On-budget or off-budget Savings account

Hey guys

I’m torn between using an on-budget account vs an odd-budget savings. It seems like an on-budget savings account isn’t more time consuming and more potential for errors. What do you guys think?

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  • I recently had an issue with onbudget savings account that did finally get resolved. 

    In some ways if you plan to use your savings account only as an emergency fund, then you might not need it as an on-budget account. I once considered that, because it gets confusing for me how YNAB recognizes checking to savings transfers. So by having the savings offline, you can simply transfer money from your savings to your checking, and then budget that money as needed. 

     

    Oh the other hand, an on-budget savings account gives an overall report of your wealth.

    I look forward to the feedback of others on this question. 

    Like 1
  • By having the account on budget you are doing a few good things to make your life easier:

    1) Giving defined purposes for money in the account, giving you a better way to plan with your money. Having a savings account not in the budget just means it's a big pile of money with no purpose. And when you do that, you start giving it multiple purposes in your head.

    2) Removing the necessity of keeping money for specific purposes in specific accounts, making your budget easier to manage. Sure, you could split the money in the savings account into multiple savings accounts, one for each purpose, but then you're just creating extra real world accounts to manage when the same thing could be accomplished within the categories of your budget and no additional accounts (this is true for accounts both on and off budget). You can move money around freely between any accounts that are on budget, maybe because you want a little better security from fraud or to take advantage of changes in interest rates at various financial institutions.

    3) Removing the categorized transfer issue from the equation, making your reports more accurate when it comes to actual spending. With an off-budget account, the money sent to the savings account leaves the budget, and must be categorized, just like spending. And if you bring money back into your budget from the savings account, you must also categorize it. And then when it leaves the account from being spent, you categorize it a third time. This then impacts all of your reports and can make a mess.

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

    Like 6
  • Don't keep your savings account off budget. 

    There's actually nothing to debate. 

    I say that as someone who was certain I had Reasons(TM) why my situation was special and my needs were different and of course my savings account belonged off-budget. After a year, I wound up spending hours one evening bringing it on budget and adjusting 14 months of budgeting so that it was on budget from the start.

    Don't  keep your savings account off budget. Learn to use the budget instead. Once you understand how the budget works, having your savings off budget will be an annoyance and a hindrance. 

    Like 3
  • So when do you transfer money that you budgeted to savings, to your savings account?

    with regular budgeted categories when you budget money for it and spend money in that category, the available balance goes down. This necessarily isn’t the case with savings 

    Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 2 yrs ago
      • 2
      • Reported - view

      Purple Vacuum Never. And always. 

       The budget determines the purpose of the money, the accounts determine its location.  Your categories have now become your new accounts.  When you want to save money, you'll do that by adding more money into a savings category.  This is entirely independent of whether or not the money is in your savings account. But the same principle applies: just like when you were separating your money between checking and savings, the money being in your savings account prevented you from accidentally spending it on something you use the checking account,  now, the fact that the money is not in a category that you use for spending will mean you won't spend it because you'll be relying on the category balance to tell you how much you can spend. 

       Periodically, you'll probably end up with too much money in an account that doesn't pay much interest.  Or you'll realize that you want to buy a big thing, and that you don't have enough money in the checking account to pay for it  even though you've been diligently saving up for it, and there's plenty of money in the category. So you move some money back-and-forth between your accounts. But this is independent of the categories. The categories won't change. 

       The practical answer to your question is, whenever you feel like you have too much or too little in a given account, you'll move money to a different account. After five years, I assess my balances  about once a month when I am doing my budget,  but I actually only move money maybe every other month or once a quarter or so.  When I first started, I kept most of my money in my checking account, because I was pretty close to the bone  and my savings account didn't pay very much anyway. 

      Like 2
    • WordTenor are you suggesting that in order to simply it i should just keep all of my funds in my checking account and let my budget decide their purpose? 

