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.
- I use several credit cards, and (generally) a single checking account
- I always pay my CC balances off each month
- I have a large-ish positive balance in my checking account
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.
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?
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!
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.
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).
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:
- Advance to next month's budget. (The math is easier there, because all overspending is covered.)
- In the right sidebar, when no categories are selected, you’ll see your Total Available amount, which is the sum of the Available column.
- 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.
- Now, add up the cash in your accounts. That includes checking, savings, and cash accounts, plus any positive balances on credit cards if applicable.
- 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!