There was an analogy used often among long time folk that YNAB is a lot like using a bicycle. What Nick True is doing is explaining that yes, you can push your bicycle while you walk beside it. And yes, you can balance on your bicycle and push with your feet. And yes, you can ride your ten-speed in the same gear regardless of terrain. All those are things you *could* do to get from point A to point B using a bicycle. 

But why not get on the bicycle, and pedal, and use the gears? That’s what it’s purpose-built to do.

What WordTenor said, plus you eventually get get tired of having the pedals smack you in the calves as you walk with the bike between your legs.  😉

HappyDance I think different strokes are for different folks and there is a lot of neurodiversity in this world.  One way doesn't have to work best for everyone.  That's another part of the beauty of YNAB, flexibility. 

PhysicsGal Yeah, we've been having this discussion for the better part of half a decade or more. The conclusion we have come to is that even folks who like stroking in different ways all eventually come around to this simplified approach, because ultimately it's cleaner, simpler and more clarifying than all the other approaches. It's just the amount of time that it takes for each person to come to that realization that differs, so we try to speed up the process.

PhysicsGal thank you so much for sharing that video. Now I understand it better. Not having a savings feature in YNAB still seems like an oversight or software development lagging, but at least the video explains what the "lazy"lol YNAB method is, (although its really not lazy, its a lot more complicated and a lot of work to keep track of). Of the workaround methods Nick True gives, Method number 3, making a savings account a tracking asset account, makes much more sense and a good option to use in the absence of a savings feature.

Silver Inspector 

That is my one complaint about Mr. True's videos.  He's enthusiastic and he's a good educator, but he never leveled up in YNAB and due to his own limitations is teaching people how to maintain a budget-by-account methodology in YNAB.  It hamstrings them, unfortunately.

HappyDance Very well said. 

He’s really great at explaining YNAB the software, perhaps better than the creators are. But I don’t get the sense that he’s coming from a firm understanding of YNAB the method. And once you’ve learned the software and gotten yourself out of hand-to-mouth spending, or if you never are at hand-to-mouth spending, it’s the method that becomes important. 

WordTenor Yeah, the savings video in particular irks me. I think it hurts as much as it helps. The biggest giveaway that he doesn't have the best grasp is that he calls the best and most powerful way to manage on-budget accounts and categories, the "lazy" way.

Superbone My preferred synonyms for "lazy" -- efficient, self-managing, simple, and trouble-free. 😎

Superbone so using the program exactly the way it is designed to be used and in conformity with the YNAB method is lazy. Good to know.

HappyDance He is pretty agnostic in the video about which method is best.  He basically says you can do whatever works for you.  I don't know why people here are acting like YNAB is a religion when it comes to this topic.  One of the reasons I stopped following the Dave Ramsey crowd was too much dogma.  I though YNAB was more about fitting my budget to my life and priorities and that people on here would be less dogmatic than the DR crowd. 

But if one of my priorities is keeping separate savings accounts for an emergency fund and another for other longer term expenses, then I'm a naughty YNABer, or a low level YNABer or something.

I specifically do this to make higher activation barrier for Whack a mole-ing out of categories that I want to not use for anything but the true expense because the true expense is fixed and necessary, and similar for my emergency fund.  I want it to be a pain in the a** to use money from a few of my categories by keeping that money in a separate savings account.  Does this make me a sinful YNABer?  Maybe I will change this someday, but for now it works for me and I'm happy with my results so far.

Personal finance is personal.  Keep your dogma at church and let's all just be supportive of one another as we work toward healthy finances, no matter how we chose to do it.  Your way is fine for you and I won't tell you to change it, but please stop acting like anyone doing it another way is a lesser person.

PhysicsGal What an interesting collection of words you used. Rather than a religion, YNAB is a methodology. If you're doing something different, you're not only not in line with the methodology, you're also not maximizing its benefits. That's not a judgement call on a person's worth, but an evaluation of their approximation to the method. 

There can be many reasons for only using part of the method.  I, myself, decided to sync up my savings accounts and categories because I was not ready for the fluidity of that organization.  It took a few months before I was ready to try the YNAB approach, but now I will never go back because of the benefits.

If people start using YNAB terms for things that are not part of the method, the method will become less useful and more confusing, because people won't know how the process is supposed to work.  If you don't know how the process (method) is designed to work, how can you get better at it?

PhysicsGal Objectively speaking, budgeting by account in YNAB requires more effort than budgeting by category, both in YNAB and in the real world. You may choose to do so because of some perceived greater prevention, but the majority of people who investigate this issue are doing it that way because it's what they've always done. (Understandably, it's a great idea when accounts are all that one has.)

