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?

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  • with Categories.

    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.

    Like 5
  • To add to what Bruce said, put your savings account(s) into YNAB as on-budget accounts. That way, you can just transfer money between accounts and don't need to categorize it, since money is not leaving your budget.

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  • 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! 

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    • nolesrule
    • Stealing From the Future fix is an improvement but is incomplete....
    • nolesrule
    • 1 mth ago
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    • Reported - view

    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.

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    • nolesrule exactly. When I’m transferring money between checking and savings it’s just to maximize interest income. I never worry about whether my savings account matches a savings category.

      Like 1
  • 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.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
      • Reported - view

      CPA Budgeter I even moved my main CC payment account to my Savings account to keep even more in a savings account.

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    • Superbone okay I’m curious what is a main cc payment account?

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
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      CPA Budgeter My main credit card that pays the majority of my monthly payments. Instead transferring payments from my checking account, I now make the payment transfers from my savings account thereby allowing me to keep more in savings and an even leaner checking account.

      Let’s say I purchase 3K a month on this credit card. By paying my statement balance out of my savings account, that’s 3K less I have to keep in checking on average.

      Like 1
    • Superbone 🤯🤯🤯

      Thats genius. I’m going to look into this for my credit card payments immediately!

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
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      CPA Budgeter You just have to be careful of the 6 max  transfers a month allowed by savings accounts in the US. Now I’m thinking of moving my mortgage payment from there too! That’s my second largest payment in an average month.

      Like 1
    • Superbone it worked for my credit card and I was able to set it up for my mortgage payment too! I'll probably stop there due to the 6 transaction per month limit on savings accounts but these probably make up like 80% of the balance I kept in the checking account. Thanks for the epic hack!

      Like 1
    • Superbone great minds think alike. We posted that at the same time. 😂

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
      • Reported - view

      CPA Budgeter One other hack I did was modify my paycheck to direct deposit some to savings and the rest to checking to minimize transfers. When I move my mortgage payment to come out of savings, I’ll adjust my savings portion to add the additional monthly mortgage payment there as well.

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    • Superbone good thinking to cut down on the number of transfers per month. 👍

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
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      CPA Budgeter I believe the limit only applies to transfers out of savings. I don't think there's any limit on transfers to your savings. The only reason I do this is so that I don't need to do a transfer to savings every time I get paid and wait for the transfer time as my savings account is in a different bank than my checking account.

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    • Superbone thanks I’ll look into that further. 

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