Floating Unused Money in Checking?

Hey guys !
Still wrapping my head around Ynab.
From what I understand so far, giving ever dollar a job means that every dollar is either spent each month on a task, aged by rolling it to a future month or invested in a tracking account.

I was wondering what should be done with money that is simply floating in the checking account for no particular reason? Do I have to spend it on something?
I also, for instance, have to have a certain minimum amount in my checking account to have a waiver on my credit card fees, this is money that is not being spent but Ynab considers as "To be Budgeted", what should I do with it?

Thanks !!

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  • You still give it a job, that job could be "maintain minimum balance" create a category and assign it.  Other money should also have a job?  What are you holding it for?  Is it for emergencies? Is it for stuff you forgot to budget for?  Those are jobs.  Create categories and assign.

    Like 1
  • Giving every dollar a job doesn't mean you have to spend it. Emergency Funds or Income Replacement Funds are great examples of this. They sit in your normal account (possibly savings for that tiny bit more interest, but checking is fine for ease), and hopefully never get spent at all, because you won't need them!

    So go ahead and keep your money in your checking account and save for a new car, or that vacation you've always wanted, or whatever works for you. Float your money there. Move it to investing when you have enough to cover yourself in an emergency and you're ready to invest. YNAB doesn't tell you when that point is a it's individual for everyone. 

    Like 1
  • The great thing about YNAB is that you can have fine-grained savings categories. For accounts that require a minimum amount to stay in checking to avoid account fees, I have dedicated categories that I label with the bank name and the word "minimum". 

    You also want other savings. My categories (for money that is readily available), include: car maintenance savings, pet care savings, emergency fund savings, vacation savings, etc.

    Like 1
  • The key to remember is that location and purpose are independent. You have $X in your checking account. Part of it has the job of "maintain minimum balance" as Herman said. Part is for groceries, part is for fuel. Or maybe you pay cash for groceries. It doesn't matter WHERE the money is (as long as you have enough in which ever account you are paying with.

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    • Pezimaniac  Well, except that the money that I budget for Minimum Balance Buffer - His US Bank Checking" needs to be in my husband's US Bank checking account.  It does no good if it's in my USAA checking account. 

      There are other situations, as well, where it makes sense to keep money budgeted for a specific purpose in a specific account.  Often, this is for reasons unrelated to budgeting, but in order to facilitate bookkeeping and tax preparation, or to maintain isolation between business and personal finances.    In some cases, one spouse may be very budget aware and spends lots of time on the computer (or phone) checking the budget, and the other may need the hard feedback of a declined debit card transaction to curb discretionary spending. 

      As a general rule, though, I agree that for personal finance it is more convenient to use categories rather than accounts to do budgeting.  Businesses often use accounts and sub-accounts (such as you can do with QuickBooks) to delineate budget categories, and the bank can enforce policies on overdrawing the accounts.  Consumers don't generally have that ability to structure their bank accounts as budget categories.

      Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 3 yrs ago
      • 1
      • Reported - view

      Maroon Cyborg A  challenging poke--it actually doesn't matter if "Minimum Balance Buffer" is in that account. In fact, it doesn't matter if you have a "minimum balance buffer" category. It only matters that $X is in the account at all times. I realize that seems really weird, but it's true. As long as the account stays above $X, you have satisfied the bank. 

      After multiple years using the YNAB method, most of my budget is money that is sitting. Only about 15% of it is actually income deposited and money spent. So I could just leave some money sitting somewhere to satisfy an account requirement without that money needing to be in a particular category. It is money that is going to sit regardless of where it sits. Case in point--my credit union, who hold the lien on my car, have a whole rigamarole for transfers from other banks. It's a pain to make an online car payment with them UNLESS I am transferring it from my savings account with them. So what I do is once a quarter or so, I dump $1,000 into my savings account (not much more because the rate is abysmal). Each month, I budget $250 new dollars to car payment, but it comes out of that $1000 I deposited months before. What is the other $750 that is remaining? Who knows. Part of my home maintenance fund, part of my income replacement fund, money for Christmas...it's just money. I am choosing to let it sit at the credit union because it makes my life easier, even though the car payment is "technically" coming each month out of my paycheck. 

      Like 1
    • WordTenor Yes, and no.  In once sense, maintaining your minimum balance isn't a budgeting question at all, because you never spend it.  But it is, in a sense, a (very small) "savings goal" - and in that sense, it *is* a budgeting question, especially for someone who doesn't have most of their budget consisting of money that is just sitting.  You can't tell where you stand with respect to your minimum balance on a specific account, just by looking at your budget.  You have to look at your account balances.  But if you put a budget entry in there for each account, a) you won't spend the money you need for the minimum balance and b) you will have on record what the minimum balance is, as a reminder and as a reference for when you are looking over both your budget and your account balances.

