Problem dealing with cash

I am in my second month of YNAB and it seems to be going pretty well. I noticed a major hole in my budgeting as far as cash is concerned. I went to the ATM and got $100, charging the withdraw against my "checking account" general fund (my buffer). Then I spent $15 on shipping a box to my kid in college, $5 on a bridge toll, and $4 at McDonalds. I realized that I am effectively cheating my budget - I stole money from the buffer and spent outside of my budget categories, not tracking it at all. So to fix it, I created a Wallet cash account and changed the original $100 transaction to a "transfer to the Wallet" instead of an "ATM Cash withdrawl". Now my "Wallet" account has $100 and the checking account still reflects that $100 left it and went somewhere else.  Everything seemed good up to this point. So I entered the shipping cost ($15 paid in cash) as a transaction from my Wallet account, allocating the transaction to my "Misc. Education Expenses" category in my budget (which is at 0 available at this point). My wallet account now says that I have $85, as it should. But....my "Misc. Education Expenses" category turned red and showed overspending of $15 and wants me to fix by WAMing from another category. I am clearly not understanding something about cash; if I spent cash to send this box, isn't the money already allocated? My wallet account paid for it, so it seems to me I shouldn't have to WAM to fix it. Help!!

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  • Transfers between accounts don't affect the budget, all you did was move money from one account to the other, which is not a budget activity. That's why none of your category balances changed when you entered the transfer from checking to your cash account. Now that you're entering the transactions, you have to pull the funds from somewhere to cover the spending you did. Think about it, the whole reason you added the wallet account was because you didn't like that you were spending money that was somewhat hidden from your budget. So now by entering the transactions beyond just the ATM draw, you're telling your budget where to take money from.

    Your cash account operates exactly like your checking account in YNAB. When you spend money you need to categorize it and that category needs to have money in it.

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  • Sac Army Green said:
    But....my "Misc. Education Expenses" category turned red and showed overspending of $15 and wants me to fix by WAMing from another category. I am clearly not understanding something about cash;

     This has nothing to do with cash. This has to do with spending money from a category that didn't have enough money in it.

    Remember, when you receive new money to your budget, you assign it to categories. Then you spend according to your categories. If you spend from a category that doesn't have enough money in it, then you need to cover the overspending, because having a negative balance in a category means you have too much money in all your positive categories (more money in categories than in your accounts).

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  • Hey Sac Army Green !

    You can handle cash as an account or a category—we cover how to handle cash spending in our Help Docs. If you want to track the details of your cash spending, the "Wallet" account is the way to go.

    Your accounts are buckets where your money is stored, while your Budget is where you assign them jobs. The money in your budget isn't tied to a specific category, so you may need to move money to cover your cash overspending—though I'd recommend checking your category before spending. It's where the magic happens!😉 Check out this quick short from our Video Courses to help visualize this, and let us know if you have questions.

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  • Think of using a wallet account as delayed categorization. 

    If you were going to pay for the shipping from debit or credit, you'd have to ensure there was money in the category or WAM.

    Same goes for the wallet spending. 

    Sometimes I treat my cash as a bit of a slush fund and match a category (loosely) to it. Then, if I use it for regular spending, I can "fungibilize" that amount in the budget and move it elsewhere. 

    This could be because the cash I get is rare, usually a gift, and I don't typically spend with it. Actually, the last 3 places I tried to pay with cash refused and asked for card.

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  • Thanks everyone for chiming in and helping to clear it up. When I stop and think about it VERY SLOWLY, I think I understand my problem here. I totally get WAMing when using my debit card, it makes perfect sense to me. But for some reason, cash allocation in the budget area is giving me a fit. I think my best solution for now (until the new month when I can newly fund my categories) is to transfer $100 from my buffer category (where that $100 came from in the budget, after all) to one of my "cash envelope" categories, like entertainment. Then I can WAM out of there and see very clearly what is happening to the balance of just that $100. Yikes, I have no idea why I am struggling so much with this one point when everything else makes sense to me. Thanks again for your help - I think I am slowly getting it.

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  • I think my fundamental struggle is that I keep my buffer category (next months money) and about 20 sinking funds in my checking account, only separated emotionally (and by budget category, of course). Up to this point, when I add together the buffer category and all the sinking funds, the total amount available matches my checking account balance. And I was happy. Until I spent cash. 

     

    Here’s the issue I am running into, which I really think is a fundamental problem in how I have this set up. Say for example I get paid $1000. I take 100 cash, allocate 850 to the buffer category and put 50 in the Kids Educational Fund. For simplicity I will assume my checking account is brand new and initially at $0. My actual checking account balance is now 900 at the bank and also 900 on the account list to the left of my budget screen and when I add up my categories that belong to that account (buffer and educ. Fund) my budget says 900 is the total available. I am also holding 100 in my hand, but it is not in the bank, nor is it part of the category available balance in my set-up. And this right here is my fatal flaw, I think. But let's continue. Then I mail a box off to Kid #1 and pay $15 cash. This makes my cash in hand 85, and when I allocate this purchase to my Educational Fund sinking category, that category decreases by 15 to $35. My budget tells me that my funds (buffer and educational) are worth $885, but my bank balance is still $900. I guess I want to have the buffer and sinking categories that together comprise my bank balance to always add up to equal my bank balance and have my cash be…something else that doesn't affect this balance. But this approach clearly is not working.

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  • Sac Army Green said:
    Say for example I get paid $1000. I take 100 cash, allocate 850 to the buffer category and put 50 in the Kids Educational Fund.

     If you have a cash account in YNAB and do that, then you still have $100 in To Be budgeted. When you take the cash out and you have a cash account in YNAB, it doesn't leave your budget. It only leaves it when you spend that cash.

    Sac Army Green said:
    and also 900 on the account list to the left of my budget screen and when I add up my categories that belong to that account

     Trying to match a set of categories to a specific account in YNAB is asking for a headache! It's a lot of unnecessary work. Your budget represents ALL the cash you have on hand. And checking accounts hold cash. While credit cards hold debt or nothing.

    Sac Army Green said:
    But this approach clearly is not working.

     Indeed. The only way you could have it this way easily is if you only have 1 debit account in YNAB, be it checking, savings, cash wallet. Else the money of your categories is the SUM of all the debit accounts you have in YNAB.

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  • Sac Army Green said:
    cash allocation in the budget area is giving me a fit

    The ENTIRE budget is cash allocation. You have cash in your checking account. (It's not credit, right?) The account simply corresponds to the method of payment.

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  • Yep, as I play more with it, you all are correct. I am trying to match every dollar and exactly which account it belongs to. I need to take a deep breath and use a more holistic approach. I have a bucket of money, I have a budget to put it in. This will take some getting used to, but I will do it. My way is not working, you guys clearly have it figured out. So here it goes!

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  • Sac Army Green said:
    I need to take a deep breath and use a more holistic approach

    This will help with that:

    https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/

    In spite of the title, once it clicks, it simplifies things greatly.

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