Emergency Fund Off Budget

Is this something doable? 

I currently have my emergency fund sitting in a high yield savings account. That money is shown on my budget under a category called “emergency fund”. I have found over the years that I have a bad habit of WAMing out of the emergency fund when a specific month gets overspent. So I am considering making it an off budget (not even tracked in YNAB) account. The money will just sit in my savings until needed. Also note, I plan to very rarely use this money. 

If I do this my understanding is the work flow would be:

*budget money to the emergency category 

*transfer money from checking to savings

*show that transfer as an expense. 

*In the rare occasion I need that money transfer it back to checking. 

*show the transfer back as inflow to be budgeted? Or just an positive transaction in the emergency category? (This is the part I really haven’t figured out yet.j

*then move that money to the category (like home maintenance) that is needing the money.

Idk, I am still toying with the idea. The money right now feels too accessible. Has anyone else done this with success?  



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  • I haven’t done that and wouldn’t do it but yes, you can do it pretty much how you outline. If you can’t help yourself from taking money from your emergency fund when you don’t want to, maybe it will work best this way for you. But make sure you’re also budgeting for your other true expenses other than just a generic emergency fund.

    As far as your question about how to transfer it back into your budget, the first way you wrote is the best. (Inflow into TBB.)

    If you’re moving your EF off-budget, you’ll have to reduce you EF category by that much. The only reason to even have the category at that point is to assign future dollars to your EF.

    Like 2
  • It will show up as an expense on the reports. as if you spent the money.  And when you put it back in the budget, it will show up as income. Neither of which is true.   I put my Efund way at the bottom of the budget page so its out of sight out of mind. You can even hide that category too, but its still in your budget.  

    Like 3
  • Hi flyou10 !

    This is possible but we recommend keeping those savings on budget so that they have jobs. Maybe this would be easier to see if you broke down exactly what your Emergency Fund is for? Instead of just an "Emergency Fund" category, what about "Loss of Job Savings" or "3-6 Months Worth of Expenses" or other specific expenses that money is meant to cover. If those funds have specific jobs it's easier to ask yourself if you Really want to take away from that category to fund other expenses. :)

    If you still want to move those funds off budget, your list of steps is spot on. When you initially move those funds off budget it will look like a large expense for the given month. When you transfer funds back into your budget, you'll categorize them as Inflow: To Be Budgeted and then budget those dollars where you need them, instead of inflowing them to a specific category.

    Like 1
  • flyou10 said:
    I have a bad habit of WAMing out of the emergency fund when a specific month gets overspent. So I am considering making it an off budget (not even tracked in YNAB) account. The money will just sit in my savings until needed.

     I don't follow your logic. Besides agreeing with the advice to keep it on budget, I think you're saying that you don't want to WAM from it unless it's needed. But it sounds like that is something that happens regularly; You need it, so you WAM from it. How will keeping it off budget change that?

    Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 1 yr ago
      • 4
      • Reported - view

      JoeDid If it's on-budget, they "need" it. With scare quotes. This is really a way of budgeting by account and you can't ride two horses at once.

      Like 4
  • Raiding the e-fund in the early days of budgeting isn't failing; it's just working out what your actual numbers need to be. I would argue that it's not that the funds are too accessible, but that the budget is not yet mature enough or reflective of how you live and spend. It can be further complicated if you are keeping a tight budget in order to smackdown debt aggressively or if you're attempting to save too aggressively for your level/speed  of income.

    Just because you think X-amount should be in your emergency fund at this point in time does not make that amount stay there if your immediate categories are inadequately funded and you're faced with making a necessary spending decision. Until you're actually caught up on all your categories, you will need to keep moving money around, and it won't matter if the money is off-budget or on-budget.  But it will add extra steps in YNAB.

    I found that once all my categories were properly funded, realistic amounts budgeted to my frequent-spending categories and all the necessary balances built up in my categories, I was finally able to leave the dollars in my emergency funds alone. Until I got the first bit sorted out, however, every dollar I put into emergency fund category just got WAMed right back out.  I wasn't being irresponsible; I was making spending decisions with not enough money and deciding which was a higher priority.

    Like 14
  • I feel that. I'm two months in and end up "raiding" my future funds (allocated to next months rent, or whatever) often for random purchases that are harder to foresee, but if I didn't have that it would be coming out of my Emergency Fund or other categories. But I think HappyDance is right (as usual ^.^), and your budget may not accurately reflect your spending habits (at least that's in part the case with me as well).

    But here's the kicker of why it might not make sense to move your e-fund out of YNAB: YNAB is helping you stay true to YOUR priorities. The money you take out of e-fund means your prioritizing that purchase over whatever your e-fund is truly saving for (and that's where Faness is spot on). You've got to make it clear what choice you're really making, and building that awareness and conscious effort is what YNAB allows you to do.

    Despite that important point, if you're really struggling to stop dipping into savings because it's easy to do with a click of a button, move it out for a while until your budget matures into a more accurate picture of the lifestyle you're choosing, build up those skills, and then add the e-fund back in when you're ready!

    Like 1
  • I have taken this approach in the past as well and consider it to be perfectly acceptable.  Our emergency fund sits in an online savings account at Ally Bank, and I had it off budget for a while in the past for exactly the same reasons.  We are pretty disciplined about it, but putting it off budget just puts it another step away from an easy WAM.  The only reason that I have it back on budget now is that we have some money for other purposes in that account as well, so it was necessary to put it back on budget in order to keep track of the 2 different categories contained within that account.

    Like 1
  • I also created a new savings account (Ally bank) and made it a tracking account that I transfered into. The only bummer was the AOM and AOB hit I took when doing that ;)

      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 1 yr ago
      • 2
      • Reported - view

      xgirlmama Which is to be expected when money leaves your budget (for any reason). When you move that to a budget account instead, your AOM and AOB should go right back up. Or are you planning to leave your savings account off-budget for some reason? It doesn't really make sense to do that for a plain-ol' savings account. Things like IRAs, investment accounts, sure, but the cash in your savings account exists for a purpose and it's better to be explicit with yourself in your budget than to risk mentally assigning those dollars multiple jobs.

      Like 2
  • If it really bothers you to have it so available why not just hide the category, then if you do need to use it (or add to it) unhide it to do your transaction then hide it again.

  • Behaviorally, off-budget Efund is better for me. It reduces your AOM, but by keeping AOM > 30 you can tell you'r enot saving too hard and and fast...

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