Working with Multiple Accounts the "Right Way"?
Good afternoon everyone!
On my sixth month with YNAB and it's been a game changer. So far, all of my budgeting has been with a single checking account at a bank that supports direct-import. However, having moved away from where that small bank has branches, I decided to open an account with a financial institution closer to where I'm living and working.
That financial institution is a credit union, and my primary share in said credit union serves as a savings account which is more or less mandatory. I have a checking account with them as well, which I'm in the process of migrating over to using.
I know the YNAB recommended account structure is to have as few accounts as possible. However, when I'm required to have that savings account as well, are there approaches that are better or worse than others as to how to split the balance across the accounts? The institution doesn't support direct import so I'll be manually adding transactions (Which I did anyway so it's not that huge of a difference). But, as far as YNAB sees that account... is it even worth treating them as distinct accounts in YNAB? Can it just say "Credit Union" with the account balance being the sum of the two, leaving me free to move money between the savings and checking without dealing with the trail of those transfers in YNAB?
Curious what people do that works for them, what they've tried that doesn't work, and some overall suggestions. The APY on the savings account is 3% so it'd be cool to keep some money there just so it's earning some small interest.
I have only checking account at my main bank (no bank fees for any accounts).
I don't do saving accs on them as no interest or almost zero. My main savings account is in internet bank which provides 1% interest yearly. I keep ALL savings here. All big savings, other may call it lifetime savings as well. The idea of savings, and I have savings in my checking account, I just budget 500 for that emergency fund.
It's always there on main checking account and I am not taking from it unless a need.
So technically I love, and I believe the less accounts, is the better.
I strongly believe you need to make actual accounts as you have them at banks in your YNAB.
I may be wrong, I am YNABer since one week, but we will see if someone will correct.
In my checking usually under 1K, and in Internet bank the real account for savings which has 20K+.
I like the idea of two bank accounts, it is minimalistic and less stress.
You can have it all on your checking, but I keep money I do not need in years elsewhere mainly because of better interest. I hope someone else can tell exactly how they organize their money. Thank you.
It should match reality. Separate accounts should be separate accounts in YNAB. Much easier to reconcile that way. Transfers between on budget accounts has no effect on your budget.
I keep one month's worth of expenses plus a buffer in checking and the rest in savings (gaining a little more interest these days but this changes from year to year.) I use my scheduled payments and income along with the running balance to be able to look ahead in checking to make sure I have everything covered for at least the next 30 days.
Nothing wrong with the minimalist approach either where most is in checking as there is little interest to be gained these days anyway. However, that can and will probably change.
Since you'll be doing manual entry, you could keep them as one account and just not record the xfers between accounts. If it were me, I'd have trouble doing that and reconciling my accounts, and if there was ever an issue, would find it twice as difficult to identify the source of the issue.
I know YNAB recommends only have one account, but I have multiple accounts of various types and have yet to find reconciling them to be time consuming/tedious/a problem. (I've only been a YNABer for a little over a month, and have been recording transactions daily and reconciling weekly, for context.)
If the savings account yields any interest at all, you probably want to keep as much of your money in that account as is feasible/comfortable for you. (I'm assuming the checking account doesn't yield interest, or as much interest as the savings account, since that seems to be the current norm in the US. ) I've found scheduled transactions in each account to be very helpful in figuring out how much that is, and was able to move a significant chunk out of checking accounts and into the corresponding savings accounts as a result.
For me, I'm not comfortable with my checking account going below my monthly rent + a couple hundred, but I know that amount varies by individual.
I'm similar to you. I have my main checking account through local credit union, and they require $5.00 in savings at least in order to have any other accounts with them. So in YNAB I have my savings account with $5.00, my checking account with what I need for the month plus a cushion, and another savings account (Higher Yielding than CU's savings) where I have all the other savings.
In my case, I don't need to use the CU's savings, but in your case, I definitely would, if you're getting 3% interest! Definitely keep the accounts separate, though, to avoid confusion.
When I began in YNAB I streamlined from 5 to 2 accounts. I had a transactional account from which I do my everyday spending and a linked interest bearing savings account where I dump anything I don’t need immediately.
I have expanded to an additional HYSA since then and theoretically this is where long term savings goes and earns higher interest. I’ve moved this around to chase interest rates and it just stays named as ‘Savings’.
Like you, I manually add all transactions
I think it is important to reflect reality as far as account structure goes in YNAB. It is OK to have multiple accounts even if some of those have little or no activity. What I do is organize the accounts with less activity at the bottom of the accounts list in YNAB. I keep all of my credit union member savings accounts and CD's at the bottom. I keep my daily use checking and credit cards at the top of the list. I am a manual entry person too as I do not like auto import. Once you get organized and your work flow going then maintenance is fairly easy especially if you reconcile daily.
Don't get hung up on this "recommendation" if it doesn't reflect what you need. Your budget structure should be customized to your needs not how anyone else thinks it should be. The only caveat to the previous sentence is this: Budget accounts in YNAB should always match the balances at your financial institutions. Please don't combine separate bank accounts together into one Budget account in YNAB; it will likely lead to more work and confusion down the road.
Regardless of the number of accounts you decide to include (which is a completely personal choice), being consistent with your budgeting/reconciling process is the key. Without that, YNAB is useless as a budgeting tool.
