YNAB Attempt #13 Alt title I make YNAB too complicated... /long read

Hello All,

So as the title says I am going to attempt using YNAB for the 13th time since I bought YNAB 4 way back when on a Steam special. Why do I keep on failing? It boils down to two main reasons and in the last two years I now have a third reason.  Apologies in advance for the long read.

First reason, I did not understand it correctly eg: I tried to use it as a normal budget and still kept on looking at my bank balance. After re-reading I now know this is a big problem, I am meant to live in YNAB not in my bank account.

Second reason & biggest one as it is a mind set change. All my bills for the month are paid off and I now have living expenses which are not that much. My problem? I already have a nice sum in my account, close to second paycheck amount, that I am not sure where to allocate in categories. Since I have paid my monthly accounts for August and I am working in September that would mean I have to assign monies to the monthly bills in budget column and when I pay them at the end of September, only then reflect activity? Same applies for True Expenses, budget amounts there then capture activity as and when it happens. I do have upcoming car maintenance that I need to do so I can move a portion of it there but the rest? Savings sounds good and I suppose then I just move things around dynamically as and when they happen? As I said I over think how this all works <_<.

Third reason, I have two types of small savings accounts, one is a tax free investment account, that build on a daily basis that when imported into YNAB are seen as an outflow. If I create these two accounts, update the totals with current totals, how do I then tell YNAB that money coming off my main account is going into these smaller savings accounts? I also don't want them to be "budgetable" as they are meant to be accounts to grow not use unless absolutely needed.

Lastly, I see people mentioning reconciling accounts, how and when is this meant to happen? What does this mean in simple terms? I am not a financial savvy guy and it takes me some time to work these things out hence attempt #13...

I am off to re-read the guides and try to wrap my brain around them. One way of me doing this is to ask questions and since I don't know anyone who uses YNAB in my circle thats where you guys come into play.

I really hope you don't mind me asking these simple questions. :)

*edit*

Are monthly debit orders like home loan, car/house insurance and investments Immediate Obligations or True Expenses? Home loan --> Immediate Obligation but I am not sure on the rest.

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  • Hi!

    For, I reset YNAB 4 times.

    So, this is my 4th time, I'm trying to figure out YNAB's complete workflow and this time, I completely understood everything.

    These are the videos that helped me to understand everything.

    https://www.youtube.com/watch?v=xPVEB759gkU&list=PLHokQCjONqvY6Jk38CV5avo4Di94SMwK8

     Note: Consider watching all his YNAB videos!

    The guy Nick, explains everything clearly by comparing YNAB with real-life scenarios!

    Have a try

    Like 3
  • Oh dear, it sounds like you just dove in without reading any of the training materials or taking any of the classes. Unfortunately, because YNAB is so different from the way most people think of budgeting, that approach isn't the best for this method (it's a method first and the software is in place to support the method. Please take advantage of the free pre-recorded and live classes as well as the various documentation. It all boils down to: YNAB is an electronic form of envelope budgeting. All of your money needs to be put in an "envelope" (ie category) and then you can spend whatever is in the envelope. It is not a set and forget process, it takes active participation from you on a daily basis. Manual entry of transactions is the method and the direct connect is just for back up/double check. It is up to you to  manage which account you spend from (credit card, cash, debit card, etc).

    How you categorize things is entirely up to you. I completely got rid of the default categories, because that's not how I chose to organize my budget. You have to do what will work for you. Generally speaking, investment accounts should not be on budget accounts, they should be tracking accounts. But a regular savings account should be on budget. And you should budget the funds. Because aren't you saving up for something - new car, catastrophic loss of income, medical emergencies, etc? I have 3 savings accounts and 3 checking accounts all on budget. Location and purpose are separate things. (Seriously, that last link will change your life).

    Like 3
      • mik
      • mik
      • 6 mths ago
      • Reported - view

       I think you need to back off your stance a bit... Your points are well taken but if this is can appeal to various thinking.   For example, the link you reference states, "The real power in money management is focusing on what you want the money to do, not where it’s located." 

      I have a money market account that earns 3% interest but can only withdrawal 3 times per month before a $7.50 fee is levied. My other account is a basic checking, no fee but also no interest. If I have $30,000 today I'll be spending over the next year, I would prefer to earn 3% interest on that. Bills I can't pay with a credit card are paid through basic checking and I have my direct deposit split to only send a small amount of funds to that account.

      YNAB works for me as it helps me with what I want to do with my money first but YNAB also helps me maximize my interest/avoid fees BY having more than one account. It's not complicated.

      I busted through the learning curve without reading all the how to's first..."unfortunately" that's how I learn. I then watched videos, made some tweaks... Still do.

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 1
      • Reported - view

      mik If you think that article is advocating for a single account, you should probably read it again.

      Like 1
      • mik
      • mik
      • 6 mths ago
      • Reported - view

      dakinemaui You're correct, I do realize that.  It was a long day. Felt like the user was getting scolded for trying things out himself/herself. The link I referenced contained the quote I pasted which is contrary to where I've found value in YNAB, i.e, the location of my money can be as valuable as what I want it to do.

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • Reported - view

      mik agree that viewpoint is extremely powerful, and I'm glad you have that understanding under your belt. Cheers!

      Like
  • Rowen Nortje said:
    reconciling accounts, how and when is this meant to happen?

    The point is to ensure YNAB matches reality. It doesn't do much good if your plan (a.k.a., budget) has $5000 when you only have $4000 in real life. The process will identify transactions you don't have in YNAB (but should), as well as potentially detect fraudulent transactions that you didn't make.

