savings account / emergency fund
Okay, I am a baby to this YNAB. I just added my accounts and have money in a savings account that I want to hold in reserve for emergencies. How do I add a category to hold this money aside? I do not want it included in my budget as money that is "available".
Those dollars are there for a reason. What is their "job"? Car repairs? Dental surgery? Medical bills? Job loss income replacement? Make a category for that job and budget money to it.
The purpose of doing this is to illustrate to you that one amorphous blob of "emergency fund" cannot simultaneously do the job of being available to replace the dishwasher if it goes belly-up, pay an unexpected ER bill, and fix the clutch on your car. Each dollar can only do one job.Reply
I did what you are trying to do. I have a savings account with X amount of dollars in it as my emergency fund. I have a budget category called Emergency Fund. I budgeted the amount that I have in my savings account. When I add to the Emergency Fund category, I transfer from my checking account to my savings account. If I get an interest payment in my savings account I put that in my Emergency Fund Category.Reply
Hi Lynne !
We think of savings a little differently at YNAB, so I wanted to leave a link to a few resources:
– Here's an article showing you how it all works.
– Take a look at this 7-minute Whiteboard Wednesday about savings.
– Attend a free workshop about savings called Reach your Savings Goals!Reply
I differ from the opinion that savings could all be for named things without a big blob called "Emergency Fund". I have both types of savings.
For me, the named things are those that that I expect to have to pay for at some point but don't know when or how much, like dental treatment or home maintenance. Also for planned things that come up occasionally or periodically, like annual software subscriptions.
The Emergency Fund is for things that hopefully will never happen, like losing my job and having a few months before I get another one. Or the roof (which should be fine) turning out not to be fine after all and suddenly needing to be replaced. Or legal fees if I find myself in an unexpected situation where I need legal advice. I don't have a big fund for each thing. I couldn't afford that. And although they're possible, they're unlikely. But I do have one big pot to cover things like that.
The Emergency Fund is a category in my budget like the others, and I have available funds in it. I simply don't spend from it. I have a goal set for the total amount, so the little goal icon next to the amount should always be showing that it's fully funded. I've also moved it to the bottom of the list of budget categories so it's separated out a little.Reply
I don’t find the name Emergency Fund to be very useful, and the difference of opinion in this thread illustrates why. I’ve renamed mine Buffer Zone.
Plus I have categories for all the little ‘emergencies ‘ I used to have. “Stuff I forgot to. budget for” ought to cover any that come up which I hadn’t thought of. For example, a little while ago haircuts had to be paid from “Stuff I ..ftbf” but now I have a Haircuts category.Reply
I have an Emergency Fund for 2 main reasons. One is for the unexpected things that can go wrong. The other reason is if I were to lose my job. I'm lucky in that I could probably get some work in my field if I were to lose my job, but I would still need some money to get by. I'm still building that up to 3 months. I keep it in an Amex Savings account, that pays a little over 2%. I also have next month's budget fully budgeted, I'm building that to 2 months in advance. This is in checking. Lastly, I have a Stuff category, which typically less than $50-$100 in it. This is for the haircut type stuff. That's just the way I do it. From what I've found, pretty much every personal finance guide recommends a 3 to 6 month emergency fund.Reply