Borrowing from yourself
One interesting consequence of having saved money is that you can give yourself a 0% loan when needed. I won't go into the details whether you should really borrow money rather than wait, for the sake of this post let's assume you are adamant about borrowing from yourself. I am curious about possible upsides and downsides of borrowing from yourself, as well as how to best work with such a loan in YNAB to ensure it's paid off.
What I did to track the paying back was:
- Created a new category in my budget called "Loan for X from Y", where Y is the category I had taken the money from initially.
- Set the goal on the new category equal to the amount I borrowed. In my case I set a weekly goal.
- Once the goal is funded I'll move the money to Y and delete the category I had created for the purpose of the loan.
Upsides that I see are:
- You can actually have a 0% loan.
- If for some reason you want to delay the payments, take a month or more of break from paying off, reduce/increase the monthly rate you can do it without additional costs.
- You actually remove the money from your wealth - if it happened you needed the money you loaned, it does not exist.
- There are no real consequences for not paying off on time/at all, you are your only motivation.
The longer I’ve used YNAB, the more I have come to just face that my plan for my money is my plan for my money. I don’t budget to pay myself back for thing X; I acknowledge that I changed the plan. Whether I choose to change the plan afterward to “aggressively save in the category I took from” is up to me.
It seems an easier way would be to add the goal to category Y directly.
If you already have a goal in this category, update it. If you don't have a goal, create a new one.
I don't see what information saving separately for the bit you used for X will give you. What you want to know is when you will have enough for Y or make sure you will have enough for Y by the date you need it.
It doesn't matter whether you need to save $100 per month because you diverted a bit to pay for X or because you started saving for this goal 3 months later than you think you should have or anything. What matters is you have to save $100 per month to reach your goal and whether that's sustainable for you or not. If you can't, you need to change something else in your budget or revisit this goal.
I guess that's a con in your method: you loose the visibility of how much per month you need to save for your goal and if you are on track because now it is the sum of the budget (or goal) in 2 categories instead of one.
As has been said here, there is no real borrowing from yourself (very zen, I know). However, I have had times where I pay for something that will be shared by many users (vacation home rental between brothers and such). In this case, if I paid outright, I record the transaction in full (from the relevant category - vacation) and cover that from my "slush fund" category. when I get paid back, that money goes into the slush fund.
In order to avoid miscalculating my actual expenses, the original transaction is split between "vacation" and "slush fund"
Just to provide another perspective, I have done what you suggest when moving money from my allowance account to my husband's allowance account to help him pay for a thing, where he's going to pay me back. I create a $0 transaction where $X is removed from mine and $X is added to his. That way he can see it, and then I do the opposite when his allowance is filled back up and he's ready to "pay me back."
The one problem I have with YNAB is not being able to clearly see when I've moved money from one category to another, so looking back (or when my husband looks at it) sometimes it looks like I spent more on my Dining Out category than budgeted for so I could have lunch with a friend, but really I took the money out of my Shopping account. It's not super transparent, although it is possible to find the info if you look deeper.
I get what you're saying, and I totally support it. If there's a way to make Rule 3, or whichever, more salient to you in your head, go for it. I come up with all sorts of mental tricks to help me give purpose to my budgeting decisions. I know for others it's a more straightforward down the line we spend this much and sweep the leftovers to savings or wishlist. I just don't do it that way. I play all sorts of head games and they don't break the rules and my 10 yr old budget is pretty sound. What helps me is to frequently write notes to myself in the categories so I remember exactly which head game I was playing at a given moment in time :).
Thanks for the suggestion on how to track borrowing from savings. I am using this method for my husband to pay back his recent phone purchase (individual) to our shared savings for a car replacement. This allows us to continue to jointly save towards the car replacement and he has the separate category for him to move pocket money over each month as "payments" for the phone. Ideally, we would have had enough saved in our technology fund to cover the phone, but we don't just yet and there were extra store perks for purchasing the phone outright ($200 in store credits) that offset any lost interest from the money sitting in our savings account.