Budgeting the remaining balance in my checking account

Please forgive me if there's another post with this question, but I wasn't confident I could frame the search terms well enough to find it.

Assumptions:

  1. I use several credit cards, and (generally) a single checking account
  2. I always pay my CC balances off each month
  3. I have a large-ish positive balance in my checking account

Backstory:

When I began using YNAB, there was a period where the transactions in my credit card accounts weren't aligned with the balances. IOW, I wasn't going to back-fill the transactions, and just started with the current balances. This meant that I had previous balances to pay off (which I budgeted for) and new transactions (also intended to be budgeted).

Now that I've been using YNAB for a couple of months, I have everything budgeted, but am stuck with a balance (several thousands) in my checking account that I don't know what to do with. I probably missed some concept, but it's (from a budgeting perspective) dead money.

Problem:

I want to apply that balance towards savings goals (annual bills, etc.), but if I allocate the money to savings goals, it puts me in the red (since it's not new income). Essentially, I want to treat it as new money to be budgeted.

How do I assign/move around that existing balance in the checking account, and assign it to budgets, without throwing everything else off?

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  • If your To Be Budgeted is $0, then you have already allocated the amount in your checking account (whether to cover the credit card float or other categories).  The $ will live in your checking account even after it is allocated, until you're ready to spend it according to the categories you've already set.  Once you eliminate the cc float, you will always have $ in your bank account that is already set aside to pay the debt you are accruing as you spend on the credit card.  Hope that helps!

    Like 3
  • If all of your account balances are correct (left hand side of screen), your TBB is 0, and your credit card payment available category balances (budget line items) are the same number but opposite sign as your credit card balance (ie if your Mastercard balance is -500 and your Mastercard Payment Balance available is +500), then all of the money in your checking account already has a job and you cannot assign those funds to categories without reducing some other categories first.

    Like 2
    • jenmas Then why is it that, month over month, my actual checking account balance never drops below several thousand? If I transfered $4k from my checking to my savings (an actual bank transfer, not in YNAB), I'd still have income to cover the expenses I've budgeted. 

      It's like the floor has been set at a permanently large balance, when I'd prefer it to be set at a much lower number. 

      If I just spend/budget the surplus, the Available number will go red, and carry over as red to the next month, no? 

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      • monkeyhanger
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      • monkeyhanger.1
      • 1 yr ago
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      Spring Green Barnacle What is the current total of your credit card balances currently?

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      • adriana01
      • adriana01
      • 1 yr ago
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      Spring Green Barnacle The YNAB balance on your account should match your real life account. Anything that is cleared in the bank should be cleared in YNAB & those balances should match. You may have some pending transactions in YNAB that haven't cleared the bank yet. Is this true for all your accounts? Go and reconcile the accounts if it isn't!

      So long as your account balances match the real accounts, the money is already accounted for somewhere in your budget. If you want to transfer some money to savings you can do so without changing the job of the money.

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      • Ben
      • Toolkit for YNAB Designer & Developer
      • furiousfalcon
      • 1 yr ago
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      adriana01 said:
      If you want to transfer some money to savings you can do so without changing the job of the money.

       Somewhat important typo above: "can" should be "can't" in this sentence.

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      • adriana01
      • adriana01
      • 1 yr ago
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      Ben if both accounts are on budget, you can transfer without changing the job. If 2k of my emergency fund is in checking g 3k is in a high interest savings account, I can transfer 2k from checking to savings & still have 5k in emergency fund.

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      • Ben
      • Toolkit for YNAB Designer & Developer
      • furiousfalcon
      • 1 yr ago
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      adriana01 Sorry, I misread your comment, and I can't edit my comment to fix it now. =(

      The same idea applies though in the opposite direction though (which is how I originally read your comment) -- if that money isn't currently budgeted to a savings category, moving the physical location of the money to a savings account doesn't necessarily make it savings.

      The OP's original comments makes it sounds like they have already budgeted all the money they have available, but think there should be extra money in their accounts that they haven't budgeted yet. If that's the case -- if they have budgeted everything -- the only way to save is to reduce the budgeted amounts in some of their categories and move that money to savings categories instead. Moving the physical location of their money wouldn't do anything for them in that situation.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
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      Spring Green Barnacle You don't have a surplus. All that money has a job already. Some of those jobs may be to spend later and not now, and that's why the account balance is growing. You have the option of moving the money to a savings account that is part of your budget in order to gain more interest, but that won't change the jobs you've already assigned to the money.

      The link @jenmas  provided earlier explains it.

      Like 2
    • monkeyhanger 

      This is probably the issue, in some form. My credit card balances seem all out of whack, or I'm just not understanding.

