How to keep my savings safe from being allocated elsewhere?
Just signed up for YNAB yesterday and entered all my info. I have several CapitalOne360 savings accounts that I use for automatic savings goals to cover unexpected expenses (vet bills, emergency fund, car repairs, etc.). I added these as categories and linked them to the appropriate bank account. Their balance shows up in the “available” column, and I currently have 0 budgeted for each of these categories. How do I allocate this money to stay in those categories, rather than accidentally assigning those dollars to other categories (groceries, shopping, etc)?
-
Just leave them there! Once you've given dollars a job, they stay in the category, waiting to do that job, until you spend them or deliberately move them elsewhere. A dollar won't change jobs without your permission, with one exception: when you spend with a credit card, dollars will move to from the spending category to the credit card payment category automatically.
Now that you're using YNAB, you don't need to keep your savings category balances synced up with your savings accounts. That will feel weird at first. Here's a lot more info on why YNAB does it this way and how to keep up:
https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/
-
mamster
This is so helpful, thank you! It will feel weird to not keep my savings category balances synced up with my savings accounts, but I'm ready to take the plunge. :)
One thing I can't wrap my head around: cash flow. How do I know that I have enough money in my checking to cover, say, my credit card bill that I pay in full every month, if my categories aren't synced up with my actual accounts? I know I have money in my budget because of YNAB, but how do I know that on the 16th of the month there will be enough in my checking to cover a big bill, if some of it is stashed away in other accounts on CapitalOne360 (though still properly allocated in my budget)?
-
Kate As long as you enter all transactions against the right account (be careful of this, it's easy to make a mistake) then YNAB knows exactly how much is in every account. This gives you an at-a-glance way of checking all your account balances.
This has the weird secondary effect of allowing you to check how much cash you've got around the place (some in your pocket, some in your purse, some in the change jar in your bedroom and that 10 you keep in the car for emergencies) because YNAB can also tell you how much cash you have at hand.
It really does take some getting used to!
-
Kate That's just something that you have to check. I get my credit card statement on say June 2 and the payment is due on June 27. That gives me 3 weeks to make sure there is enough money in the checking account. Over time, you get a sense of how much needs to go out of your checking account in a month and you just make sure the balance stays at that level. I know that throughout the month on average $X goes out so I make sure that on the 1st of the month my checking account has $X + 15%.
-
Kate I've started creating one-time scheduled future transactions for each credit card payment and manually updating them throughout the month to match the (PIF) credit card balances. I also have the running balance feature turned on in the toolkit so I can see how those payments will impact my checking account balance.
-
Olive Branch This. Except I have them as recurring transfers and update them as each statement comes in. Running balance then shows your checking balance at every transaction point in the future.
-
Olive Branch Is the Toolkit and running balance a YNAB feature? I’m not familiar.
-
Kate Not a native YNAB feature - its a Chrome/Firefox extension that adds lots of extra functionality to YNAB. You can find it in the Chrome Web Store or the Mozilla add-on site.
-
-
In my opinion, if you have the accounts, you should keep them balanced with your budget. However, with YNAB you no longer need different savings accounts for every different savings goal. That's what the budget categories are for. But, if you have the account, you should maintain it.
-
Joe That’s old thinking. I’ve had mine detached for 8+ years with YNAB and it’s much preferred. No silly busy work to make account balances match a particular amount. All budget funds is just one big amount. Location doesn’t matter. I just like to get a bigger interest rate return on the bulk of it.
-
Superbone I think thats a matter of perspective. IMO having to do a cash flow analysis to determine how much money I need to keep in checking and how much I can stash into savings accounts is silly. I find it much easier to roll up all my savings categories into one master savings category and using the master category budgeted amount to tell me how much I can keep in my savings account.
As pointed out because of how ynab works I don;t HAVE to do it this way, but to me its the EASIEST way to know how much I can keep slightly less accessible because for it's" job" its not likely to be needed anytime soon.
-
Slate Blue Sander The issue with that though is that it’s overly conservative. In addition to categories you want to spend soon, there are probably categories that you actually will spend soon but which your cash flow will enable you to pay with money that comes in. This is especially true if you use a credit card and pay only the statement balance every month. When you match savings accounts to savings categories, as you start to build up more money in your budget, particularly the buffer, you miss out on earning interest on some, possibly a large percentage of, your money.
In addition, if you wind up needing to spend from one of your savings categories, are you wind up having to transfer money out of the account so that your account balance stays in line with your category balance. Whereas if they’re separate, and you have enough money in checking, you can just spend the money and deduct it from the appropriate category.
I learned this years ago when I was a newbie from a more seasoned YNABer, and i’m grateful that I learned to separate accounts and categories early. It’s very worth doing.
-
Dropping the synchronization also means not having to transfer money back from savings for many "savings-like" purchases. (Less effort in such situations)
Most people quickly establish they want $X at the beginning of the month (or end or on Payday or whatever) for their normal spending. X would include your own desired cushion as well.