      Like
      • jenmas
      • jenmas
      • 2 yrs ago
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      Purple Vacuum My paycheck is deposited into checking account #1. I don't particularly like checking account #1 but I'm too lazy to do anything about it. My mortgage, condo fees, and HOA come out of this account because this is how I set it up when I bought my place. I pay my housecleaner out of this account. When I get cash out of an ATM (usually only once per quarter) this is the account that it comes out of. Therefore I like to keep this account at 2x(Mortgage+CondoFees+HOA). Every time I get paid, anything above that amount gets moved to either a high interest savings account or to the online checking account #2 that has a decent billpay interface. I know that I need to keep approximately $Y in the online checking account #2 to cover my credit card bills. So when I move money out of checking account #1, I first make sure that checking account #2 gets topped up to $Y and then everything else goes to the savings account.

      Where is the money that I have saved up for a trip to Hawaii? I have no earthly idea, because I also have checking account #3, savings account #2, savings account #3, Wallet Account, Euro Account, Gift Card Account, Emergency Cash Stash account, and a CD ladder plus all my credit cards as on budget accounts. The location doesn't matter except on the day that I need to pay my credit card bills (well, and on the days when I get a pedi at the place that charges less if you pay cash, so I have to have that on hand) and since all of my credit card payments are due between the 22nd and 29th of the month, I know when I need to get money into online checking account #2.

      Like 2
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 2 yrs ago
      • Reported - view

      Purple Vacuum That is the most straightforward solution, but ideally, you want to earn as much interest as you can on money that you don't need to use soon. So you'll want to keep some, and over time as you build up savings categories in your budget, probably most of your money in a savings account. 

      There's not a hard and fast answer to how much you should keep where (and importantly, it is not related to your category balances). A good rule of thumb is to have about a month's worth of spending in checking, since you'll get paid over the course of the month and that money will replenish. But many people are able to get away with less, sometimes, much less. 

      Like
  • I think what I will do to simply this whole thing is to just Combine checking and savings and just use one account since looking for “interest” is unfruitful given our current economical environment. 

    I have a brokerage account right now with around $30k in it right now that I didn’t link to YNAB nor will I ever. The same goes for my 401k. 

    But what I will do is combine my checking and my savings, so that I don’t have to worry about transferring to-and-from my savings when I ‘budget’ for it. And once I build up my Savings over $5k then I will move that tranche over to brokerage. Then rinse and repeat. Fill up $5k —> move over to brokerage account out of YNAB. 

    My concern hasn’t been that I’m living paycheck to paycheck (I guess we all are in some capacity) but rather control my spending in a more calculated way. This is the reason I love YNABs credit card payment feature. I’ve always spent on credit card and paid off but had a hard time controlling my money in relation to my budget. 

    How does that plan sound? 

    Like
      • jenmas
      • jenmas
      • 2 yrs ago
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      Purple Vacuum my approach to finances is that if I'm going to have to spend the money in the next five years it needs to be in a checking account, a savings account, a CD, or perhaps an I-bond. My investment account is for stuff way down the road because I wouldn't want to risk there being an emergency and having no choice but to withdraw from it in a down market.

      Like 2
    • jenmas okay I can respect that. I on the other hand think all signs point to a strong economy for the next couple of years and want to take advantage of that. Take our viewpoint aside as it relates to storage of funds - does the idea of me combining checking and savings into one account for purposes of using YNAB make sense? Because in a way YNAB allows you to earmark every dollar for a job. And you could essentially have one single account that you operate out of, as YNABs envelope based budget philosophy allows you to have multiple envelopes acting as their own account, if you will - without physically creating new bank accounts 

      Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 yrs ago
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      Purple Vacuum I agree with jenmas although I might use a Money Market fund in a brokerage account for on-budget savings. However, if I were to do that, it would be a separate account from my long-term investing and would be considered as a savings account rather than an investment.

       

      Every category in your budget is for spending. Some of it is current, some of it is for 6 months from now, some of it is in a year, some 5 years, some of it is for stability (Income Replacement Fund which might be tapped today or never). Only money that has no purpose goes into volatile investments.