I don't buy the "higher activation barrier" argument, though. Are you really going to say you'll cover overspending from a category named, "Property Tax, Don't ****ing Touch" when there are lower priority categories with money?

Most people who budget by account (not a comment about you, necessarily) mistakenly think being in a different account and off-budget absolutely prevents it from being used. Consider that someone overspends, but every category remaining in the budget "needs" the money they have. The money's gotta come from somewhere, resulting in a transfer from the EF account. So much for prevention.

The most effective way to operate is to reallocate in advance of any purchase that would cause overspending from a lower priority category. And if you can't, then it's much easier to skip the purchase in the first place. EDIT: that's not just my opinion, it's the recommended practice. And discussion of why things are recommended should not be viewed as religion. Religion is saying do X without explaining why (other than "take it on faith").

Move Light Sound Life The YNAB methodology is the 4 rules.  It's very flexible and that's what I like about it.

As I made clear, I'm fine with learning different ways of doing things and then choosing what works for myself, and you chose what works for yourself, etc.  Did I tell you you're doing it the "wrong way"?  Did I even tell you to stop teaching your way, or did I tell you to stop saying your way is the most simple, or even elegant? 

This is another option that may work best for some people and it's just fine for them to do it a different way, even if it's more complicated, if that's what works best for them, right now, to cultivate the most financial peace of mind.

Maybe someday I will change my perspective, after I pay off my debt so my budget isn't so tight and have more of a buffer, but for now I like my way and it doesn't mean I'm not using YNAB right.

PhysicsGal Hey, you don't have to change your perspective. And you're right - YNAB's method doesn't tell you what your financial priorities should be. Plus, it facilitates flexibility as your priorities change.  But, I wouldn't say the method itself is flexible. 

I'd also like to clarify some information. 

In Nick True's video, his first, "lazy," way is actually the way YNAB-the-company recommends. This is a logical extension of using the 4 rules, as decisions are made based on category balances. If your goal is to earn as much interest as possible on your savings, this way conveniently makes it happen. Otherwise, why have a savings account?

He calls his second way "The YNAB Way. " However, I've not seen any YNAB literature (doesn't mean I didn't miss it) that teaches it. Rather, he is budgeting/saving by account (not the YNAB 4 Rules) while using the YNAB software. If that's the way you want to think of your savings, fine. Budget your monthly budget with the 4 Rules.  If/when you get tired of the savings tedium required by using another method inside of YNAB's software, come back and apply the real YNAB way to your savings, as explained in the article linked at the top of this post. 

As for his third way, that is another iteration of budgeting/saving by account, but with even more extra work. Plus, when you actually spend on one of those goals, the reports will show a net 0 spend. I don't see the benefit. It is also further removed from using the 4 Rules.

When I started YNAB, I wanted to see a report of how much I was saving towards each goal. I was directed to the budget itself, which makes sense. I'm not even sure what parameters I would want for such a report if I were to ask for one.

Move Light Sound Life The second way isn't budgeting by account, every month I use the TBB money to budget all of my categories, including those I keep in savings, following the 4 rules, I just transfer the newly budgeted amount on certain categories to savings once I figure out how much I'm budgeting in each category.  Maybe this would be needlessly annoying if I were paid more than once a month.  I've been paid monthly since 2003 and I've never had to budget on any other paycheck cycle, so maybe this is the reason people think it is needlessly annoying or complicated, since in their situation it would be.  If I got paid weekly, my answer would probably be different.

As it is, for me, once a month I make transfers into my Ally savings accounts for Long term goals and my E-fund.  It takes me probably less than a minute to do the transfers on my cell phone.  When interest hits the account, I just have to make sure to categorize it towards one of the goals that is in the savings account.  It's really not a big deal.

But I never have to worry about having enough $ in my checking account to pay for any category except for the few long term goals in savings.  Eventually when I have a month of buffering it may be overkill.  But for now, I don't need to worry about my account balance on my checking since it will always be enough to cover my bills that have been budgeted. 

Anyways, it's fine for people to do what works best for them as individuals, that's all I'm saying.  There's more than one way to skin a cat.  Even if some people interpret it the 3rd way he shows, and decide they want to categorize savings as a big pile of money they can't touch because that's their priority, well, that's also following the 4 rules.  The money's job is to sit there and make that person feel more secure.  If that's what someone values, you can't talk them out of it by telling them they aren't "doing YNAB right".

PhysicsGal I have no argument with you running your budget as you see fit. I enjoy philosophical discussion, and would have fun honing the idea of budgeting by account in relation to YNAB use. However, me saying NT's second way is budgeting by account, and you saying it's not won't get us far. I could describe how I think of budgeting by account to substantiate my claim, but I'm not going to go to that trouble if you don't want to say your perspective so we can compare. 

