reduce number of accounts or change the amount you leave in your chequing account.  I don't like to let my chequing account balance dip below $1,000.

    Like 1
      • Jen Trumbore
      • Sometimes I get it, Sometimes not...
      • Alice_Blue_Clarinet
      • 2 yrs ago
      • Reported - view

      HappyDance That's how I've been working so far, and in 2 years I've never over-drafted yet, but I think I needed to see it spelled out so I could understand *WHY* that is. I've also had a few unexpected expenses and took our checking accounts down VERY low to pay those things off - which made me wonder how I could still have thousands allocated to other categories, but be nearly empty in checking. Of course I came to the conclusion that it's my savings accounts that are filling those other categories. That's what made me question this...What if I moved money from a savings goal, into a category I paid by checking, but then didn't have the money in checking to cover it? Now I see the answer is, I'd have to physically move the savings money to the checking account as well.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 2 yrs ago
      • Reported - view

      Alice Blue Clarinet 

      Perhaps you are running your account a little too close to the zero. If you have some savings built up, I recommend you leave a bit bigger pad in your account for convenience so you don't have to worry about balances when dealing with regular monthly transactions.

      A couple of days before the start of a new month, I make sure that my main transaction account has an amount that is equal to the total of:

      1. my average monthly spend +
      2. any unusually large scheduled transactions or irregular purchases or cash withdrawals +
      3. $1,000

      If that total should exceed what is in my chequing account, I supplement with a transfer from savings. If the amount in my chequing account is much more than I need for the month, I transfer to savings. Because there is new income every month, I rarely need to take money out of savings.

      I chose $1,000 as my baseline minimum because it was a number that made me feel successful and which gave me confidence that I would not exceed my account and NSF. I removed overdraft protection from my accounts, and this reduced my monthly bank fees, but it placed the responsibility of not miscalculating on my shoulders. Whether I have a low-spend month or a big-spend month, I rarely dip below the $1,000.

      Now someone new to YNAB might ask: what is that $1,000 in my chequing account that I never spend? Which category or categories does it represent? The YNAB answer is that it represents none, some, and all, depending on timing of the question and whimsy or life's occurrences. This bothered me at first, having grown accustomed to budgeting by account. For a while I told myself that the $1,000 extra in my chequing account was part of my emergency fund, but the truth is that it could just as easily be part of any of my true expenses, or next month's credit card payment.

      So, it doesn't align with any category, but I agree that getting cash-flow between accounts done correctly and on time is important.

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      • jenmas
      • jenmas
      • 2 yrs ago
      • 1
      • Reported - view

      HappyDance I approach it in a similar manner. I have 3 checking accounts and 3 savings accounts. Paycheck comes into C1 which I try to keep at a balance of 2 mortgage payments (including 2 HOA and 2 Condo fee payments). Anything over that gets sent to other accounts - 2/3 to C2 which is my bill paying account and the rest to S2 or S3 (interest rates have been fluctuating on these 2 lately so which ever one has a higher rate at the time gets the money and S1 just doesn't see activity because it is basically useless, but I opened it when I opened C1 when I was 18 and it just sits there to have extra cash on the wildly unlikely chance that I'll need an immediate transfer to C1).

      But how do I know I have enough in my bill paying account to cover the bills? Well I just look at the balance. I can tell at a glance when I compare the balance of C2 to the balances of my cards if there is enough to cover the bills. If there isn't, I move money over. There is never a rush because I generally have about 21 days between a statement closing and a payment being do, so plenty of time for a transfer to happen.

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