      Like 1
    • nolesrule to put things in perspective of why anyone at this time would utilize a savings when the APY is 0.01% at most institutions. A $50,000 balance would yield a $5 return annually - hardly worth the inconvienence. At a 0.25% APY your annual return is $125 - a little better but adjusted for inflation and cost of living hardly worth our time. 

      I like the idea of betting on the market (and history would say that’s right) so I put my money in ETFs that track indexes rather than investing in individual stocks, a safer and more reliable return historically.  My bet is on the US economy and world economy 

      Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 yrs ago
      • Reported - view

      Purple Vacuum My primary financial institution has a 1.60% APY on the savings account for balances over 10k.  That's up from 1.0% APY in the last 6 or so months You might wish to reconsider your financial institution, at least for savings accounts.

      I invest in index funds as well. My brokerage account consists of Vanguard Total Stock Market and and Vanguard Total International Stock market index funds. But I'm not betting the money earmarked to replace my wife's car or pay for my kids' bat mitzvahs or my Income Replacement money in those funds, because that money may be needed regardless of the condition of the stock market.

      One thing to consider is that stock market crashes happen without warning, and we're in one of the longest bull markets in history. It's best to formulate a plan that is appropriate for both continued growth but also unexpected decline, rather than betting it all on continued growth, which ignores the risk.

      Like
  • Purple Vacuum said:
    . I on the other hand think all signs point to a strong economy for the next couple of years and want to take advantage of that.

     As long as you have a plan for what happens when you need to spend the money but it's not there due to an unexpected downturn (bear market, crash, etc.) then that's fine.

    Hope for the best, plan for the worst.

     

    Allocation budgeting doesn't work very well when the total value of your budget is volatile. You can always hold more in cash for your budget and increase the risk in your investments.

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  • So one of the benefits of YNAB is the ability to really use one account for multiple purposes though? By the way the checking account I am using at the respective institution has an APY of 0.20% so it’s not like it’s not earning some form of interest/return 

    Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 2 yrs ago
      • Reported - view

      Purple Vacuum I don't consider that a benefit, I use multiple accounts to increase the return on the money I don't want to put at risk. I have a checking account, a couple savings accounts, several CDs and I Bonds held at treasury Direct in my budget.

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

      Purple Vacuum I would say the benefit of YNAB is the ability to maximize the efficiency of your accounts without sacrificing your ability to have discrete purposes for your money. You are able to keep money in Account A because Account A provides some sort of benefit (high interest rate, easy access to another account, a good bill pay system, no foreign exchange fees, etc) and not because the money is sequestered arbitrarily to "save" or to "spend." 

      For example, I budget for my car payment every month. It is auto withdrawn from my savings account at the credit union that holds the loan, which is the only way they will do an automatic payment. But instead of transferring the payment to the savings account each month, I front-load the account with $1000 every quarter. It's just easier to only deal with that account once every three months instead of the 25th of every month.  But *technically* some of that $1000 is budgeted to other categories, because only $300 at any given time is budgeted for the car. But it doesn't matter, because I don't spend all my categories to zero each month. So I can just throw a bunch of money in a random account periodically because it's just a lot easier to have some money sitting there for them to auto-withdraw. 

      Like 2
      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 2 yrs ago
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      Purple Vacuum 

      Purple Vacuum said:
      So one of the benefits of YNAB is the ability to really use one account for multiple purposes though?

       No, you can use one account for multiple purposes regardless of what budget software you use.  Or you can do that even if you have no budget.

      Bear in mind that the "one account" recommendation is meant to foster simplicity and avoid the danger of overdraft charges.  The recommendation comes directly from Jesse Mecham, the creator of YNAB.  Jesse is far more conservative than the average investor his age (early 30s, I think).  Jesse is far more conservative than I am at age 62.