Also, please refrain from putting words in my mouth.  I didn't say anyone was not "doing YNAB right." I prefer more nuanced phrasing because it provides better context for quality discussion. I also try to avoid personal judgements, which is a connotation of the misquoted phrase.

dakinemaui Black and white thinking is a huge part of religious and cult thinking.  My ex was brainwashed by a "philosophy" cult that didn't ask for any leaps of faith, at least not as stated (narcissistic sophistry works well!).  There are lots of psychology cults that don't involve any sort of deity or any leaps of faith, just a narcissistic cult leader using controlling and manipulative behavior and sophistry to get people to believe the evidence agrees with their interpretation.

Because of my history, black/white "you're either doing it the YNAB way by this very strange definition of the YNAB way or you're wrong" thing really bothers me. 

PhysicsGal black and white thinking is also part of objectivity. When approach X  requires more effort, actions, clicks, time, etc. than approach Y, that is black and white. It either does or it doesn't. If something is recommended as a best practice by YNAB, that is also factual, as everyone can read those guidelines. I can understand your predisposition against black and white thinking, but also keep in mind that it can be a foundation of agreement between differing sides of a discussion. We can then have an educated discussion about the gray areas.

dakinemaui Black and white thinking is fine for things that have objective measures, like measurements or math.   But personal finances is not objective. It involves humans and thus human psychology.  The "best" way of achieving goals x, y and z for person A may be totally different than person B.  And you can't get person B to agree that person A's way is better even though person A clicked less, or made more money on interest, or whatever because it isn't, for person B, due to personal reasons, maybe their psychology, life situation, etc.

I really don't understand why it matters so much that some people prefer to do YNAB their own way if it's helping them achieve their goals, even if there is YNAB literature stating that method 1 is their best practice method.  That means they think it will work for the most people on average, that doesn't mean it works for everyone.  If people are struggling with understanding the system, I get why using the 1st way would remove an extra layer of complications, but I know how to use YNAB and I will continue to chose to do it this way until I feel it is no longer help me reach my goals. 

PhysicsGal there are parts of personal finance that are objective. Here is a really good example.  It is a fact you will pay more interest if you choose to save a cash EF rather than pay down CC debt. Absolutely black and white.

I get that some people choose to save cash, and I don't say they're wrong for doing that, but I do feel obligated to point out that in the end -- regardless of whether an emergency occurs or not -- they will be financially better off having paid the debt. Again, that is a fact.

If they choose to pay more, they are effectively paying for "peace of mind". If they still want to go down that road, that's their business. More often than not, though, they realize they had never considered that and change their mind.

They were fine with the way they were doing things. That does not mean there isn't still room for improvement.

I want people to make educated decisions. Dismissing new ideas because they're different than the status quo is not educated.

Put it this way, I'm ok with just leading the horse to water and sometimes even telling the horse that I would drink if I were in their situation (as I understand it, at least). After that, it's up to them to choose to drink. Or not.

dakinemaui "It is a fact you will pay more interest if you choose to save a cash EF rather than pay down CC debt. Absolutely black and white."

Not necessarily.  If you have an emergency where you need to pay a large lump sum right away and don't have an emergency fund, you may have to take on more debt at a higher interest rate than you would have if you had an emergency fund before you dunked it all into your debt.  Maybe the line of credit you were paying off is a lower interest and has been since closed for whatever reason.  And if the result of this emergency plus an increase in your debt to pay for it causes you to lose hope in ever gaining control over your money and you go off the rails for months (or years) then it most certainly is NOT black and white.

Depending on your situation, the probability of the above occurring could be tiny or significant.

In any case, for the sake of everyone on this forum, I appreciate people who present all options.  I am totally for presenting options for everyone to pick and chose what works for them.  And I am all for promoting the 4 rules, which have already helped me so much, especially getting off the credit card float and planning my true expenses ahead of time. Also, I am much happier and more relaxed since I went from the Dave Ramsey baby steps to my own  modified program that is more in line with  YNAB, ie spending on my priorities not Dave Ramsey's priorities for me.

I just think this strange interpretation of the 4 rules where accounts can have no relation to the categories is strange.  

So, if you do it your way, how do you decide what to move into a savings account to earn higher yields?  Do you just move anything above a certain  minimum in your checking?  If you have, say, your annual yoga membership due a certain month and it's a significant portion of your monthly income (an example in my budget), do you then have to make sure that you consider all the bills that will hit your checking and then decide how much extra you need to move into checking to cover the large bill?  That seems more complicated to me than keeping the amount for the membership in savings, earning some interest, until I'm ready to pay the bill, then moving the balance into checking.

