Beware the savings account type
Hello fellow YNABers,
Having had a very tumultuous couple of years changing jobs, I am now in a stable job and I am ready to save up for my first home! Exciting times!
I looked to my budget and saw that I had £4.5K in a Savings Account which I sent around £200 to each month for a few years already. I also had another 6K in a budget category labelled "Deposit" in my budget.
I thought great...I have £10.5K for my deposit already saved up and so, like the good budgeter that we all are, I decided to make a forecast and a plan based on that number.
It was only later that I realised that the Savings Account didn't have any categories, and I thought, hang on...where are those "dollars" accounted for in my budget?
While I was indeed Saving that money each month, that money was already accounted for in my Budget, AKA my £6k "Deposit" category.
Naturally, I was very disappointed to realise that I am about £4k short in my brand new saving plan (gasp) since the money in my savings account was already being budgeted in my "Deposit" category.
I double counted the savings I have, which leads me to the title of this conversation: beware the savings account...If the money is not in your BUDGET, then it's not budgeted for...
I guess my plans to buy a house will be postponed for a few months, but I am happy that I spotted this early on.
All the best
It's unfortunate to learn this lesson the hard way. It's an important lesson, however.
Your budget, not your accounts, tells you the money's purpose. If there is not $10,000 set aside for a house purchase in the budget, there is not $10,000 set aside for a house purchase. Same with anything else--if there *is* $10,000 in checking but not $10 in dining out, there's no money for a burger after work, either.
Sending thoughts of fortitude as you build that savings back up. Press for more than $200/mo and see how fast you can get there.
Thanks WordTenor - appreciate the thought!
I've started saving at least £1200 now (£1000 + £200 that goes into the savings accounts, which is a specialised first time buyer savings account, with bonuses etc).
Very important lesson I just learned, indeed, but also I am massively relieved that I only need to track one number - the one from my budget - to know how far off I am from my goal.