      Once your budget grows above some size (exactly what size is debatable), the danger of overdraft becomes negligible and you can start thinking about earning more interest.  To put this in perspective, right now my budget contains 8.3 times as much money as I put in each month.  Obviously, my typical month will not consist of spending 8.3 times my income.  So it would be silly of me to keep it all in checking earning a mere 0.65% APY.  Some of it is in savings (1.50% APY, and others think I'm silly for not going with Ally for 1.60% APY).  Some of it is in a CD at 1.50% APY, which looked really good when I bought the CD: when it matures in December, I will put the funds into something else.  Some of my budget is in I-bonds earning a variable interest rate based on inflation; my oldest I-bonds date from 2010.  I have yet to be forced to cash an I-bond.  Some of my budget is in T Bills, which was a mistake on my part for on-budget money; but I anticipate that they will mature and I will be able to put the money into something more sensible.

      Bottom line, my budget funds need to be in something that has no danger of loss of principal (other than to inflation), and that I can access timely enough for any budgeted expense that might occur.  My checking account is accessible instantly.  I can transfer money from savings to checking in 2 minutes, assuming I have functional internet access and it's not during one of my credit union's monthly maintenance windows.  I could break the CD at the cost of an interest rate penalty, probably almost as fast as I could move savings.  It would take me a few days to get the money out of the I-bonds, but I expect I will have a few days warning if I need to spend money on something big enough to force me to redeem I-bonds.  I cannot get to the T Bills at all until they mature, which is why I say putting budget funds into them was a mistake.

      It's more of an art than a science to determine how much money you need in checking to cover cash flow.  I leave more in checking than a truly aggressive cash flow manager would, but when the balance creeps up to be more than 1.5 times my monthly budget income I start thinking about how much i can put somewhere else.

      As to why . . . my checking account pays 0.65% interest.  My savings account pays 1.50% interest.  If I can move $2000 from checking to savings and leave it there for 2 weeks, that's an incremental $0.65 income.  I don't know about you, but if someone driving by my house throws two quarters, a dime, and a nickel onto my property, I'm going to pick them up and put the extra $0.65 into my budget.  (I wish.  More commonly, they throw a beer bottle or a fast food drink cup that I need to pick up and put in the trash or recycle bin.)  And most often, the money I can move from checking to somewhere paying higher interest stays there a lot longer than 2 weeks.

      Like 3
  • Nolesrule and jenmas I appreciate all of the dialogue and your guidance. Hopefully I didn’t scare you off! :) 

    Like
  • nolesrule said:
    Every category in your budget is for spending. Some of it is current, some of it is for 6 months from now, some of it is in a year, some 5 years, some of it is for stability (Income Replacement Fund which might be tapped today or never). Only money that has no purpose goes into volatile investments.

     As a new user, this is what I'm doing. My e-fund savings account is added to YNAB and a budget item ("Income Replacement Fund" too, funny enough) and has 8-12 months worth of expenses available. Should I stop receiving enough income from my regular job, I will budget my immediate obligations and recurring expenses at least one month in advance to see how much to transfer over (this should put me in the red). Then, I'll move what I expect to use for the month into checking from savings, and I will use YNAB to move that same amount from "Available" to "Inflow: To Be Budgeted" to zero things out.

    Am I thinking of the scenario in the right way?

    I guess an alternative could be to flat out budget all 8-12 months to see how much runway you have? But then you get a job in month 3 and paychecks in month 4, and you're still budgeted to infinity, and that seems all sorts of weird.

    Like
  • The third part of this video does a good job at explaining the off budget method (starting at about 20 min): 

    https://www.youtube.com/watch?v=tATZ3PhooW0

    The only thing I would do different from the video is have the savings category group ONLY for making transfers too and from savings (not for spending). This gives you the advantage of planning how much to spend each much, in addition to planning how much to save each month, and keeps them separate so there is no confusion. Put the last 4 of each account number on each corresponding budget savings category (1435 - Car Repair). Then you just match numbers when categorizing transfers to and from that savings account. 

