Savings Goals Category for Starting Balance
How do I categorize a starting balance in an unlinked account towards a savings goal in my budget?
Starting Balance should show up in TBB (To Be Budgeted) up at the top of your budget. Just click on the TBB button, and it will ask how much you want to move, and allows you to select the category to move it to. Simply put the amount that you want into the Category that you'll be using for that particular savings goal.
You can’t. The account must be a budget account to put it in the budget.
Keeping savings on budget is the smart and correct thing to do. You’ll want to digest this: https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/
I really do get that and have read it previously. The thing is, I already had $5000 in my Investment account and I had already given those dollars a job before I ever met YNAB. So when I setup my budget in YNAB, I had a savings goal for investment dollars of, say $12,000 by June. I was already half way there. But YNAB doesn't show that progress unless I can categorize my starting balance of $6000 in the same way I can categorize any outflows from my main checking account towards that savings goal. It wouldn't do to claim my savings goal is only $6000 by June. How can I accommodate this reality?
P.S. The answer to "maybe I don't need those other accounts" is, "Yes I do because those funds are earning a better rate of return," albeit at a higher risk than I'm willing to keep all my money at.
What is ironic is that if I create my Investment account as a regular savings account, I CAN categorize the starting balance, but I CAN'T categorize the transfer between the main checking and investment savings account. Navy Blue Pegasus I find it unfortunate that I can't set a savings goal for the full amount and categorize what I've already saved OR give the savings goal a starting amount already contributed. It's dollars that "I've given a job to" but I'm not finding a way to track that reality.
So, I'm interested in how someone else would handle having $6000 already saved towards a savings goal and tracking their total amount saved when there are subsequent outflows from another account.
- I've tried recording them as transfers to a tracking account, but am unable to categorize the starting balance for that account.
- I've tried recording them as transfers to a savings account, but am unable to categorize them at all except for the starting balance for that account.
- I've tried recording them as outflows from my main checking with a category for the savings goal and a manual transaction inflow in the savings account, but the net effect on the savings goal is zero.
- I've resisted a fictional savings goal of the amount actually remaining towards my goal (i.e. $6000 instead of $12,000). This would work until or unless I took more than $6000 out for a particular investment. The budget category would go negative with an $8000 investment when in reality there may have been $10,000 already in there.
I'm open to ideas for my reality.
IMO, while invested, you shouldn't think of those same funds as available for savings goals. The volatility of investments requires that you have sufficient liquidity/flexibility to reflect any significant market pullbacks as categorized outflows. It gets messy. The income/expense reports become a total disaster. If the account drops $10,000 or $50,000, how do you categorize that outflow? For that reason it's best to leave them off budget or as tracking accounts, where the ups and downs don't have to be categorized.
The COVID-effect in 2020 was a rather wild ride for many of us even if we managed to stay employed at pre-COVID income levels. I know that my investments swan-dived by nearly $50,000 in the first quarter of 2020, dramatically belly-flopped, floated like something dead in the water for the second quarter, then suddenly and very dramatically recovered to grow by six figures in the last half of the year.
I invest regularly and systematically. The funds leave my budget for that purpose, categorized as "investing" and show up as expenses in my monthly income/expense reports. The investment accounts aren't in my budget anymore, not even as tracking accounts. I'm also shuffling some medium-term saving funds to investment accounts with the notion of eventually buying something with those funds (example: a replacement car), but while invested, I consider those savings dollars to be working as investments and not available for the purchase. Until I transfer funds back in to my budget for that car purchase, my budget and the "next car" category reflects my current reality, that I cannot handle a car purchase right now.
I make different (better) spending, saving, and investing decisions when my budget accurately reflects my actual current liquidity versus my best-scenario, future liquidity.
I think it’s important to remember YNAB has budget goals. Your goal now is to budget another $6k to reach the total you’re looking for.
This was the biggest thing I struggled with when I stared (a whopping 58 days ago!), but I learned to stop caring about what account the money was in when I thought about my budget (I still have auto-transfers for certain things, I just don’t worry about them when I’m using YNAB). So to check my progress on say “saving for a new car”, I look at the available balance for that budget item in YNAB and I trust the money is in some account somewhere.
To be fair, I’m not entirely in love with this idea, but I’m choosing to trust the process for now. I keep a bit of a buffer in my checking account in case I screwed something up, but my generally feeling is YNAB has helped a lot of people and it has a pretty robust methodology, so I’m going to try it for a year and then asses.