PhysicsGal Outflows from checking are in the scheduler, and the running balance shows the impact of those transactions. Arrange for the desired minimum balance. Same effort/process regardless of how many categories might be involved.

Usually it's not necessary to move any money at all for most expenses. There's usually enough money already in checking since income arrives several times during the month.

PhysicsGal FWIW, I totally agree.  I’ve been using YNAB for a long time, I grok the method, I’m not living hand-to-mouth, and I actually really love the idea of connecting goals to accounts.  I structure some of my savings across multiple accounts that way.  It means I have to align category balances to account balances (sometimes multiple category balances to one account balance).  It’s not ideal, it’s more work, but it works for me in the end - in the way I think about and manage my budget, using YNAB effectively as a tool that supports me in being successful.

eta:  Interestingly, YNAB actually empowers you to budget this way by allowing you to structure Budget Groups in innumerable ways, at least one of which can allow you to align your cumulative balances of all Budget Categories in those overarching Budget Groups to the cumulative balances of the accounts that hold the funds in those categories.  So, there may be a nerdy argument to be made by someone less tired than I am right now (and generally more inclined to debate on Internet forums ;)) that structuring your budget this way is very much in line with the YNAB methodology - which is imminently tailorable to your personal budgeting style.

Purple Captain There's no way to know what you're doing wrong without seeing it but the best way I've found to keep my accounts in sync are with frequent reconciliations. Every two or three days I reconcile my accounts to their online cleared balances. This way they can never get far off so it's easy to track down any discrepancies and fix the issue. Reconciling locks in the correct transactions.

But yes, you are absolutely correct that you need to keep your account balances in sync otherwise you can't trust your categories.

Purple Captain The root cause anytime balances don't match is going to be either missing transactions, incorrectly entered transactions, or an incorrect starting balance.

Doing a Fresh Start just covers this up, and doesn't teach you how to go about fixing this. On the other hand, reconciling will help you find missing and incorrect transactions, and also figure out if the starting balance wasn't correct.

The starting balance being incorrect can often happen by including pending transactions in that number, and then also entering in those transactions, so that they end up being double counted.

Purple Captain 

https://www.youneedabudget.com/budgeting-routine/

https://docs.youneedabudget.com/article/166-reconciling-accounts

Purple Captain Reconciliation is the process of making sure a secondary data set *transaction ins a persona (finance program), match the transactions of the actual financial institution. The purpose is to find missing transactions, double-entered transactions, incorrectly entered transactions and fraudulent transactions that may cause a mismatch, while accounting for transactions that have not yet been processed by the financial institution that have been manually entered in your records (finance program).

This is not some new process, but it dates back to the days of paper ledgers and checkbooks, and should be a standard practice of anyone who has any kind of financial accounts.

Turquoise Hail Is the savings account an account on your budget? If yes, then the transfer of funds between accounts does not have any impact on your budget, which is why account transfers don't require a category. The money is already somewhere in your budget. You will just need to move money from another category to the one you are paying the bill from.

If it's not on your budget then you would need to enter an inflow transaction on your budget account and then budget that money. It all depends on where you have your savings.

Turquoise Hail Read this. Several times.

https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/

Dollars are interchangeable, so you don't actually have to transfer from a savings account to checking if checking already has enough dollars. Since income also typically arrives into checking, the likelihood is high that it will have enough dollars. You basically save a step by having your savings account on-budget.

(It should also be on-budget by virtue of being able to carve it up into discrete pieces to better assess what you can do with that money.)

dakinemaui But the reason I am transferring from savings to checking is because there is NO money there to cover the bill!

Turquoise Hail Any expense needs a relevant category with funds available. That's step 1. Reallocate from elsewhere in the budget to achieve that.

Step 2 is to ensure the account you choose to pay with has sufficient funds. Transfer from any on-budget account with cash as necessary.

That is how things work when you have multiple cash-based accounts as part of the budget.

Turquoise Hail Generally, you should not try to match an account to a category, i.e. "Trust Fund."  The account is the location of your money, the category is the purpose.  So in your example, Fit up would be the category for the expense.  The account that money came from is immaterial to the budget, it's just where the transaction is recorded and the money was physically withdrawn from.  

Annieland Ok but what if I want to "hide" these funds from the budget because they are for future savings goals - thats why I try to match the fund category with the real account balance so as not to take these funds into the budget and use them! - another example, kids savings accounts that I don't want to touch at all but want to setup savings goals/contributions to them each month to build a cushion.