    Also, you will find yourself opening more and more accounts if you go this route (the biggest drawback). Ally Bank allows you to have unlimited savings accounts. I'm sure there are others. Most banks allow you to automate transfers into your savings accounts, from a checking account, which makes saving like making a payment to yourself.

    Here are some arguments for keeping savings off budget.

    Savings out of sight

    We often forget how much we have saved in certain categories because we are just focused on the month and what we've planned to spend. 

    I think there is less temptation to spend savings when it isn't constantly in front of your eyes.

    Get to see budget go to zero each month

    More like a traditional budget where you budget what you want to spend and see it go to zero. There aren't these savings account balances mixed in with your budget. Can budget how much you want to save and that money goes to zero as it is transferred to savings. 

    Delayed Spending from Savings

    If you let YNAB connect to bank accounts, you have to wait a day or two before a transfer shows up from savings on your budget, instead of having it always on budget ready to transfer and spend at any moment. 

    Something Nice about Separate Accounts

    It's neat having a separate account specific to one thing. It's more real, instead of just virtual.

    Your actual account shows a real balance.

    Less reliance on YNAB

    If there is ever an issue with YNAB, all of the savings accounts are still there with correct balances (physical tracking instead of virtual)

    Not so easy to accidentally mess up savings account balances

    If you move money from a savings account there is no way to know how much should be moved back unless you remember

    Like
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 2 wk ago
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      Maroon Keyboard Holy thread revival batman!

      Also I disagree with most of that advice.
       

      Maroon Keyboard said:
      Savings out of sight

       A savings master category towards the bottom is easily as out of sight as one should desire

      Maroon Keyboard said:
      Get to see budget go to zero each month

       Similarly to above, you can spend to zero in every category if you wish but there are plenty of goals for annual or quarterly expenses that probably shouldn't be going to zero every month. I barely have any categories go to zero.

      Maroon Keyboard said:
      Delayed Spending from Savings

      I can't actually tell if this is for or against on-budget savings accounts?

      Maroon Keyboard said:
      Something Nice about Separate Accounts

       You can have one account or a hundred accounts. You can still keep them on or off budget as desired. Makes no difference how many accounts you have.

      Maroon Keyboard said:
      Less reliance on YNAB

       Fair enough, but separate accounts would achieve this without being off budget in any case.

      Maroon Keyboard said:
      Not so easy to accidentally mess up savings account balances

       If you move money between real accounts, you have a record on your bank account. If you move money in YNAB between imaginary accounts you have a YNAB record. If you mean between budget categories then even ignoring the latest feature which does track recent money movements, if you are taking money from a savings category one month you will always see the  negative budgeted amount which you could reverse in a future month if things need to be exact. In reality if you are moving long terms savings money out for spending on other things, your budget was inaccurate to begin with.

      Like 2
    • SgtBatten  

      Superbone

      Thanks both for your replies. Let's see if we can find any valid points for off budget. There are pros and cons to each system.

      Savings out of sight

      Yes, this one does depend on perspective and how you budget. For a zero-based budget where you budget once per month, you build your savings once during the month, so it makes since to keep it hidden. Yes, you could just keep it condensed or at the bottom in this case, so we can disregard this point.  

      See budget go to zero each month

      With off-budget savings accounts, the money you budget either gets spent or sent to those savings accounts, so they should be going to zero each month.  Take a look at the third part of the video listed. This one remains valid. 

      Delayed Spending from Savings

      This is for off-budget savings accounts. After you make the physical transfer you have to wait until the transfer comes through on YNAB before you can categorize it  to an on-budget spending category. This could be a disadvantage to some so it also depends on your perspective.

      Something Nice about Separate Accounts

      I think there is a reason that having a separate account for each category on-budget is not even mentioned as an option on the video above. It would be a headache to ensure  each of those on-budget accounts always corresponds with each of your physical accounts. If you are using on-budget savings they recommend limiting the number of savings accounts.  

