Where should I put funds for annual bills?

I've been playing around with YNAB for around 2-3 days and I really like the concept.  My question is where to place our funds for annual bills like car registration, home insurance, and Christmas savings?  I don't feel comfortable leaving it in our checking, so I was wondering where to other put those funds so they don't get co-mingled (and possibly mis-spent) with the rest of our funds.  Thank you.

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  • Well,  technically the funds shouldn't get mis-spent because you should be checking your budget before making purchases :)   You could have a savings account that has a higher interest rate for these annual expenses.  

    Like 2
      • Maroon Drum
      • Maroon_Drum.11
      • 2 mths ago
      • Reported - view

      Mamba I'm still trying to get a handle on this program!  There's definitely a learning curve, but I'm determined to get the hang of it!  This is just so drastically different than any other program I've ever done before.  Thanks for your reply!

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  • Accounts hold dollars, not specific categories. If you find yourself trying to synchronize a category (or group) to an account balance, you're making it harder than it needs to be.

    More details:

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

    Many keep enough in checking to handle upcoming outflows, and the running balance / scheduled transactions makes this assessment trivial.  Move the rest to a higher rate account. 

    Like 3
      • Maroon Drum
      • Maroon_Drum.11
      • 2 mths ago
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      dakinemaui Thank you so much for taking the time to answer my question and providing me with a link.  I truly appreciate it!😘

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  • Apologize for the size of the picture. We wanted to do what you described when we first switched to YNAB from EveryDollar. Items with the blue dots, are annual recurring expenses. Rather than leave all those funds in checking, we reallocated them to savings once they were funded and then made the physical transfer between our banks that have our checking & savings accounts. A few weeks before the recurring bill comes do, we do the transfer back to checking & pay then refund and move to savings again. Probably way more efficient ways or methods but it's clean to us and works fine. As others mentioned, our savings is located in an online bank that pays higher interest.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
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      Cadet Blue Hammerhead I'd say the more efficient (and cleaner) thing is to ignore the budget for these sort of cash-flow decisions. Assuming you use scheduled transactions, the running balance in your checking account is all you need. (No need to miss out on interest from partially funded categories. Typically, there is no need to transfer back prior to each bill coming due. No need to add up category balances. Funds earn another month's worth of interest when purchases are put on a CC.)

      Just throwing it out as an option to simplify if that appeals to you.

      Like 2
  • Maroon Drum said:
     I don't feel comfortable leaving it in our checking, so I was wondering where to other put those funds so they don't get co-mingled (and possibly mis-spent) with the rest of our funds.  Thank you.

     That's how you will likely feel when you're starting, but dakinemaui is correct, the best thing to do is read the link given and learn the independence of categories and accounts.  As a newbie, you will likely feel uncomfortable with this, at first.  I think the issue is if you don't know if you'll stick to YNAB, you want to the money separate so you don't lose track of it if you stop budgeting.  But, ideally, as Mamba mentioned, you'll be sticking to your budget, checking your budget before you spend and not spending the money you've put into those categories for annual bills because you'll only spend money in spending categories you know you can have money sitting in.

    So you can technically move specific amounts for your bills to certain accounts but you don't have to and it's much  more work that way, basically.  In the long run, once you develop the habit of following your YNAB budget, you will realize this.  It took me a few months before I felt comfortable co-mingling my money and just moving money to/from savings based on what my balance would be in the next month by looking at my future balance with scheduled, mostly recurring transactions and the running balance, but now that I do that it's so much easier.

    Like 5
      • Maroon Drum
      • Maroon_Drum.11
      • 2 mths ago
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      PhysicsGal  I'm still trying to wrap my head around the YNAB philosophy because it's so different from any other budgeting program.  Thanks so much for taking time out of your day to respond to my question.  I  appreciate it!

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  • Maroon Drum said:
    I was wondering where to other put those funds so they don't get co-mingled (and possibly mis-spent) with the rest of our funds.

    I keep mine in a “high yield” savings account (currently only 0.6% but better than nothing) but not for the reasons you state. There are no worries of “co-mingled” funds when using YNAB properly. You look at your categories for purchasing decisions. NOT your bank accounts. The only reason to put them is to make more interest on your funds while they’re waiting to be spent.

    Like 5
      • Maroon Drum
      • Maroon_Drum.11
      • 2 mths ago
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      Superbone That makes perfect sense!  Thank you for sharing your viewpoint and advice!  

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