    How often is a personal call. Some reconcile their main accounts daily. (It is easier when there are fewer transactions.) I reconcile the main accounts weekly and low traffic accounts monthly.

    Like 4
      • rushiec
      • I choose forwards!
      • rushiec
      • 1 yr ago
      • 1
      • Reported - view

      dakinemaui same here.  I reconcile something like weekly for my main account and any not currently used/low transaction accounts I just reconcile very irregularly.

      Like 1
  • Rowen Nortje said:
    Third reason, I have two types of small savings accounts, one is a tax free investment account, that build on a daily basis that when imported into YNAB are seen as an outflow. If I create these two accounts, update the totals with current totals, how do I then tell YNAB that money coming off my main account is going into these smaller savings accounts? I also don't want them to be "budgetable" as they are meant to be accounts to grow not use unless absolutely needed.

     Hi Rowen, 

    I'm not sure what you mean when you say that YNAB see's these as an outflow.

     

    If both small savings accounts and your other bank account (I'll call this MAIN) are in YNAB, and you mean when you deposit to your two small savings accounts, YNAB sees the outflow from your other account - MAIN, then you would also have an inflow to the small savings account.  Overall your net position would still be the same...just the $ are no longer in MAIN and are now in small savings.

     

    Like jenmas  I also initially changed the categories, and then after 2 years, I did a completely new budget aligned with my new way of YNAB thinking (priority driven, and for me I prefer to see my least negotiable categories lower down.  So the categories I have room in to play OR that I won't fund until I paid off debt are first....it keeps me VERY reminded of why I am making the choices I am.

     

    I also listened to the entire back catalog of podcasts by Jesse.  And took a couple of the workshops (some twice) until I go the hang if it all.  

    Like 3
  • Thank you for the responses and the YouTube link! I am definitely going to watch all those vids. I did read the Ultimate Quick Start Guide and ... thats where I stopped because I thought great I know what is going on. So yeah that was not a good idea. 

    Like 2
  • I have to say this video: https://www.youtube.com/watch?v=xPVEB759gkU&list=PLHokQCjONqvY6Jk38CV5avo4Di94SMwK8 and the subsequent ones are great for beginners. Thank you Akhil K A for the link it has answered most of my questions and made things a lot easier to understand. :)

    Like 2
      • Akhil K A
      • Digital Marketing Specialist & Growth Hacker
      • akhilaniyan
      • 1 yr ago
      • Reported - view

      Rowen Nortje I'm glad it helped! His videos helped me to understand everything (at least the things I need).

      Happy budgeting!

      Like
  • Hey there!

    So glad you're continuing to work on this and get the hang of it. Your finances will thank you! In all of your attempts, I'm sure that each time you've gained a little more knowledge and a little more experience.

    Unless your accounts are WAY out of line numbers wise and not matching up, I would encourage you to just stick with it, and keep adjusting as you go. The reason being is that the longevity in the budget itself has a LOT of value, but you've got to stick with it long enough to get to that point.

    I've been using the new YNAB since November of '17 (I was on the classic version for a while before that), and now that I've got 2 years under my belt I'm finally able to see certain trends in a much more helpful way. But it takes THAT LONG to really sort out what you need, and refine your categories clearly enough so that they can give you the information that is valuable to YOU. And even with that, I have just tweaked my categories in 2 of my budgets recently so I can get a better grasp on where the money is going (I rarely delete categories, I always seem to need to add one or two here or there).  But now that I've been working with this budget for this long, I can clearly see averages over the course of a year of how much we spend on things like groceries, gas, the power bill, and other expenses that tend to vary a bit. It's SO helpful to know an average of how much I need to set aside each pay check, and then I can basically ignore the category once it's beginning to get built up.

    So do be really patient with yourself. I usually recommend that people spend a minimum of the first 6 months just using the budget and reconciling the accounts, not worrying as much about where the funds go, but just getting used to putting transactions in and reconciling that against the bank account. Once you get the hang of that, then it becomes easier and easier to know where the funds need to go, and to manage to work ahead and figure out how to fund things further and further in advance.

    Because of YNAB's clarity, we have been able to get ourselves into a position where we pay our car insurance every 6 months instead of monthly, which is saving us about $500 each time we pay it. That's HUGE! We wouldn't be able to do that if it weren't for YNAB's clarity of where our money is going and where it is needed. It has also kept me on track for setting aside the money so that we're prepared to pay the next 6 month total again when it rolls around (with some extra usually, which is a great bonus to be able to work with!).

    So be patient with yourself, and make your primary focus getting your transactions into YNAB first. Once you have the hang of tracking where the money went then it's easier to start creating a plan moving forward. I also recommend manually entering your transactions because it really keeps your fingers on the pulse of your money much better than if YNAB imports them and assigns them automatically.
    If you'd like some support personally, I've helped several people get their YNAB systems up and running, so I'd be happy to chat about that, just shoot me a message and we can talk about how that would work. (I would have done so much better if I had someone to directly ask questions of when I was starting, so I know how that can be!)

    Like 2
  • Rowen Nortje said:
    After re-reading I now know this is a big problem, I am meant to live in YNAB not in my bank account.

     Exactly!  And that kinda goes to your last question regarding reconciliation.   I reconcile my bank transactions every few days.  I pay for everything with my credit card so their are not a ton of transactions to go through.  I also do that manually.....I don't like syncing my bank to YNAB.

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