Tracking Future Planning for Investments
My wife and I have been saving a modest amount of money for our 3 children's college funds. They're all under 10. We recently received a significant inheritance which we want to earmark for future college expenses. Let's say presently $50k each, so $150k total value. This won't be tapped for another 10+ years. But let's say that we want to liquidate some of the investment to do a small home remodel, effectively borrowing $15k from the college fund. How might we adequately track this shift in investment value so what we can see that while we've transferred $15k into our budget, we still have $45k remaining in each kid's fund? I know I could do this by moving all investment accounts onto budget, but I'd rather avoid doing that. Perhaps I set up a second Investments budget with those present values and how we plan to allocate them?
Looking forward to your thoughts! Thanks in advance.
I'm not big on doing things by account, but in this case I'm going to suggest you just put that money in its own investment account. Whatever money is in there can then be used for future expenses. Any money you pull out will reduce the balance. This will meet your needs until you start drawing for college.
However, once you start drawing from the account to pay for the education expenses, you are going to run into a different set of issues, as the balance is volatile and you will be drawing over many years. As a result it will be difficult to maintain evenness of distribution among multiple children on different timelines. You also probably have to consider inflation.
We have 2 kids, and we know that even with all else being equal the youngest child will cost more in raw dollars for the exact same education, because she will start 3 years later and everything from tuition to room and board will cost more during her 4 years of undergrad.
On a different note, how are you doing saving for retirement, and what are your prospects for receiving means-tested financial aid?
My retirement is healthy. My wife and I both have government retirement accounts from previous jobs. I also have both a 401K with a healthy company match as well as a employee stock ownership program (ESOP). The inheritance is in the form of a diversified investment portfolio. I'm not worried so much about the money itself as the mechanics of tracking it in YNAB to ensure we're making good decisions and our goals are covered. As I mentioned, I'm leaning towards a second budget that is based solely on the current (maybe updated quarterly with a manual reconcile) investment accounts. I understand that child 1 vs child 3 will have different costs when I start drawing down the road; I'm not worried about equitability for the moment. The YNAB mechanics is what I'm trying to figure out.
I also think you're overthinking this. A glance at the quarterly statement will do the job. I wouldn't involve YNAB at all. That is just going to be additional work for zero additional information. Import does not update the balance to the market value.
You should, however, track the loan in YOUR budget with a tracking account. Record the inflow to checking as a transfer from an empty tracking account (category TBB). Similar with the repayments (category Loan Repayment or whatever).