      Your loan payment example is a different scenario, because it's a once-a-month transaction that you do more or less the same way each time.  Minimum balance on your checking account is something that someone living close to the limits of their income has to be aware of with every transaction, increasingly so as one gets farther and farther out from the most recent inflow of funds, and this gets significantly more complicated when there are multiple accounts that are being used and that each have a minimum balance.  It's DEFINITELY easier when there is only one spending account.

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 3 yrs ago
      • 1
      • Reported - view

      Maroon Cyborg When you're close to the bone, certain things about account independence don't work as well. But if your account minimum is $X, the moment you have $X in a category or a few categories sitting for greater than one month, you don't need an "account buffer" category any longer. In fact, I would argue that you never need it--if you have money sitting whose job it is to sit, give it a job that would warrant it not sitting--at a bare minimum, it is part of your emergency fund because it will be spent in an emergency. 


      If you have more than one account, you in theory always have to look at the account balance, and using the budget becomes a two-step endeavor. "Is there enough money in the category?" and then "Is there enough money in the account?" In the case of an account with a minimum, "enough in the account" means the minimum amount plus the amount you're going to spend. 

      In practice, what that looks like for someone who has built up some true expenses and savings is that periodically, the main spending account gets squared away to a number where the account will not be overdrawn given normal expenditures. "Overdrawn" if you need a minimum, again, means "Won't drop below the minimum." After that, you don't in practice check the account balance for each transaction, you only do it when you have a transaction the size of which is out of the ordinary. Or, if you're using a credit card for most budgeted transactions, you will only check the amount in the account when you go to pay the card. 
       

      Tl;dr Once you have at least the account minimum in your budget, it doesn't matter which category it's budgeted to. All it has to do is sit. 

      Like 1
    • WordTenor Once you've gotten out of the day-to-day worrying about going below your minimum balance, I agree with you.  I have a spouse for whom month-to-month worrying about how much is in the account will probably never stop being a concern.  For me when I am helping him to budget, it's helpful to have the amount that he can't spend because of his minimum balance right there in the budgeting section.

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  • Sea Green Cleric said:
    I was wondering what should be done with money that is simply floating in the checking account for no particular reason? Do I have to spend it on something?

     Move it to an on budget savings account to get better interest while it's sitting around waiting to be spent sometime in the future.

    The Relationship Between Your Budget & Your Accounts: It’s Complicated

    As for minimum balances, you could just consider that part of your emergency fund, because in an emergency if you need money you don't care about minimum balances. And per the link above, Location and purpose don't matter, so part of your emergency fund could be in savings, while part of it could be sitting in an account serving as your minimum balance. It just doesn't matter.

    Like 2
  • Thanks so much for the response, everyone.

    There is something that is kinda hard for me to understand with Ynab it seems.

    If I give every dollar a job, some for spending and some for saving.. How can I tell which money is gone and which money is saved?

    The final balance is 0 after assigning everything but clearly some money is gone and some I have. 

    This is a bit confusing compared to other budgeting software :)

    Sorry for the silly question !

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      • Aritavashkai
      • playing with numbers makes me happy
      • aritavashkai
      • 3 yrs ago
      • Reported - view

      Sea Green Cleric No silly questions! 😊 All the money is still there, it's just in different categories. You'll spend from categories like Groceries or Phone Bill. You'll save for categories like Emergency Fund it Vacation. You can certainly think of the Emergency as "gone" psychologically so that you're not tempted to dip into it frivolously, but it is still there, with the rest of your money. It's just money you're not spending.

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      • Good Goods
      • Beige_Yeti.4
      • 3 yrs ago
      • Reported - view

      Sea Green Cleric  I agree- it is very hard to see what is really available and not really spent. Not sure I'm 

      a YNAB fan yet. I'm still in the trial period and really want to use YNAB to replace a 20 year Quicken habit, but so far I'm not convinced. 

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      • doctor_who
      • Silver_Boa
      • 3 yrs ago
      • 1
      • Reported - view

      Sea Green Cleric  Basically, any money that you spend has to come out of a category. So, you go to the grocery store and buy $50 of groceries. Let's say you are entering transactions manually, in real time (which is the best way). You assign that $50 to "food" or whatever category is appropriate. Perhaps you started the month with $300 in there, and now you see that only $250 is left. That feedback helps guide you in your decisions to purchase more food as the month goes on.

      But if you allocated $1000 to "savings", you would not charge the groceries, or gas for your car, or an Uber ride, or any other ordinary expense to that category. In that way, it's protected, by your decision to regard that money as savings. If you enter every transaction as you make it and assign it an appropriate category, your savings are guaranteed to remain untouched. (Of course, one day you may decide to break into that money, but you will have made the decision beforehand and be conscious that you are doing it). 

