Starting YNAB by importing all transactions for last couple of month.

I'm new to YNAB, and have gone through many tutorial and videos.

What I did so far are (and I think many people start like me): 

1. Create my own categories.

2. Create all accounts.

3. Import all  transactions for last 3 months.

4. Give appropriate category to all transactions.

5. Match the balance out with actual balance of each account.

6. Based on expense of last three months, set a goal for each category.

Then, I'm stuck in budgeting mode. It's messy and I can't clear it up.

 

Can someone advise how I can start new budget for next month from here? 

Do I need to make my account balance same as monthly total income at the end of this month, and budget it for next month?

How to deal with credit card balance (debt) at the end of this month?

Is it better to delete all previous transactions?

 

Your help will be much appreciated.

 

Eric K

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  • Many people do start like you and all of them end up confused. YNAB is meant to start from today. Do a fresh start or create a new budget, which you can do from the budget main menu. Fresh start preserves your categories and the names of the accounts you’ve added, but if you’ve snarled up badly, whic it sounds like you have, you might want to begin again from pure scratch. 
     

    1. Create your accounts, with today’s balances. 
    2. Budget the money which appears in TBB to the categories. You can change the categories if you want. Stop budgeting when TBB reaches 0.
    3. Start using the budget to guide your spending, by looking at the amount you have available in the category before you spend and moving money from another category if necessary (or not making the intended purchase). 
     

    That is the whole ballgame. You can watch hours of videos on YouTube, but that’s all you actually need to know to get up and running. 

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  • Thanks WordTenor,

    I was told YNAB is working like that, but I think real cash flow is more dynamic. For example, it would be better to keep lump money in the home loan offset account until the credit card payment as its interest rate is better than that of check/saving account.

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      • WordTenor
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      • WordTenor
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      Eric Kim Yes, you are correct, and YNAB can help you do that (assuming you mean an Australian-style redraw. The US “velocity banking” idea is mostly just a scam). But first you have to set it up correctly. The steps above are how to set it up correctly. 
       

      Don’t import past transactions. Start from today. 

      Like 2
    • Eric Kim The budget captures WHAT you want to spend money on. WHERE you keep money in the meantime (which account) is totally up to you. Money is fungible (essentially interchangeable), so just make sure you have enough to cover the outflow in whatever account you've chosen to pay with at the time of that outflow.

      Many use the account register's running balance and scheduled transactions to see at a glance whether they can shift funds to a higher rate account (i.e., because they're not needed for a while) or possibly have to shift back for a larger than usual outflow coming up.

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  • Historical transaction data is a good predictor of future spending. That can help you draft more realistic budgets, which can help you get off on the right foot with YNAB. (Although YNAB encourages you to adjust your budget over time to fit your ever-changing priorities, starting off with a wildly unrealistic budget that requires massive adjustments can dismay and discourage some users.)

    But that data doesn't need to be imported into YNAB, and there's no point in creating fake prior budgets around that data.

    Instead, you can just look at old bank statements. I'd recommend sorting that data by amount and paying extra attention to your largest expenses over the past few years, and reflect on whether they were "one offs" or if you're likely to face similar expenses in the future. Those things can be real "budget busters" if you don't save for them.  (The essence of Rule 2.)
     

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    • +1. If you use a credit card for most spending, it may have a "Yearly Summary" which is a good place to look for category ideas & funding requirements.

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  • Thanks guys for your valuable comments. It's appreciated and I like this 'alive' community.

    If I  go back to my questions;

    1. Do I need to make my account balance same as monthly total income at the end of this month, and budget it for next month? This seems the best practical option to avoid the hassles. 

    2. How to deal with credit card balance (debt) at the end of this month? Can someone please advise how I input the credit card balance at the end of this month into YNAB and budget?

    3. Is it better to delete all previous transactions? It sounds like this is a better option. 

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  • Eric Kim said:
    2. How to deal with credit card balance (debt) at the end of this month? Can someone please advise how I input the credit card balance at the end of this month into YNAB and budget?

    You don't input account balances in YNAB**; you only input transactions. Outflows cause the balance decrease and inflows make the balance increase.

    Credit cards are no different from other account types in this respect, except their balance is usually a negative number, so a decrease (outflow) makes the balance more negative. (Apologies if this is obvious, but this math trips some folks up.)

    This is why frequent reconciliation is a vital part of the YNAB workflow. You need to ensure your running balance in YNAB (the net result of all the inflows & outflows that you record) matches up with the real-world account balances.

     

    ** The exception is the pre-existing balance of an account when it's first setup in YNAB; that balance is recorded as a transaction.

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  • Eric Kim said:
    Do I need to make my account balance same as monthly total income at the end of this month

    No. Your account balance should match that of your real world bank account. The Budget is your plan for the cash you hold. When you get more money, make a plan for those new dollars at that time.

    If you can't cover September expenses from the money you have at the end of August (most cannot when starting out), then focus on the expenses you'll incur before being paid again. That often means only budgeting for part of the month's expenses.

    By only budgeting money that can actually be spent, the category Available values really are available to spend without impacting any other category. They form the basis for priority-based spending decisions and living within your means.

    Like 2
  • #2 -- all accounts in YNAB should agree with those in the real world, not just credit cards.

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

    Additionally, if you expect to pay off any of that debt on the card at startup, you need to reserve funds to do that. Budget some of your startup capital to enable a larger CC payment.

    If you regard a CC as having paid in full status, you should make the Available amount in the Payment category cover the entire debt / account balance.

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