Budget Setup, whole thing is messed up
So, I have a question about accounts. I have 5 saving accounts I setup at a bank that allows for unlimited saving accounts for things like Vacations, Home Improvement, etc... Let me lay out the scenario:
We have checking our pay goes into, lets call it checking for this.
We have 2 savings accounts, lets call them Vacation and Furniture.
We have a budget of 100 a month going to Vacation, and 25 to Furniture.
The 3 accounts are all linked.
When I make the transfer from Checking to Vacation, it comes through as a transfer to Vacation, same with Furniture. So how the heck do I track that in this program? As far as I can see in the budget, transfers are more or less invisible, and you can't assign a category.
Balance goes up in the savings, checking balance goes down, but I have no budget tracking for the money out of the xxxx $ money for the month I brought in. So how does one track these things?
Also, I'm WAY confused at the top line in YNAB, I'm attempting to make a ZERO based monthly budget, but as 3 months have gone on now since I've had this program, it has a sorts of weird numbers up there like 6400$ to budget, but that number seems pulled out of thin air and doesn't match up with anything I see.
In YNAB, when the money hits your first account, you assign the dollars to a CATEGORY in your budget (furniture, vacation, mortgage, insurance, etc). The money is "saved" when you assign it to a category. YNAB does not care which ACCOUNT your money lives in. Read this article (as many times as required for it to really sink in).
Right now you are saving by ACCOUNT. Which is a perfectly fine way to do it. It's just that in YNAB, it is redundant if you spend based on your CATEGORY balances. As far as YNAB sees it, moving money from your checking account to your savings account has the same impact on the budget as moving a $20 bill from your left pocket to your right pocket while you're walking to the Starbucks - it doesn't change the fact that you have $22 budgeted to your Eating Out CATEGORY or that fact that the total amount of money in your pockets is $50 (a $20 in your right front pocket and five $5s in your left front pocket).
For some people, it is worth it to continue using multiple accounts even though it adds extra steps. I personally have multiple savings and checking accounts - but their purpose is to maximize interest, reduce risk if an account is compromised, and to address any potential FDIC limits on covered amounts. I cannot say that savings ACCOUNT at X bank contains the funds from any particular CATEGORY. Because it doesn't matter.
Steel Blue Vacuum Categories can function to track accounts if you want them to. The beauty of YNAB is that it eliminates the necessity of having multiple accounts to track piles of funds.
jenmas did a good job explaining it, but I'll chime in with a few tidbits that might be able to help you as well.
You can easily create a Category Group called Savings Accounts, and then create individual categories under each of them for each of your savings accounts, and then you would only need to make sure that the funds in each of those categories matches the funds in each of the accounts. You would be able to add funds to each of the accounts directly, then go assign it to that category so that the numbers match. I assume that the portion of your pay check that goes directly into those savings accounts does not pass through your checking account first. If it does, then it would make the most sense to create the transfer between the accounts just so that it matches what happens in your bank account. You could do this fairly easily with scheduled transactions so that you don't have to repeatedly make the adjustment.
Hope this makes a little more sense. Welcome to YNAB!
And then once you've spent the time and work synchronizing categories to accounts, you'll be happy to eliminate that work and just maximize cash-flow/security/interest on the account side while maintaining the priorities you're saving for in budget categories.
One more thought: as farfromtheusual said, making transactions match reality is the best thing to do.
However, I do like seeing the paychecks split up in the same transaction. For example, one of our paychecks goes to two different accounts (one to pay the mortgage, one for normal things... It's a pre-ynab holdover that I haven't bothered changing), and I also have split lines for gross income, taxes, social security, 401k, and other benefits/deductions. I find this information helpful.
You could, ostensibly, do the same with your transfers if they are direct deposited. But again, after you get used to YNAB, you may find this to be a rigid workflow and move away from it.
I like to think of the YNAB budget like a massive overlay/web over all your accounts, and the cells/sections of the budget (categories) do not have to line up over the account cells.