Turquoise Hail Then as dakinemaui suggested above, it should be an off-budget tracking account.  Just realize any money that moves to it will be considered a budgeted expense and will need a category, and anything going from the Trust account to a budget account will be new money to be budgeted.  It's fine that way.

Annieland Thanks for the help, although I do like the idea of linking to budget to get auto downloads of transactions, will this still happen if I unlink?

Turquoise Hail Linking for Direct Import is independent of being on-budget or off-budget / tracking.

You seem to be regarding that trust account as an Emergency Fund. Recommended practice would be to leave that on-budget, but not worry about synchronizing a category and account.

Silver Inspector I don't understand how YNAB is depleting your categories without you initiating those moves. That is opposite of the way it works. If you are covering overspending with money in a savings category, sure, you will have less than you did. You can prioritize getting it back up to par or not - that's up to you. 

Also, anytime you put money into a category, that's savings. Sometimes you save that money until your afternoon snack, or the mortgage payment in a few weeks, or the insurance payment in a few months, or a vacation in a few years, or various "emergency" funds {loss of income, car issue, home issues} that we hope aren't called for for a long time. 

I don't understand what else you want. As someone who synced my savings account with my e-fund category for several months, then tried to get better interest by syncing the savings account amount with more long-term categories, then decided to try just ensuring my checking account would never go negative (max in savings), the latter is the most lucrative and easiest. 

I understand wanting to get the hang of YNAB first before changing your prices in the real world, though. Trusting your budget and checking it is Paramount.

 Silver Inspector 

What makes a savings account off limits to you? You can still move the money to your checking account. Run out of money for ice cream? Just move some money. Maybe it takes a day, depending on where it is, but there’s nothing actually stopping you from using an emergency savings account for a frivolous expense. What stops you is your sense that the account boundary is sacrosanct—that money from your savings account can only be used for a few specific purposes.

YNAB is no different. If you are moving money from your emergency category because you bought ice cream, that’s you making that choice. Or perhaps it’s you making the choice retroactively because you didn’t check your category balance. 

Treat your categories with the same respect you would an account. Consult them for your spending, and don’t remove money from them if you meant to keep it there. 

Silver Inspector That's simply not true. Savings accounts in YNAB have always behaved the same way as they do now. The only question is if they're off-budget or on-budget. Of course if they're off budget, they won't affect your budget. However, it is highly recommended to keep them on budget. This way you can categorize your savings.

There is nothing special about a savings account in YNAB. It's just an account. The only difference in real life is you hopefully make some interest on your funds. You still have to keep your savings account reconciled and up to date and that includes interest.

I personally like to build up my savings so having them in my budget and my savings categories front and center really help in that regard. I have made HUGE savings gains since discovering YNAB. Huge, Jerry!

PhysicsGal if you are a soccer player, and you kick the ball only with your right foot, It’s not some sort of cruel judgment to say that you are playing soccer inefficiently. It doesn’t mean you’re doing something that you shouldn’t do with a ball, or  breaking the rules of soccer, but there’s a better way to play the game that involves kicking the ball with both feet. 

You can line up accounts and categories, and it doesn’t stop the YNAB method. But it’s like kicking the ball with 1 foot, it puts an additional constraint on playing the game that is unnecessary and unhelpful. 

WordTenor I like your example.

My example was going to be my "vegetable lasagna." I don't like pasta, so I slice up veggies (but not noodle thin because that requires more effort than I want to expend) and then layer meat sauce, normal lasagna cheese mixture, and veggies. As my brother said, it's not vegetarian and it's not lasagna, so I can't call it vegetable lasagna. It's tasty and doesn't give me a carb overload, so I know my brother's refusal to call it a lasagna is not a judgement that I am an inferior cook.

I just have to be careful about calling it a casserole around people who are not my immediate family, lest they get the wrong idea...

PhysicsGal Thanks for the paraphrase. :) Again, I do think that if someone is not applying the method to how they interact with their savings, they're not aligned with the method. That doesn't mean they're using YNAB in a bad way for their situation, and it's not a personal judgement. Like the lasagna story, there are other factors involved in what I make for supper than simply how to make a lasagna - what's in my fridge, carb requirements, time constraints, what I like to eat, what is healthy for me, etc.

I would counter your claim that budgeting by account is a style choice within YNAB. Again, this would be discussing the idea, not your personal worth.  At the moment, though, I'm quite tired, so I'll put that reply up tomorrow. 

Move Light Sound Life 

From https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/:

"We’ve been brainwashed a little bit to believe that account management equals money management. And, hey, let’s be honest, account management is better than no management. (That’s how I operated before YNAB, and it did help a little.)

But, once you start budgeting, you have a better way. Budgeting is the truest form of money management."