      Less reliance on YNAB

      Same as previous

      Not so easy to accidentally mess up savings account balances

      The recent YNAB feature of tracking recent money movements does help solve this problem (great feature). There is a better record kept with off-budget accounts though, as you can see a permanent transaction for each savings transfer, showing what savings category it was transferred into or out of, the amount, and the date.  

      Use Reports to track savings

      Another benefit not mentioned is you can use the YNAB charts to visualize and track your savings. I'm not sure how big of an advantage this is, but it may be for some.

      Drawback #1 - The Time to Add New Accounts

      We have been using this system for over a year now, and it has worked very well. However, the biggest drawback is how difficult it is to add additional physical accounts. Even with Ally, it takes time to setup a new account, rename it, and add it to YNAB. One of the benefits of YNAB is saving for short term non-monthly expenses, so there is a real advantage to being able to quickly setup a new savings.     

      Drawback #2 - The Number of Accounts

      This system limits the banks one can use and would make it more difficult to change banks. I find we are constantly adding new savings accounts, so this model may not be sustainable. If a bank uses tiered interest rates per account, you would miss out on that interest. Banks probably do not like the additional maintenance of so many accounts.

      Like
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 13 days ago
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      Maroon Keyboard Have you ever tried having a savings account on budget without matching a set of category balances to the amount that is in the account?


      I would suggest trying the “all accounts on budget” method before going any further. If you really do it (as in, you don’t move money between categories just because you’re moving it between accounts and vice versa), you’ll find that it’s far preferable to the multiple savings tracking account method.

      The impulse to keep money off the budget comes from a bigger, more insidious impulse which is an impulse to spend everything that is visible. This is where the “it takes a few days” comes in as a positive. But I don’t want it to take a few days to be able to spend a big chunk of money. If my sewer line blows (true story), I want to stroke a big check from my “home maintenance” category right away so it can get fixed right then. The catch is, in order for that to work, I have to be able to look at my growing home maintenance category and go, “yep, that money is for in case my sewer blows someday which means it’s not for cheeseburgers today.”


      Good money management comes from limiting what is considered available, so squirreling money into an account which requires a multi-day transfer or that you can’t see is not a bad impulse. But the even better practice, the one which will get you rich, is the ability to look at a budget and a checking account with thousands, or even tens of thousands, right there in your face and go, “Right yes but dining out is at $0 so I don’t get to go out tonight.” 
       

      Like 6
    • WordTenor 

      https://www.youtube.com/watch?v=tATZ3PhooW0

      Thanks for your reply.

      Having a savings account on budget without matching a set of category balances is called the lazy-YNAB method.  The first part of the video above. It's a good method, the main method YNAB recommends, and the first of the three methods mentioned in the video.

      Having the money off budget doesn't mean it is not available. In the event of an emergency, you use the money and categorize the transaction when it comes through, same as you would with on budget accounts. This method is explained starting at about 20 min.   

      Like
      • jenmas
      • jenmas
      • 13 days ago
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      Maroon Keyboard it's called the lazy YNAB method by a superfan who is not employed (and to my knowledge has never been employed) by YNAB. The actual YNAB methodology is The Relationship Between Your Budget & Your Accounts: It's Complicated. Call me crazy, but the YNAB software was designed to specifically implement the YNAB method, so me and on budget accounts (4 checking, 4 savings, 1 gift card, 2 cash, 14 credit cards, 2 CDs, 1 I-bond) are gonna go with the actual YNAB method. 100% manual entry since 2014. Never had a single issue in YNAB. Never had to do a fresh start. Never overdrafted. Only move money out of savings into checking 1-2 per quarter but move money out of checking into savings every time I get paid.

      Like 7
    • jenmas 

      Thank you Jenmas.  

      His reasoning is well thought out, and since YNAB focuses on their sole methodology, we must go to outside sources when exploring the pros and cons of on-budget vs off-budget savings accounts.

      It looks like he is an independent YNAB coach. 

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 13 days ago
      • 6
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      Maroon Keyboard I've posted this or similar in various groups. 3 stages of YNAB users.

