How do I keep emergency funds part of Net Worth?
Newbee question.....sorry. I want to send money from two savings accounts to an emergency fund but I want the dollars to still appear as part of my net worth. It seems when I send the money over it increases activy and simultaneously reduces the savings accounts (this part seems just regular YNAb) but then my net worth becomes that much less.
Here's what I did. I established a budget category for emergency funds with a goal of $60K. I took $40K from one savings account and $20K from another and created activities to pay the emergency fund. My account balances dropped and my TBA increased by $60K. . I take $60K from TBA s and activity shows $60K, my goal. - all good thus far.
But since those savings accounts are part of spending and I've now budgeted that amount to the funds, my accounts have dropped a total of $60K and my net worth drops $60K as well. What's wrong?
Thanks!!!
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So where does this $60K now reside? Is it in an on budget account or an off budget tracking account? Both of those are included in Net Worth. So for example, every month I have an automatic transfer of $X from my checking account to my taxable investing account. Checking is on budget, investing is tracking account. The transfer shows as "spending" activity in my budget because it is money leaving the budget. That's why I budget $X to an investing category each month. However the transfer does not impact the total net worth because both accounts are in YNAB.
I don't particularly have an emergency fund, but I do have fully funded categories for home maintenance, car maintenance, Loss of Income, and medical out of pocket maximum. I make absolutely zero attempt to match a category balance to an account balance so I can't tell you that my loss of income money is in the savings account at Bank Y. It's just in all of my accounts across the board (multiple checking and savings accounts plus CDs and cash).
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Great response and many thanks! Extrapolating from that, I rearranged things in a way that I THINK meets my needs.. I'm just reporting in to see if I've created any other problems I can't spot yet and you might.
Extrapolating from what you've done, I created a new Emergency Fund tracking account. I also left the Emergency Fund in the budget and created two sub-categories of Emergency Merrill and Emergency Cap360. I Transferred money from each of the two accounts ($40K and $20K) and used the Emergency/Merrill category for one and Emergency/Cap360 for the other. So:
New tracking account shows $60K total. Budget has an Emergency Fund with $60K total from the two subcategories. I allocated 40K and 20K to the two subcategories and TBA came down appropriately. Net Worth stayed consistent through all this.
Thanks again. Advise if I created some other issues I haven't spotted but so far so good.
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Aquamarine Transistor If the account doesn't exist in the real world, it shouldn't exist in YNAB, tracking or otherwise. It sounds like you are trying to track categories to accounts (what with the Emergency categories being named after banks).
Any account that is liquid should be represented in YNAB as a budget account--this is checking, savings, investment settlement accounts. The total of these accounts will be the total of your budget. So first, make sure that all your savings accounts are part of the budget. This will build your budget off the money in every account you have.
Then $60K of your total is for emergencies, create one category called "emergency" and budget all 60K there. There should be no transactions involved--this is all on the budget screen. Whether that 60K is in one account, two accounts, or sixty accounts doesn't matter. What matters is that it is budgeted for what you want it budgeted for. If you're using your categories to guide your spending, as you should be, you won't accidentally spend the 60K. It won't be in the categories you're using to decide how much you can spend.
Advanced move: most experienced YNABers don't have a generic "emergency" category. They might have a well-funded one called "income replacement" that is in case of a job loss, but other kinds of emergencies are usually acknowledged as "things that you can probably count on happening at some point" so there are separate categories for home repairs, giant vet bills, medical emergencies, car disasters, etc. Fate doesn't usually care if you're employed or not when it decides your cat needs surgery, so better to have both these problems explicitly covered.
Congrats on having such a healthy financial situation!
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WordTenor OK! It finally sunk in. I guess I was moving money from the savings accounts via a transaction, but once the account was established the money went to TBA...but the "real" account balance still shows the same and doesn't impact net worth.
Sorry for being dense. This is a real change in thinking for me. Not easy these days, LOL!
aj
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Aquamarine Transistor the accounts and category relationship takes a moment to understand, but it is well worth the mental gymnastics. Read this article; the pictures help.
https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/
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Aquamarine Transistor transfers between on budget accounts should not use a category...
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satcook
Thanks to y’all. Not only does it work (straight transfer between accounts - still see net worth) but it’s much cleaner. Big plus w also reviewing the suggested video again (I’d seen it once already but first time it didn’t take). Much appreciated plus yer personal examples were awesome!
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