Since you have 6 months using YNAB under your belt, I'm sure you already have a good YNAB workflow. But I'll go over a bit of my process since I use multiple bank accounts, which you or someone else might find helpful.
- I have 9 Budget, and 9 Tracking accounts in YNAB. (Many users have more!)
- None of them are linked/connected in YNAB to my financial institutions. I manually enter/reconcile each account.
- To streamline the workflow, I've automated just about everything that happens in my accounts (both within YNAB and the actual bank institutions) with scheduled or recurring transactions for known expenses, paychecks, automatic transfers between accounts, etc.
- I reconcile the main (checking, savings, cc's) Budget accounts every morning and then do a quick double-check when I get my monthly bank statements. (Note: you don't have to reconcile daily; I'm just addicted to YNAB... heee 🙃)
- My Tracking accounts get reconciled monthly, quarterly, or yearly depending on the type (IRAs; mortgage loan; savings bonds; etc.) so little manual work or time involved with those.
- My Vanguard, Betterment, Gift Cards, and Wallet (Cash) accounts are less frequently used/reconciled. But I keep them represented in YNAB since they do reflect actual money coming in and out of my budget on occasion. (I may be closing the Betterment, but haven't officially decided on that yet.)
- The only bank account not represented in YNAB is the mandatory "Share" account at my credit union, that requires a minimum balance of $0.01 in order to keep my accounts open... I don't feel obligated to employ that penny in YNAB! 🤣
- I enter/adjust any variable/discretionary spending at the time of, or very shortly after, a purchase (groceries, clothing, dining out, gifts, etc) in the corresponding YNAB Budget account.
- If I get unexpected income, I enter it manually and then assign it a specific job or put it in my Income for Next Month holding category.
- Like other's have mentioned, I keep a minimum buffer of my typical 1-month outflows (plus a little padding) in my two separate Checking accounts at all times.
- My bi-weekly paycheck is direct deposited into my C1 Checking account.
- A portion of each paycheck transfers into my CU Checking account to keep a minimum balance there. I also need to maintain at least 10 individual transactions (inflows or outflows) in the CU Checking account every month to avoid their $3 monthly fee, but I have that whole process set up and automated in order to meet those requirements.
- Excess money above my min/buffer in my C1 Checking is then transferred over to my C1 Savings to sit and earn interest.
- These transfers between my C1 Checking, C1 Savings, and CU Checking are all automatic - my inflows and outflows are relatively the same every month, which makes it easy, in my situation, to automate this process and doesn't require me to do any heavy lifting.
- I actually have very few expenses coming out of my two Checking accounts - things like the mortgage, electric bill, property taxes, life insurance, retirement contributions, some charities, etc., that can't be paid with a CC or would add a hefty convenience fee to do so. These expenses are also almost always the exact same dollar amount, so not much fluctuation to adjust for which makes forecasting with the running balance fairly simple.
- I use the running balance feature to gauge if I may need to adjust for larger/infrequent expenditures coming out of either Checking account that may require a transfer from Savings (typically only when I pay my property taxes twice a year).
- My C1 Savings currently holds a 2.5 month income replacement fund (which I'm trying to grow to 6 months), my car replacement fund, and a bunch of other "savings" buckets, in addition to any other funds not needed in the Checking accounts.
- Everything else gets paid with the C1 Quicksilver to earn cash back rewards. 🎉
- I pay my C1 Quicksilver from my C1 Savings account which is set up to auto-pay the statement balance to avoid interest charges and I don't have to worry about dipping into the C1 Checking account buffer when its time to pay. I just have to manually adjust the payment amount in YNAB when the credit card statement arrives. (Note: all CC purchases are fully funded in my Budget categories.)
- My CU Platinum CC is only used twice a year for two separate annual subscriptions (it's my oldest credit card at 23 years, so I like to keep that active for my credit score), otherwise it sits at 0.00 balance 10 months out of the year.
- I pay my CU credit card, the two times a year I use it, from my CU Checking account since it's quicker and easier to transfer that payment from within the same institution. These are set up as payment placeholders in YNAB, but are not automatically transferred at this time. I manually make the payment through my credit union website when it's due; I flag these placeholders RED and enter "PLACEHOLDER" in the Memo field as a reminder.
This all seems like a lot now that I type it all up, but as I noted above, most of the Account side is completely automated. The instances of discretionary spending, or extra income, or cost of living increases that I need to adjust for are minimal, and I have a better handle on my budget during the 1-1/2 years I've been using YNAB, than I ever have in my entire adult life before.
- Here's my On-Budget accounts for reference to the above workflow:
I don't even have my Credit Union share savings account with $5 in it on budget. Don't bother unless you're actively using the account.
Same. I have a $1 savings requirement for mine. I have a fake, uncleared $1 outflow so that it appears to contain a 0 balance and then I "YNAB closed" it. Which made me start wondering to myself why even have the account in the Closed accounts? But then I just looked at it and it was active from 2011-2013 and then half a year in 2017 with quite a few past transactions.
OK, and then just counted my closed account and I have 49 of them! Do I hear 50?! Wow. That's what 10 years of continuous YNAB use will do for you.