A Regular Account Vs Tracking Account Vs Keeping Track in You Mind
Good afternoon fellow YNABers,
I am hoping that by sharing how I do a couple of things that I will either get some ideas how to change it up or tweak it or confirmation that I am doing it right. Seems that I am always getting ideas from reading posts here.
I am on SSDI and get on check at the first of the month. Now I also, I would not call them side hustles as they are not steady, but I do some side work, at UpWork.com , for hire repair and building computers in the community, I also fill out survey's. From these I get funds in a variety of ways and that has led to my quandary. When I get cash or a check from a computer build/repair, I deposit it into my checking account and move the funds “TO BE BUDGETED” and assign them a job, that is easy. Upwork, the funds go into my PayPal account and depending on the amount either stays in there for E-Bay or other purchases, or for larger jobs is transferred to my checking account and treated as above. Now on computer builds, a lot of times for the parts there are rebates on the parts and I just factor that into the price, so the customer does not have to deal with sending the paperwork in and waiting for the gift card to come back. Generally, I just use those in my budget for gas money that month and switch that money to something else.
It is the surveys that are sort of throwing a monkey wrench into things. Generally, the payoff is e-gift cards, Amazon, Regal Theaters, Barnes and Noble to name a few. These have value, but I can’t see putting them into the budget, although I guess if I had a Chili’s I could take some strain of my dining out category, but it is not like the funds are transferable between stores. What I do is make each a store a separate tracking account. Then say I buy a Kindle book, I just enter the transaction in the tracking account, there has only every been one transaction that required funds from my checking as I did not have enough gift cards, but that was a pricey video card for the computer that went on sale so I jumped on it.
Can any one see a better way of doing it? Using YNAB allows me to keep everything in one place, instead of balances on an Excel spreadsheet or something, for physical gift cards I used to write the running balance on the card with a sharpie.
This is one of those topics that you have to experiment and figure out what works best for you. I have 6 gift cards listed as individual cash-type on-budget accounts: one gas station, three different grocery stores, my favourite drive-thru coffee place, and a misc gift card account for the one-offs. The first five are for specific stores and have fairly largish revolving balances on them. I regularly replace the cards for the same stores as part of a fundraiser for sports activities for my sister's kids. Early on I decided to track every grocery purchase to the penny rather than record a $100 grocery purchase when I bought the card. I record a transfer from my chequing account to the appropriate gift card account when I buy it, and YNAB helps me know how much is left on a card before I go shopping at that store.
The one exception is the miscellaneous one. When I get a little gift card as a rebate or in payment for participating in a survey, a gift of a restaurant card, I track the value in the misc gift card account, and I do this so that I don't have to do mental math any more. These are typically little amounts. I could probably just enter them as a cash inflow to my wallet, but it's the left over few dollars that drive me batty. The number of times I've lost track of the value on a gift card in my wallet..., but I digress. When the misc gift card gets to zero, I just close the account. When I get another one of these unexpected small or one-off cards, I reopen the account.
I have read other YNABers' posts where they put all their gift cards in the one account, but that wouldn't work for me with my multiple repetitive cards.
I have one gift card account (on budget) for all gift cards. I get Amazon gift cards every month from a survey site and treat them as income and budget them like any other income. So the $10 I got on Jan 12 for Amazon got budgeted to New Dining Room Chairs even though I bought the chairs last weekend from IKEA. I treat all funds as 100% fungible. But I think the fact that even after Christmas when my gift card account tends to be at its highest at 3-digits, it is maybe only 0.5% of my on budget cash is why it is NBD for me to really embrace the one big pot approach.
If you have enough in savings type categories that you don't have to worry so much about liquidity then you could just budget normally and not worry about the fact that the gift card money is available only at certain places. Unfortunately I am so close to the bone all the time that it was either not track the gift cards at all or figure out a way to do it accurately. What I settled on that seems to be working is that I have one account I call Gift Card Wallet and a category group called Gift Cards with sub categories for each individual card type. When I receive a card the funds are budgeted in to the appropriate subcategory. Because I want my spending reports to be accurate I record spending in the appropriate spending category and then just WAM that amount from the gift card category that I used. I occasionally reconcile my gift cards by checking all their balances and also when I am done entering and WAMing the Gift Card Wallet account balance equals the total of the Gift Card category group.
This has been an interesting discussion between those still seeing their funds as literal and those who have transitioned to seeing their cash, account balances, and gift cards as totally interchangeable or fungible.
Let's say you won a prize at the grocery store, and it was a $5,000 gift card from their "groceries for a year" sweepstakes. WooHoo! Pick me! How do you view that windfall of $5,000? How do you enter it in your budget?
Someone new to budgeting and with limited cash flow might see the entire $5,000 as grocery store only, and be convinced the entire inflow amount must be budgeted to the food category. They would do this in order to not make a mistake and overspend any other category resulting in overdrafting the bank account. Seen from this perspective of limited liquidity, they would not be wrong. In this scenario it would be impossible to use the $5,000 today to buy anything that isn't sold at the grocery store.
Someone with six months of income sitting in their bank accounts from building up true expenses, emergency funds, savings for their next car purchase, etc. could simply assign the value of $5,000 to their vacation fund. They could even spend $5,000 on airline tickets the same day and be entirely confident in the knowledge that their account liquidity can handle it. They would add a new $5,000 account and inflow, budget as they choose, and the amount they budget to groceries every month would not change.
The gift card discussion is a variation of the more general topic of liquidity concerns. I have some T-Bills at Treasury Direct that are part of my budget. I can't spend that money on *anything* until they mature, but that's okay because I know I won't need to spend that much before the maturity dates.
YNAB doesn't give us any tools to manage account-specific liquidity. It's up to the user to figure out how to have enough in checking to cover bills that are paid by checking, credit card payments, and cash withdrawals that are needed. The rather lame advice I've seen given semi-officially is to only have one account; that may work for someone starting to budget with very little money, but it's a poor solution for someone who has budgeted successfully for a year, is a month ahead on budgeting everything, and has some substantial True Expense categories.
The specific hypothetical example of a $5,000 gift card for "groceries for a year" makes me think about a slightly different issue: Suppose I won that card, and it's for Wegman's. Is it really "for a year?" By this I mean, does it expire after 12 months? If so, I have a problem because my Groceries:Food budget is only $300 per month, or $3600 for a year. Typically, it's not all spent at Wegman's because I can get better prices or products I like better elsewhere for part of the budget.
The rational gift card winner in my position would be looking for a way to get something of value out of the entire $5,000, even if it meant buying something that might otherwise be delayed or never purchased. At a minimum, I would pay more for items at Wegman's to use up the gift card that might otherwise expire. My grocery budget becomes a little distorted for that year, and perhaps I buy some non-food stuff at Wegman's that I normally would not buy there. How to handle this situation in the budget is a puzzle, because I'm effectively dealing with money that is not perfectly fungible. I'm willing to pay more for something purchased with that less-than-perfectly-fungible money than I am for the same thing purchased with ordinary, fully fungible money.
As long as there is no expiration date on the card, that issue does not arise; but the "groceries for a year" tag got me thinking about what a corporation might do to be able to advertise a greater value of a prize than what it costs to provide that prize. And if I'm sitting there with an extremely tight budget and a bunch of money tied up in restaurant gift cards, I might decide to eat out and spend more of the not-totally-fungible gift cards instead of buying groceries for less of my totally fungible cash. Again, this is a budgeting puzzle because the form of payment affects what I choose to buy and what price I am willing to pay.