Foreign currencies; still not ideal
Another trip, this time to West Africa. As before when I traveled, I set up a new budget to handle Nigerian naira. It worked to keep track of my cash and spending, but there were two major drawbacks:
1) Switching budgets is time-consuming, either on the desktop or the phone. At the very least, all available budgets should be available on the left sidebar via a flip-down arrow. (So I could see them all listed when I choose, or hide the list when I choose, and quickly swap between them.)
2) It shouldn't really be necessary to create a separate budget for every currency. I vastly prefer the handling of the other app I use, Moneywiz, where each account has its own currency, at least regarding cash. This better mirrors the real-life situation, as all of this cash comes out of the same budget. If I exchange money, it's more realistic to mark it as a transfer. The system would simply have to allow the user to input the current exchange rate.
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I don't have any experience with this. I'm curious, how does moneywiz handle the category balances? What currency does it use if you have multiple currencies in different accounts? As the currency value fluctuates, how do your category balances stay in balance with the value of your accounts?
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It's completely different software. With YNAB, the main function I use it for is the budget. Moneywiz does budgeting as well, but I have not used that feature; it is more for tracking my accounts. So I can't answer the question about category balances. It's true that would be a tricky thing to deal with in YNAB.
However, the MW approach is that each account has a "native" currency. For instance, my US-based credit card is, by default, in US dollars. If I buy a bottle of water in Amsterdam, I can enter that specific transaction in euros while on the go, and the app uses the current currency exchange rate to estimate the equivalent in US$. When I see the actual charge on my credit card, I can tweak it (fix the US$ amount and the exchange rate is adjusted automatically.) Ultimately, all the charges on that credit card are in US currency for my purposes, since I pay the bill in that currency.
On the other hand, in MW I set up separate cash accounts for each currency, and there is no conversion to US dollars for those accounts. Here is where things might get tricky in terms of handling this in YNAB and using categories. I don't have an answer off the top of my head. But switching budgets seems like a clunky way to handle it, and it means that my cash expenses are in a separate budget from credit card expenses.
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doctor_who It does seem clunky but given ynab's main purpose I'm having difficulty seeing what would be a logical approach to solve the problem. Since location of money is not relevant to category balances in ynab I'm not seeing a solution that would keep category balances aligned with the accounts and the overall budget in balance.
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Herman I don't have an easy answer, but I have to think the creative folks at YNAB could come up with a better solution than what is implemented now. So I raised the issue, and I'm glad for the thoughtful back-and-forth. Some additional thoughts:
(1) At the very least, if people will be flipping back and forth between budgets, put a toggle on the desktop and mobile apps so that it is quicker to do so. But I still don't think this is the best solution.
(2) Add a field to transactions, particularly for use with debit and credit cards, that allows entry of a foreign currency, for informational purposes. As with MoneyWiz, the final amount is in one's home currency, but while on the go, it can be recorded in the currency it was charged in, and edited later to reflect the actual charged amount. This feature could be activated only for those who plan on using it, and they could select the currency they expect to need rather than having to toggle through a long list of possibilities. (I basically had to do this anyway with credit card purchases, using the notes field.)
(3) In addition to "on-budget" and "tracking" accounts, have a third type that is "foreign currency". As I do now by flipping to a different budget, any money that leaves my main account is considered "spent", and purchases in naira or euros or whatever are basically "off-budget". But it could all be done in one screen. I don't have time to go into this in detail now, but I could explain more later.
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+1 for natively handling multiple currencies in both the mobile app and website.
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In case anyone is still following this post, I've created a tool that automates my approach to solving this problem. I've found it works nicely for foreign currency cash. I'm very happy with it for my own budget, so I'm sharing in the hopes that others will find it useful as well!
Here's another post with more info:
https://support.youneedabudget.com/t/h44n4m/another-approach-to-foreign-currency-accountsAnd here's a link to the tool itself. Note that this is a not-so-user-friendly preview version, but it is fully functional and quite well tested (I've been using it on my own budget for nearly a month):
https://borsboom.io/foreign-currency-accounts-for-ynab/-
Emanuel Borsboom
Well done. You've gone beyond the "easy" part (transaction entry) and tackled the primary barrier of mixing foreign currencies in a zero-based budget -- the ever changing equivalent values of what's in the foreign accounts.
This should really be incorporated into YNAB proper. At that level of integration, though, the difference account(s) should be abstracted away from the user's view.
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dakinemaui Thanks for your kind words! I agree this approach could be integrated pretty nicely into YNAB itself and wouldn't need the extra virtual difference accounts. If I were designing it ideally there would be an extra field in the (sub)transaction record containing the amount converted to local currency at the time of the transaction, and the UI would give you a way to see it. Since that field doesn't exist, my tool had to put that data _somewhere_, and I these virtual difference accounts were the best way I could come up with to keep the data but get it mostly out of the way.
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dakinemaui I'm thinking I might add a few testimonials to the home page. Would you mind if I use your words?
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Emanuel Borsboom By all means! Best of luck to you.
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I'm now beta testing a web based version of my tool to help manage multiple currencies in a single account. If you wanted to try it out before but were intimidated by having to run a CLI tool on your computer, now would be a great time to try out the web based version. If you'd like to be a beta tester, send me a private message or shoot me an email at [email protected].
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I would love this as well. Its absolutely ridiculous that of the three currencies I often deal with, I have to keep spreadsheets to manage and convert the other two. Lets think about that closely....I PAY $84 DOLLARS A YEAR FOR A BUDGETING APP THAT FORCES ME TO MANAGE A SEPARATE SPREADSHEETS OR BUDGETS FOR EXPENSES IF THEY ARE NOT IN MY MAIN CURRENCY...are you kidding me!?
Unfortunately, people have been asking for multi-currency support for years. Like ALL other feature requests though, nothing ever gets done. Literally everything requested falls in to the category of "there are no near term plans for this right now".
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Forest Green Stallion If you don't wish to maintain a separate budget, then work in a combined/single budget with the equivalent value of the non-budget currency.
Reserve funds in a category to absorb exchange rate fluctuations. Reconcile that non-budget currency as often as you feel is necessary to avoid lack of awareness that the category should be empty.
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dakinemaui This is what I do, which requires me to convert all the amount from foreign currency to local currency "offline", and also maintain spreadsheets for those expenses to make sure they reconcile in foreign currency. That is ridiculous. I pay $84 for a budgeting app that forces me to use offline spreadsheets to manage part of my expenses. Its laughable.
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Forest Green Stallion Many other users don't use spreadsheets, so any forcing is on your part.
When entering foreign transactions, I put the original amount in the memo for reference, and estimate the equivalent amount. Reconciliation/clearing is easy, and I don't usually bother to edit the equivalent amounts if slightly off. I just make an adjustment transaction to correct the total impact of the differences. This also accounts for any equivalent value difference in the money I haven't spent yet.
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Hey guys, there is a new solution to this pain, a currency converter for YNAB that I made. Please see this thread, where I describe it in detail: https://support.youneedabudget.com/t/p8hybcj/app-currency-converter-for-ynab Cheers! :)