      If you are ever in doubt, look at your bank accounts and add up the money in them. Then, go to YNAB and add up the amount remaining in each category. If there is no balance in "to be budgeted", and you are not overspent, these two sums should be the same.

      Like 1
    • Aritavashkai doctor_who This is what confuses me a bit.. Both money gone and money saved are allocated exactly the same.. And if money gone is allocated to X, money saved is allocated to Y then floating money like for a minimum amount in my checking is what exactly? Cause X and Y progress, there is more money being spent over time and every month that I buy groceries for instance I give that money the same job and more money is accumulated in a saving account so I give an amount a job for that purpose each time but what about money that is just standing still? Giving it a job each month means I used it one way or another didn't I? But that money isn't being used and isn't being changed at all. 

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      • Aritavashkai
      • playing with numbers makes me happy
      • aritavashkai
      • 3 yrs ago
      • Reported - view

      Sea Green Cleric I think what's confusing you is that you still have dollars standing/floating. EVERY dollar you have - including those used for minimum balance - had a job. Create a category called "Minimum Balance", allocate that money to it, and it now has the "job" of maintaining minimum balance. If you ever find yourself tempted to move money to it, you will have to do so knowing that it will mean going below your balances. 

       

      Let's see you have $1500 total, but $500 of that is minimum balances. All $1500 will show up as To Be Balanced. Since you don't want to touch that $500, immediately set it aside in a category called "Minimum Balances" or "Don't Touch" or whatever you like. That $500 has now been given a job. Now give jobs to the rest of the $1000. $100 to Groceries, perhaps, $100 to gas, $100 to Miscellaneous, $700 to bills... Now all of your money has jobs. Some of it is to pay bills, some of it is to spend, and some of it is to sit there safely maintaining your minimum balance.

      Although it's now split up between the categories, your bank account will still show the full $1500 as a chunk just sitting there. It's just in YNAB it now all had a job to do. So you stop looking at you account balances except to make sure you won't overdraw (definitely won't happen if you only have one account, because YNAB helps you not spend what you don't have) and just look at your account balances. But nothing is just floating around, everything has a job. 

      If you're worried about accidentally dipping below your minimum, install the YNAB Toolkit for Chrome or Firefox, activate running transactions, put in scheduled transactions, and just run your eye down the list every so once in awhile to make sure it doesn't dip below where you want. 

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    • Good Goods Assuming you don't have any underfunded categories, ALL of your budgeted amounts that you have not already actually spent, are really available (for you to re-categorize if your priorities change). When you look at your account balances (assuming you keep them sync'ed with your financial institution), you can see how much money is physically there.  

      But I see your point, in that certain categories are essential and some are more discretionary.  I think that is the idea behind having first level categories and second level categories, so you can group together, for example, daily and monthly regular expenses vs intermittent and larger or less predictable expenses vs emergency funds and long-term savings.  Or alternatively, nondiscretionary expenses vs discretionary ones vs emergency funds and long-term savings.

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  • You must be doing great if you have "extra" money floating around that you don't want to give a job.

    Sea Green Cleric said:
    This is a bit confusing compared to other budgeting software :)

     True, YNAB doesn't work like other budgeting software.  That is why I was able to make progress with my budget.  

    It seems you are slightly unclear on the YNAB method.  If you would like more clarity I would recommend the classes.  They helped me understand how this program works, and make progress for the first time. 

    As you started with, a main objective in YNAB is to give every dollar a job.  It doesn't matter if you will need that dollar for a job tomorrow or after you retire, it just needs a job.  That means when that "new shiny thing" calls to you at the store, you have to give up something to buy it.  For me, budgeting is a matter of priorities, and giving every dollar a job, brings that home.  

    Hope you find YNAB works for you.  

    Like 1
    • TryingToGetAhead Thank you, I might attend one of the classes indeed :)
      I am trying to understand if Ynab is for me to keep my budget in check but I don't require it to correct my balance. Having to give dollar spent, dollar saved and dollar standing still the same type of jobs is a bit confusing to me.

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  • A job is a job is a job. It doesn't matter if the job is for saving or spending. In fact, there really is no such thing as saving... it's just spending later.

    If you really have money that you can't give a job, not even debt paydown, getting your emergency funds to an appropriately funded level, vacations, next car,  then perhaps it's time to think long-term about what to do with that money. Increase savings to retirement plans or other tax-advantaged accounts, or if you're already doing that and maxing them all out, it's time to start taxable investing.

    Like 1
  • Ok I finally realized something very basic that is required for Ynab..
    The fact that there are dollars that are being budgeted and getting a job is one thing but also the fact that I have to add the expenses in my different bank accounts to affect the Activity to match those budgets. I was under the wrong impression that simply giving dollars jobs also means reporting the activity which is wrong.

    Thanks so much for all the help guys !
    I will definitely join some workshops as well.
    I really appreciate it :)

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