Do I budget for my paycheck's auto deductions?
New to the YNAB cul-erm...FAMILY... I love it here. 😉
1) I am working on my very first budget. I initially started to account for my health/life/dental insurance. But thinking about how it is automatically deducted from my paycheck, I wonder if this is the right move? I wouldn't need to fund it per se, more like document its existence, maybe? What do yall do about this? Do you account for taxes? Am I going too far too soon?
2) As far as "payees" go. When documenting my paychecks, would I be considered the Payee?? A bit confused about how the Payee column applies for income. Right now, it's blank and Categorized as "Inflow: Ready to assign." Am I on the right track?
'One of us, one of us, one of us"
I think most people only do net take home, and use the budget as they plan for that spending. However, a few people do track paycheck deductions for investing purposes.
Like you, I wanted medical insurance information, do this is what I do:
Schedule paychecks (you want to see a monthly view, so if you get paid weekly, make four transactions, offset by a week, that repeat every four weeks) as a split transaction. It can help the reconciliation process to organize the split depending on how your paystub reports your numbers. IME, some are easier to do that with than others.
Line 1 - net to hit account, inflow
Line 2 - Gross (if you're fully Buffered, you'll want Gross (-minus) Deductions, categorized to INM), otherwise use Gross to RTA, payee is your employer, inflow
Line 3 (if fully Buffered, otherwise skip this line) - Total Deductions, categorized to RTA, inflow
Lines 4+ - each deduction, in the pertinent category, outflow
Changes will need to be made to four lines (1, 2, 3, ded.) when they are called for.
As for payees, I use a separate one for each deduction, and I have a category for it. The category group is called Deductions. Some of them end up being transfers to tracking accounts, such as tax/medical/retirement. Some are just payees that cause money to disappear into the ether, like social security/medicaid.
In terms of the tracking accounts, I reconcile the retirement one every quarter, the tax one every tax year (outflowing the tax bill and the refund should set it to zero), and the medical one every new insurance year. For me, that's just a manual set to zero because I want to see how much money I'm throwing away/using by not using/using the deductible (I can do the comparison in my head) or if the plan I chose is actually working for me.
If you have an HSA, some people use tracking accounts whereas others keep it on budget. That has more to do with how you want to budget with it.
When assigning money:
*Before anything else,* select the deduction category group, click reset available amounts to 0.
Some people track their gross paycheck and all the deductions and if that's something that interests you I'm sure folks will be along to lay out the mechanics of how they do it in YNAB, but I think the majority of people just enter their net paycheck amount.
"Payee" is really "Payee/Payor." Who you are paying the money to or receiving it from. When I had multiple jobs I used the payee field to identify which income was from which job but these days my payee is just "Paycheck".
I like to think of it as the Upsilon Nu Alpha Beta fraternity.
When you’re just starting out, tracking deductions can be very confusing and it makes a hard learning curve even harder. A handful of experienced YNABers eventually track their gross pay via a split inflow transaction; plenty of us who have been using it for years don’t bother. The net is very simple to deal with.
For income the payee is the payor. The reports will then sort your income by income source and allow you to report on a given income source.
To quote Stephen Covey from 7 Habits of Highly Effective people - Begin with the end in mind.
So whenever you set up a category or decide whether to put more effort into tracking (like your paycheque) you should ask yourself what you plan on doing with that information. My paystub details all the information I need. Is your health/life/dental insurance like a health spending account? Or just insurance? If it is the latter, what is the value add for breaking it down in detail?