      Stage 1: Savings account off-budget. users don't trust themselves, so they feel they need to hide the money.

      Stage 2: Savings accounts on budget, but must match a category or combination of categories. Users don't trust YNAB to properly divide up their categories for them, and they don't trsut themselves to spend based on categories.

      Stage 3: All accounts on budget, and the account the money is in doesn't matter. The user trusts themselves to spend according to category balances. They trust YNAB to maintain the category balances for them as distinct jobs. At this point the only consideration is cash flow of the primary transactional account.

      Stage 3 is the simplest and easiest and most efficient way to use YNAB. Stages 1 and 2 require an amount of overhead for no additional practical value, and frequently result in confusion. Stage 1 confusion comes about when it comes time to actually spend the money that is now living off budget, both in the process and providing for accurate reporting. Stage 2 confusion comes about when someone forgets to make a transfer after budgeting money, or makes a transfer but doesn't budget the money. Stage e has neither of these problems. Because Stage 3 is purely a cash flow consideration, this can be solved through the use of scheduled transactions with the running balance (2 things that you should be doing anyway) to project the future account cash flow.

      Like 6
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 13 days ago
      • 6
      • Reported - view

      Maroon Keyboard yeah, Nick True is everybody’s hero because he makes YNAB like every other budget system which makes it easier for them to stomach. The hardest part of the YNAB method is letting go of existing ideas about what a budget is, so Nick puts some training wheels on so you don’t have to balance right away.

      The unfortunate consequence of his half-baked YNAB methodology though is that users get hamstrung on a quasi-YNAB that doesn’t let them realize the full power of the method. They ride with training wheels on forever thinking this is as good as biking can ever be.

      No one can force you to use it right. We can just point out that using it right gives much higher rewards. If you’ve never tried it, you owe it to your money to do so.

      And no he’s not an “independent consultant” he’s a regular user who charges people to help them. Venmo me $5 as a thank you for this post and boom, I’m now an independent YNAB consultant, lookitthat.

      Like 6
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 13 days ago
      • 4
      • Reported - view

      Calling it "the lazy way" is laughable to be honest. It is in reality "the smart way" or more simply, "the YNAB way".

      In no way is it lazy. In fact, it requires a paradigm shift, a mind shift. Multiple physical accounts are no longer necessary.

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

      As one smart YNABer put it, "Free your mind! Your wealth will follow!"

      It's Morpheus-like. Will you take the red pill or the blue pill?

      Like 4
    • nolesrule Maroon Keyboard

      jenmas

      Very interesting posts guys. I am becoming more convinced, though it is a little hard to get past how condescending some of you are. What is the purpose of this? When you've found a flashlight why not share it instead of shining it in the eyes. We are anonymous, but we  share a common bond of trying to live financially organized lives.

      Methods 1 and 2 do work, and even though they may require a little more work they sure are better than not budgeting. 

      Method 1 does provide the benefit of not having to put all trust in YNAB, you do get to see savings on the reports (an you can uncheck them if you don't want to), and you get recorded transactions between savings and budget categories (with date, amount, and budget category). These are trivial for most people and the amount of work is probably not worth it for most. But let's remember that Method 3 doesn't do anything magical that methods 1 and 2 do not. In the end it's all about keeping track of your money. 

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

      Maroon Keyboard Friend, you're the one who showed up and resurrected a 2 year old thread with a long list of "here's why I'm right," enumerated one by one, and then backed it up with things that show you don't understand how the method we're explaining works. If you had begun with "You know, I find this curious, because I find this beneficial, so can someone explain to me more about why this is the way recommended by so many and by the YNAB method?" you might have gotten responses which contained more pleasantries (but which would still say the same thing). 

      However, no one here is being mean. We're being direct because most of us have been at this  a long time and we have heard this argument before, or in my case, even made this argument, gotten offended that other people didn't understand our obvious brilliance, and then listened to others and discovered their way was better. It's not typically worth people's time to spend a long time trying to gently massage someone's feelings in order to help them understand that they should put their savings account on budget. 