I guess my interpretation of "account management" is what I was doing when I didn't budget (from about 2012-early 2019), ie, looking at my account balance and then deciding if I have enough money for something based on what's in my account.   Well, technically, I was putting most stuff on a credit card and then paying it off and using what was left, after paying off last month's bill, for non-credit card expenses. 

I asked some more specific questions to try to understand how totally decoupling accounts and categories would work, so if you can scroll up and answer those maybe you can convince me your way is better.  Because to me it seems more complicated, but maybe there's a trick I'm not understanding.  I love YNAB and find the methodology to be awesome as I'm using it and I really don't understand why I can't have some small level of coupling between my accounts and my categories and still be using the YNAB methodology.  They don't HAVE to be coupled, is the point of the article, but it doesn't say you can't have SOME coupling, if that sort of thing makes your OCD happy (it makes mine happy!).

I actually used YNAB back in 2011 the first time I got out of debt and it's come a long way since.  I was balking about spending money on it annually (what a trick, all software now costs annual fees instead of pay once and use until you want to upgrade) bc I'm a cheap bastard, but to be honest, with how powerful it is and how much it will save me in the long run when I can seamlessly be on top of my money and putting it towards my priorities, the price is totally worth it.

WordTenor Yeah but if your right foot is far more coordinated than your left due to your brain's unique characteristics, then you're not going to win by kicking with your left foot more often.

If you don't mind, could you scroll up and answer my question about how to do it ya'lls way? It seems more complicated to me, but perhaps those who use that method have a trick to make it work for them.  Or maybe it's something that being buffered makes easier.  Or having less OCD.

Move Light Sound Life I've made that with zucchini.  I was paleo for many years.  It's pretty delicious but not as good as real lasagna, to be fair, but I still called it "paleo lasagna".

PhysicsGal i’m happy to. You asked how we make the decision about how much to leave in checking? It’s based on how much we need to spend before there will be more money in checking. I think some people like to keep their average monthly outflows plus a little bit maybe $1000. I look at my running balance and make sure that it’s not going to dip below zero. 

Beyond that, it genuinely doesn’t matter. The big reason for not keeping your accounts linked to categories is that that usually results in earning less interest. Your true expenses are not going to come due all at once, plus you’ll probably use a credit card. It really does only matter that you have enough in the account for any one given transaction. You don’t even need to actually keep a cushion or make sure that it doesn’t get below zero during the month, it’s just that that’s often expedient because savings accounts can sometimes take a little while to transfer from. 

PhysicsGal First off, I apologise for anything in my response being poorly written and wordy. It has been a *very long* day. 

So, you've gotten some good answers about how to determine what goes in checking/savings. I think in practice, I'm more like Annieland without the frequency - just making sure the checking won't go red in the scheduled transactions. 

I hope HappyDance won't mind me sharing (a second time! It's so useful. I had that post pulled up for the better part of two months while I started figuring it out in my own life. Thank you!) her calculation. It was something like average monthly expenses + upcoming large expenses (including CC) + $1000 as a buffer. Any extra is put into the savings account at the end of the month.  The idea is that regular money coming in will replace regular money going out of checking. Further, the money coming in that is technically budgeted to a savings category can even pay for the larger expenses (but if not, transfer savings to checking, nbd).

As for the philosophical question about account budgeting being part of YNAB, I don't think it is because the 1st rule says to give every dollar a job (in a category). That means you're looking at categories to see the plan you made and make spending (or plan revision) decisions. The accounts have nothing to do with that process (of course, you need to look at accounts to organize payment for spending, but you have to verify that information anyways). 

So, the fundamental principal of putting money in buckets to do jobs is similar (and sometimes the same) when you budget by account vs. category, but the bookkeeping process is inherently different. The fact that you employ dollars in categories means that your interaction as the boss of the dollars happens through the budget. If the dollars can do their job from the office, at home, or at one of those flexible working places, it won't change their job. That's like YNAB's way - it treats money as fungible.

However, if you set up your dollar-place (budgeting by account) so dollars working on one job can only operate in that space, then you have to train the dollar for its new job and give it new clearances (transfer IRL) before it can move offices. Now this is totally true for certain professions and in certain situations, but a dollar in one place isn't any different than a dollar in another place.