-
In my 5 years of using YNAB, I've only ever had to pull money back into my checking account 3 times. Once for a house down payment (to wire the money), once for a car purchase (to write a check), and just once because I miscalculated cashflow in my checking. In that 5 years we've gone on vacations, bought not inexpensive art and furniture, replaced most kitchen appliances and the quarterly property tax bill is pretty hefty.
It's pretty easy to figure out the income rhythm and the expense rhythm, especially if you have everything in scheduled transactions and use the Toolkit running balance.
-
Late night WordTenor typos:
In addition to categories you don't want to spend soon
-
WordTenor Just go back and edit your... oh, wait. Never mind.
-
nolesrule Don’t get me started... 🤯
-
nolesrule Ok, I have a question, since I’m now considering trying this approach. Should the running balance ever be red? Like, if I start scheduling my statement balances on future due dates. Is it like, once everything stays gray I can start moving to savings? I’ve been dumping lump sums to savings for the past year, but unlike you, end up having to keep pulling some out for one reason or another and it’s pissed me off. I’d like to try your way, but want to make sure I use the running balance appropriately and don’t make a costly mistake.
-
nolesrule You know what? I just logged in on the web, and realized I never schedule income into my checking account. I actually schedule it in a dummy "future income" account and then move it over to checking when it's time. Moving those future paychecks to checking I see my running balance isn't as red as I thought. Ok, I'm gonna give this a shot! OMG paying on due dates here I come........
-
-
One thing I forgot to add: Watch out for overspending and overbudgeting. Overspending (spending more than the balance in a given category, taking it into the negative) means you're spending dollars that had a different job. This won't do anything to your savings without intervention, but it does mean you'll have to figure out where to take the money from to cover that overspending.
Overbudgeting is when you allocate more money to your categories than you actually had in To Be Budgeted, taking TBB into the negative. Same deal here--that money has to come from somewhere.
-
Just in case you hadn't thought of this (I hadn't), make sure you have a category for each of your savings goals: vet, car repair, emergency fund. Then budget what's in your savings accounts to those categories in the budget first, including right away each month/paycheck/budget session to represent those automatic transfers to savings.
My second month using YNAB, I didn't think about putting my regular savings allocation in their categories, and accidentally filled up other categories. Halfway through the month, I realized my mistake and grudgingly put the money back in place. :)
Now my accounts don't line up with my budget, but at first, making sure the balance in my savings matched the balance in those categories helped me know I was using YNAB correctly and could trust the numbers. Especially if you already have money automatically going into savings.
-
Kate I see you do have appropriate categories (sorry, didn't digest the picture). The rest of what I said still applies.
And, I'll piggyback on satcook 's comment. If you have automatic paycheck splits to savings (from your employer), for example, you want them categorized to TBB, not the category where you will put the money in the budget.
I do categorize directly to my emergency fund category for my paycheck split (sh! Don't tell!), because I like to see my emergency fund contributions in the reports. I just filter for income and my savings category. But, I'll never spend from my emergency fund - I would move the money into the rest of the month if I lost my job, for example. The rest of my savings are normal categories.
I'm sure other people will think this is unnecessary, but right now, I like it. Since I only use it in a controlled way, I could easily change my mind.
-
-
Just so you are aware, the way you have set up your accounts will affect your reports. When you spend your $800 on ceu’s, YNAB will tell you’ve spent $0 because you inflowed the money straight to a category. Your starting balance should have the category of to be budgeted and then you budget the money to the categories.
-
satcook Ok, what is a ceu?
-
Move Light Sound Life Continuing Education Unit, I think!
-
mamster I should have looked at the picture more closely! My brother has been teasing me for not knowing financial jargon, so I thought it was more of that...
-
mamster that’s correct, Continuing Education Credits for my job :)
-
satcook I’m not sure I totally understand, so let me know if I am missing it. When I originally set up those accounts on YNAB I had the account balance as an inflow/starting balance for the corresponding category.
Since then, I’ve made a new category group for automatic savings and rather than have each account balance as the inflow/starting balance, I allocated it from my TBB to match the amount that is currently in there (this is my first week doing YNAB and the automatic savings transfers already occurred this month).
See picture: does that look better?
-
Kate yes, generally every thing should be categorized in the account register as Inflow: TBB and then allocated to specific categories, with returns and reimbursements as the exceptions.
-
Kate Yes. Looks great!
-
-
Once you're comfortable, you can and should start collapsing all those accounts at C1360. The separation of the money is now done in YNAB . This will also help you meet necessary account minimums to get higher rates--if you have separate accounts for each thing you're saving for, each thing has to reach $10,000 before you qualify for money market account rates. If instead, you've combined 10 $1000 things you're saving for, when the collective amount is $10,000 you can qualify for a higher interest rate.
-
I just have to say, this is the most helpful community ever! I’m learning so much, thank you for all your replies- keep em coming!!