      When I started with YNAB, I began with an existing balance. That existing balance was some combination of prior charges awaiting payment in, say March; and new charges (those that I wouldn't have to pay until April). When I made the March payment, it wasn't for the entire balance, it was only for that portion of the starting balance that was already billed.

      So, it seems like the whole sequence was thrown off. Now the balance shows red, even though all the transactions are budgeted.

      I feel like if I can get my head around this, I'll better understand how to get a handle on the rest of my confusion. :)

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      • monkeyhanger
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      • monkeyhanger.1
      • 1 yr ago
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      Spring Green Barnacle Did you budget for the starting balances when you set it up? YNAB didn't know about these transactions so you have to budget for them specifically. You don't need to go back and correct anything in previous months. In YNAB, a true PIF card is when you could pay the entire balance off now. If you could do this then your +ve balance in the CC payment category should be the same as the -ve CC account balance. If you can't reallocate funds to achieve this then you are living on the float. Many people are. They often think they're paid in full because they can pay the bill when it's due but that is using this month's income to pay last month's expenses.

      I'd strongly advocate continuing to only pay the balance when it's due regardless of the amount in the payment category. Firstly, why pay money to a large credit card company earlier than you need to. It's in its own separate category in YNAB so you won't accidentally spend it on other things and it could be earning interest for you rather than them. This has the added benefit of avoiding most of the CC issues people get from refunds and the like because the chances of your account balance going positive are vastly reduced.

      The $4k that you have in your accounts is probably a combination of any money allocated to credit card payments and the balances you have building up in true expenses.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
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      Spring Green Barnacle You essentially need to budget money for all your "pre-YNAB" credit card purchases. To do this the CC payment Available amount just needs to be the amount required to pay the entire balance on the credit card. Timing of the payment doesn't matter at this point.

      You can fix this at any time. You don't have to go back to the first month in YNAB, you can correct it in the current month. Just make sure the CC balance in YNAB is accurate, and then adjust the budgeted column so the Available is enough to cover the entire card balance.

      Like 3
    • nolesrule Ah, got it. That's extremely helpful. I think. I need to figure out some details around that, but that provides a LOT of clarity. Thanks!

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  • Im still relatively new, but something seems off.... I would, if your comfortable, post screenshots of what you are talking about... I guess I am a little confused

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  • Spring Green Barnacle said:
    Then why is it that, month over month, my actual checking account balance never drops below several thousand? If I transfered $4k from my checking to my savings (an actual bank transfer, not in YNAB), I'd still have income to cover the expenses I've budgeted. 

     I'm not sure I understand what you are asking. Your TBB amount is made up from all of your cash-based accounts that are on budget (checking, savings, actual cash, asset accounts like CDs, etc). If your TBB is zero then all of the money in all of your accounts is somewhere in your categories. Read this as often as you need to get comfortable with idea that location of your funds and purpose of your funds are separate.

    I have 25 on-budget accounts (multiple checking, savings, 5 CDs, credit cards, I-bonds, wallet, cash stash, and gift card accounts). I never let my checking account get higher than $X. As soon as it does (ie on payday), I transfer money out to an account that will earn more interest and this has zero impact on my budget. Location and purpose of money are two separate things. Next month if my sister gives me a gift card to Sephora for my birthday and I add that $X to my gift card account, when it appears in TBB, I might budget that $X to Vacations or Kitchen Remodel (NB: if your budget is tight, this is difficult to manage effectively. My Gift Card account currently accounts for 0.2% of my on budget cash to it's not an issue for me).

    Like 1
  • Hi Spring Green Barnacle !

    To trust your budget, you can check to be sure that the Total Available matches the total amount in your cash (positive-balance) accounts. Here are the steps you can use to verify that the amount—no more and no less:

    1. Advance to next month's budget. (The math is easier there, because all overspending is covered.)
    2. In the right sidebar, when no categories are selected, you’ll see your Total Available amount, which is the sum of the Available column.
    3. Add that to the amount you have left To be Budgeted and any amount Budgeted in Future, if applicable.  Let’s stop here for a minute, just in case your To be Budgeted was negative. If it is, you would need to subtract it from Total Available, because that means you’ve given jobs to funds you don’t yet have. Preferably though, you would go back to this month’s budget and budget less in a few categories until To be Budgeted is back in the green at zero.
    4. Now, add up the cash in your accounts. That includes checking, savings, and cash accounts, plus any positive balances on credit cards if applicable.
    5. Your totals in step 3 and 4 should match up exactly.

    If those numbers match up—you've already given those dollars a job. Now, if you’d like any dollars to be in a different category, you can confidently move money. I hope that helps! Let me know if you still have questions, I’m happy to help!

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