I don't think budgeting by account is necessarily contrary to the method, but that it is not aligned to it. You can do the extra work if you want, and there are good reasons to do so. Mine was establishing trust in and learning YNAB by providing a check against a system I knew.  I needed about 6 months to become comfortable with not syncing my categories. This allowed me to get used to YNAB the method (that was the easiest part), YNAB the software (bumpy road), and this incredible (I read it and realized I would come back to it later) idea of categories overlaid over all accounts where the walls have no bearing on the layers. It took my husband another 10 months before we could let up on the mortgage-paying account matching. Now, he talks like this not syncing is an idea he's held all along... ... ... :)

Anyways, I'm lost in all my words... Summary: YNAB rule 1 inherently requires interactions with categories, and accounts are superfluous (but not to enacting a transaction). Syncing accounts to categories is just extra work from the perspective of YNAB. There are other reasons to do it, but they don't come from YNAB.

Once the idea makes sense, give it a try. I don't think you should blindly do it, because if you're used to thinking a certain way and those mental processes are not there any more, little mistakes will likely turn into bigger ones because you won't know what you're orienting to or how to fix it properly. Can you tell I really like to be solid on something with ways to check if I've done it correctly? That might mean I make a lot of mistakes, but not many get past me either...

PhysicsGal I don't think being YNAB buffered  has anything to do with decoupling accounts/categories. I went nearly a year with the latter and not the former. 

Yes, subscriptions are annoying. I'd rather invest in something I can use in a few years when I won't have this cash flow.

I hope I made some sense. Please ask clarifying questions (but the others on this thread are way more expert at this than I). I just spent all day repeating various stages of simple instructions. I can't string a thought to another one right now. 

Also, you don't need me to convince you of anything. You'll do what you're ready for, and if you ever want to return to this topic in your own life, you have several places you can look.

Move Light Sound Life Thanks to you and everyone else for explaining your methods.

Maybe part of the issue that makes my outlook different is that I have a Rewards checking that earns 3% on anything below $10k, so I'm planning to eventually, once I save up a full one month of YNAB buffer and a larger Efund on top of that, leave a $10k buffer in my checking above my spending for that month.

Now that $10k doesn't have to be linked to any particular category, but it seems easier to me to move  $ I'm adding to my long term goals into my Ally savings for long term goals (1.6% but not capped) minus any of those long term goals that are coming due that month, which is pretty similar to your equation except with a $10k buffer instead of $1k.  I won't dip below the $10k during the month (so I get max interest from my rewards checking), but will have enough to cover all my bills, and will maximize earnings from interest while only needing to transfer from/to savings once a month, since I'm paid monthly.

I've read how the various people who replied to my inquiry are doing their accounts and none of the responses seemed like less work than my plan, in my situation, but I'll keep them in mind for things to try later, thanks ya'll.  

I don't have to reconcile the long term savings account total with the long term goals category totals once I have that $10k buffer set up, I think that's the part people find particularly annoying about tying accounts to categories.  I'll keep that in mind.

I could definitely keep just one savings and my rewards checking; the separate E-fund account is totally a psychological luxury, I freely admit that those could easily be put into one account.  But once it's fully funded it'll just sit there and get bored AF because I broke up with Murphy.

PhysicsGal Do you not have your 3% checking account maxed at the moment? But you do have money in various savings accounts earning <something well less than 3%>?

PhysicsGal The number for you to keep in checking then is $10K + that month's expenses. Anything above that goes to savings. If you have less than $10K in total right now between those savings and checking accounts, all of it should be in checking. 

That's actually even simpler than those of us for whom keeping checking as low as possible is most useful. You will be able to spend from almost any category (unless you are crazy wealthy and often make $10,000 transactions, in which case, good on you and you probably really shouldn't be matching accounts to categories). When you receive more money, it will top off your previous spending, and periodically, you can look to see how much above $10K+checking transactions you are, and sweep accordingly. 

WordTenor I don't have it maxed now, I was waffling with whether I should continue to make the 12 debit card transactions of >=$100 total required to make that interest rate after hearing about how debit cards are more problematic in the case of fraudulent charges than a credit card, so I wasn't sure if I would use the debit anymore and instead use credit cards only, the YNAB way of course (no more credit card float EVER AGAIN!).  I even took my debit card out of my wallet because I lose stuff so much and the idea of someone being able to wipe out my account easily if I lose my wallet was pretty scary; even if I get all the money back soon thereafter,  how would I pay my bills in the meantime?  All of my utilities and my mortgage come out of my checking account

I decided earlier this week I'd just go ahead and split up a couple of grocery store purchases from those machines where I check myself out at the end of the month to reach 12 transactions, generally keep my debit card out of my wallet except then, but continue to keep some money in Ally for now while I build up that $10k buffer in my checking, so even if I get my card stolen I won't be totally hosed.  I've had my credit cards fraudulently charged 3 different times, but they were credit cards so it didn't really hurt me other than waiting for a new card.  It's slightly annoying to have to split up my purchase to make it work, but I'll do that for 3% interest plus the ability to keep a large buffer in my checking without worrying about my debit card being stolen and my account cleared out.

