Budgeted and Activity columns?
I am having some trouble setting up my budget. The "Budgeted" and "Activity" columns are really messing with my brain - I can't seem to get them to line up the way I want.
For example, say I get paid $1000 a month, and I get two paychecks per month. That would mean each paycheck is $500. Now say I have a subscription service like Spotify that costs $10 a month. That would be my budget for that bill, so I should put the $10 in the "Budgeted" column, right?
To give some background, I have two checking accounts: one to hold my bill money and one for other types of spending. If I'm saving for the Spotify bill, I would take $5 per pay check and put that in the checking account I use for bills, so that at the end of the month I have $10. In this case, I am trying to use the "Split (Multiple Categories)" to divide up my paycheck and divvy it out the budgets that I have set. However, whenever I try to do this, it will add the "Budgeted" and "Activity" columns together, so it will say I have $15 instead of $5 available for the Spotify bill.
Am I using the "Budgeted" column wrong? Is it not supposed to be the amount you want to allocate to a bill or fund each month? Is the Activity column purely for negative (paying out) transactions? Should I not split my paycheck using the "Split (Multiple Categories)" function?
Your paycheck should be categorised as income to be budgeted.
It will then appear at the top of the screen. You then budget to the categories you want and it will show up in the budgeted column.
When the actual bill hits, it will appear in the activity column, using up the budgeted money.
Attempting to use a split transaction doesn't budget money as you're trying to achieve, it just looks like a transaction to the system. Setting goals may be a more appropriate way to quickly budget set amounts.
Transactions are for real-world events -- spending/returns or movement between accounts. The budget reserves money for future spending, answering the question, "can I afford this?" Use budget entries -- not transactions -- to plan (fill your categories). When it comes time to pay, just use an account that has sufficient balance. If there's not a sufficient balance, then transfer money so it is sufficient (or pay with a different account).
This is much like having $5 in your pocket and $15 in your wallet. If you know your burger will be $8, you can simply move another $5 to your pocket (or pay out of your wallet). Accounts (like pockets/wallets) are simply locations for your cash; they have zero to do with purpose (category).
The practice of a bill account and "other spending" account is probably an attempt to define purpose by account. This is a great idea if accounts are all you have, but that's not the case any more with YNAB and categories. Most will have a single checking account, in which they keep enough for the next few weeks of outflows, while the rest is shuffled to a higher-rate account. Dedicated-purpose accounts (synchronizing accounts to a category group) can certainly be used but is definitely not recommended. You'll have to do the additional work to keep things in line (and put things back when they invariably get out of line).
OTOH, if one account has a great bill-pay service but expensive ATMs and another has free ATMs but lousy bill-pay, that's a great reason to use both and shift funds as needed. (The running balance and scheduled transactions makes this trivial to assess.) That two-account setup decision is based on those benefits.