Savings accounts for annual expenses
I pay insurance annually so I would like use my savings account to put money for annual expenses like insurance, vet visits or clothes shopping. However when I move the money from my checking account to my savings account I end up with more transactions that I have to categories and my balances are off. I am not sure what I am doing wrong. How do you separate your savings for bigger expenses separate from your day to day accounts?
if you want something for vet visits, create a category called "Vet visits" and put the money in there, create another category "clothes shopping" and put the money in there.
The money's purpose "job" is defined by the category that it's sitting in. If you don't think you'll be using that money for a while (annual insurance premium) then it's fine to move that into savings, in order to earn some interest. But the purpose of that money didn't change just because you moved it from one account to another.
Money is saved by putting it into a category and not spending it.
Forest Green Cornet All of the above is exactly right! If your savings accounts aren't on budget, I'd definitely recommend adding them (let us know if you need help with that part), and then creating categories to assign the dollars already in the accounts jobs in your budget.
You can read more about assigning your savings here, and about the independence of accounts and categories here. Let us know how it goes!
Determining how much money to keep in which account is a cash flow exercise based on short-term upcoming spending needs. Your checking account is being rplenished from income regularly so you really only need to understand what will be coming out of the checking account in the next say, 3-5 weeks while more income is also coming in. If you have to much in checking, move it to an account with a higher yield. If you won't have enough, you pull it back. If you know you are going to have upcoming higher than average expenses in the next month or so, maybe just let the balance build up from new income. It's really not all that complicated.
I remember this same confusion when I first started. Before YNAB we’re used to the “out of sight out of mind” approach by keeping our savings in another account.
In YNAB remember that money is money regardless of which bank account it’s in.
The category assignments determine what is savings.
That being said, I do keep most of my money in a savings account for higher interest, keeping just enough in checking to cover expenses or big purchases.