If anyone is interested, the credit union with the rewards checking I use is Consumers credit union, myconsumers.org. They have fairly good customer service even if you don't live near their branches. I'm in a totally different state.

I just remembered something relevant, I tried this current version of YNAB on the trial period back in May of 2019, but then switched to using Dave Ramsey's Every Dollar because I had paid for Financial Peace University and the paid version was included for free.  I only lasted a few months on Every Dollar even though it's free because somehow the total of my sinking funds (ie goal balances) was less than what was in my accounts.  ED just downloads transactions, it's not as tightly linked to your accounts as YNAB.  (It also doesn't allow you to enter your transactions manually and then match them later, you end up having to delete one of them) So I switched back to YNAB because I wanted to link my accounts to my budget more tightly, since how can I trust my budget if I'm supposed to have more money in my accounts according to it than I actually do in real life?  Syncing accounts to categories isn't necessary, but it was an issue of not trusting my budget is reflected in my accounts that brought me back to YNAB, it's not surprising I'm attached to having a slightly higher coupling between the two than others prefer.

PhysicsGal That account is pretty slick! But the 12 debit transactions changes the math a little for me. The improvement over rates at a good online saving is only a little more than $100/yr. Remembering to use my debit card 12 times every month would probably not be worth that for me. YMMV. That being said, while multiple accounts when one has embraced account/category independence are really easy, the simplest way to use YNAB is with one account, so that might be worth it. 

Yeah, that's a lot of transactions to remember. I'd try to automate at least some of that with Amazon subscriptions. Stuff you'll normally buy anyway. Definitely stay away from card readers that are not contactless.

dakinemaui I've got an account at the same CU, and unfortunately it requires that the debit transactions be POS, so online or recurring don't count. Most months I make enough small transactions at my work cafeteria & a grocery store to reach that easily, and since I also have their credit card I usually reach the higher tiers of 4.09 or 5.09 which is much more worthwhile.

adriana01 I used to have their credit card that gets you the higher interest rates on the checking account and 1% cash back, but I closed it during my Dave Ramsey phase.  Now they only have credit cards with points that don't give you cash back anymore :(  I ended up just getting a Citi Double rewards card instead.  It will probably work out to be more cash in my hand than points for consumer products I don't need or want plus $200/year at the most, assuming I maintained the full $10k balance all the time.

adriana01 Interesting. I would have thought if you give the number online it would be the same as swiping/inserting in person. Live and learn!

Annieland Mine is that I don’t always input transactions when I make them and sometimes cover overspending after it has happened. 

However, my spending is more out of control and the budget just is not as helpful when I do this. So I have to conclude that actually doing it the way YNAB says to do it is a better way to reach my goals. Not because I’m blindingly following a cult, but because I’ve actually checked and their way has better results. (I know you know this, but since people are throwing around these accusations in this thread I thought I’d point out another situation similar to this.)

Annieland I have looked at the underlying principle behind Rule 1 and decided it's better for me to budget next month's area with funds I don't have. I have an entire template budget in that area without using Goals while maintaining accurate spending guidance in the current month (the intent behind Rule 1). So a bit of a gray area -- I violate the letter of the written YNAB law, but obey the spirit. 😂

Oh, and I too sometimes cover overspending after the fact, and agree that's not as effective. Fortunately, my budget is not as tight as some, so I can get away with being a little sloppy.

dakinemaui WordTenor You guys are so funny, I was totally kidding. But wow, what a bunch of lightweights.  Good thing I didn't go first.  I will actually put in a paycheck before it comes in sometimes!  And I DO match my HSA account to my HSA Category and it totally works for me, but I've caught myself make errors a few times already.  And it's a real loop-dee-loop when I get a reimbursement from Insurance and then HSA and have to circle it all around through checking and out of HSA and into TBB and back to the budget.  I cover overspending after the fact more often than not because I gotta see the actual numbers in the register first.  Otherwise it's too much math for my wee brain.  

Annieland I take the Wish Farm idea farther than I think it's intended, often saving for something in one category and recording spending in another. This makes averages slightly less useful for my current budgeting process. To be honest, I'm still getting settled about all of this in terms of finding trends (I'm slow, I know). 

Also, funnily enough on this post of fungibility, I sync our cash with a cash category. I also have a non-fungible gift card category that is synced with the pertinent gift card accounts. If/when I can make an otherwise budgeted purchase with either of those methods, I move the same amount of the purchase from the nFGC/cash category to wherever I want it to go. Otherwise, I'll forget that method is there to be used.