Car tax and ins.

Hi. Just a weird late evening thought. I was keeping my car tax and car ins categories in my savings section and the money in my savings account but for some reason tonight I thought should I be keeping them in my current account as they even though I'm saving them to pay once a year they are a monthly bill.

Probably is a personal preference and it's just my brain overthinking after the gym lol

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  • Purpose of your funds and location of your funds are two different, though related things. Read this blog post.

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    • HappyDance
    • YNABing consistently since 2014
    • HappyDance
    • 1 yr ago
    • 3
    • Reported - view

    Hi, Violet Carpenter

    Rather than thinking in terms of types of expenses per account, think in terms of cash flow.  How much will you likely spend out of your chequing account this month?  Is it a low-spend month, a standard month, or a big-spending month, one with big annual expenses?

    At the start of each month, the amount I like to have in my primary chequing account is the total of this formula:

    • my average monthly spend, +
    • any big scheduled expenses due in the next six weeks, +
    • $1,000

    The $1,000 is just my baseline. It's an amount I chose to leave in the account in case I need to change my plans on the fly. It gives me spending flexibility, and it also ensures I don't accidentally overdraft.

    If there is more in my account than this formula, I transfer the excess to Savings.  If there is less, I move funds from savings to chequing.  Since more income arrives every month, I rarely have to move funds from savings to chequing.  Usually, it's a matter of just NOT moving funds to savings this month.

    The extra $1,000 is not from any category in particular.  If I have an emergency, I guess you could say it was emergency funds. But I could also impulse a Christmas present early, so that would mean it must be from Christmas fund. If I decide to go nuts at a shoe sale, clothing.

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  • Thanks for your responses, I think I have OCD about my saving categories and savings account balance matching 😂

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      Violet Carpenter A lot of people think that way. But wants you separate the categories from the accounts, it gets so much easier.

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  • In addition to the blog post above... I just thought of a new way to look at this....

    Just like when budgeting, you ask yourself the question about what the money needs to do until the next time you are paid, you can also ask the same thing of your primary transaction account.

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