      You should put it on budget. Why? Because it's better in every way. Why aren't we providing a point-by-point takedown to be nice to you? Because none of us are paid by the company to make sure you feel good so that you keep up your subscription. No one is calling you names or being mean to you, we're just pointing out that there's a better way to do this, which, as I pointed out, you are welcome to take or leave. 

      Like 3
    • WordTenor

      Hello WordTenor, kindness is not worth your time unless you are paid?? Really? 

      Whew, I'm glad the majority of humanity does not feel this way. 

      I actually posted because I was hoping to find holes in the method I've been using and see if there is a better way. You will notice, I said "Here are some arguments for keeping savings off budget". Not, here is why I am right. You will also notice, I also mentioned two drawbacks to the method I am currently using (time to add new accounts, and the number of accounts). Nobody is obligating you to respond to this resurrected post. 

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

      Maroon Keyboard Are you familiar with the concepts of sea lioning and tone policing? Both are ways of circumventing having to argue one's points by focusing on the other party's unwillingness to be gentle in their rebuttals. You are doing both right now. 

      Try putting your savings on budget, and give it real try, not one where you match accounts to categories. That is more work, and you'd be justified in going "this is more work than my old way." And then we'd have to point out, gently or un-gently, that you aren't doing what we're talking about. After you've done that awhile, c'mon back and see if you'd still prefer having lots of little buckets for your savings. I've never known a single person to really get the YNAB method and go, "Yeaaah, but the old way was better." 

      Like 1
    • WordTenor  You still seem under the impression that I think off-budget is better and I am not considering changing. Why is this your assumption? I came here looking for change 🙂 

      Like
  • SgtBatten said:
    Maroon Keyboard said:
    Savings out of sight

    A savings master category towards the bottom is easily as out of sight as one should desire

    This is funny to me. Two different ways of looking at savings. Avoiding using them and trying to build them. I personally want to build my savings therefore they are my most important categories. Therefore, they are at the top of my budget and the most prominent.

    Like 1
      • SgtBatten
      • "YNAB broke" since 2013
      • SgtBatten
      • 2 wk ago
      • 1
      • Reported - view

      Superbone I share the same thoughts. Mine are near the top for the same reason. 

       

      I meant that the most extreme case of wanting to hide your savings would still be on budget in my opinion. 

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 wk ago
      • Reported - view

      SgtBatten Totally agree and didn’t mean you specifically. I know you were responding to Maroon Keyboard. It’s just that I’ve seen their same sentiment so many times. It just takes a simple mind shift to go from protecting savings to growing them.

      Like
  • Superbone said:
    Calling it "the lazy way" is laughable to be honest. It is in reality "the smart way" or more simply, "the YNAB way".

     As a software developer, a lot of times, we'll refer to ourselves as "lazy" or "I did it the lazy way" But really what that means (in that context) is that I did it smart, so I won't have to repeat a bunch of stuff.  Lazy as in efficient, I guess?

    So perhaps calling it the lazy way does fit, in that context.  It's "lazy" because you don't have to do a bunch of busy work to make sure it doesn't all come crashing down like a house of cards.

    But yeah, I totally get what you're saying.

    Like 2
    • Bruce Thanks Bruce. Yes, I am going to school for software development so took it that way as well. Hopefully nobody thought I was dissing the YNAB way. Anyway thanks for the discussion everyone.  

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 13 days ago
      • 1
      • Reported - view

      Bruce I've been a professional programmer for over 30 years but had never heard that. It makes sense in that context. Still don't like it though. 😛I'm all about efficiency. It takes hard work to attempt efficiency at all times.

      Like 1
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 13 days ago
      • 3
      • Reported - view

      Superbone elegant simplicity.

      Like 3
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 13 days ago
      • Reported - view

      nolesrule Much, much nicer! 😁That I can get behind.

      Like
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