Confused - How does giving every dollar in my savings a 'job' help me save money?

I'm new to YNAB and I'm very confused about this. How does this help me save money exactly?

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  • By itself it doesn't. But the whole method together really does help you to understand your money and prioritise your "needs" and "wants" in a way that will make you understand how much money you actually have (you might feel "YNAB poor" for a while!). The rule of giving each dollar a job just means that you have to actively manage your budget and divvy up your money (between those needs and wants). In isolation it forces you to populate your budget with the money you HAVE (not the money you wish you did). It's more the combination of rules that force saving (particularly rule 2!) as you will get to a place where upcoming expenses don't surprise you and force you to empty out your savings or incur debt.

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  • The point of Giving Every Dollar A Job is so that every dollar knows its purpose. Defining exactly what you want your money to do for you helps stretch it in the right direction. If you have $500 in Savings, is it okay to spend that $500 on a vacation, or was $200 of it for Vacation while the rest was for Home Repairs? Using your categories, you'll never have to question if your savings are being used on what you set them aside for in your budget.

    If you have a moment, take a look at this 7-minute Whiteboard Wednesday about savings. :)

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  • Specifically looking at money in savings, you'd give your dollars jobs like "sit there in case of an emergency" or "hang out until I have enough to buy a new refrigerator." It's a subtle shift in mindset from "just don't touch this money."

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  • Ivory Device said:
    How does this help me save money exactly?

    It helps you to have money available for the important things when you need it. That's the entire point of saving. You see the tradeoffs / consequences of spending now vs. spending later (i.e., savings). For instance, if you keep having to take from Mexico Vacation 2021 to cover what you consider excessive Eating Out, you will tend to curb that habit -- assuming Mexico Vacation 2021 is more important to you than that going out that additional time (or times).

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  • If your savings jobs are...wait for it...savings, then those funds aren't available for other frivolous expenses. That's how.

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  • Give every dollar a job does not imply that you spend every dollar.

    Some jobs should be for long-term expenses, e.g. "Christmas 2020" or "Buy a new car in five years."  That's the essence of Rule 2.

    You might even have some money assigned to jobs that (you hope) you'll never need to spend, e.g. "Emergency Fund." That's the essence of Rule 4.

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  • Wow, thank you all for your replies!

    I re-read the rules earlier and now with your input, I think it makes much more sense to me now. I guess I was just too used to the old school way of budgeting lol.


    Thanks again :)

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  • giving a job to savings was a foreign concept for me at first too. I put the $ I had into a "savings" category without specific jobs for it. In time though, using YNAB helped me really accelerate what I could scoop into savings. So eventually it made sense for me to have a savings category with sub-categories for things that don't require daily/monthly spending,  like Christmas, car registration, other holidays with gifts (Valentine's, Easter - I have kids), Halloween (again with the kids), etc. And was able to considerably add to what my savings was originally for - I created an "emergency" category

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    • xgirlmama Yep, assigning every dollar I have to a job seemed counter-intuitive to me initially as far as saving money goes. But now as I continue to use YNAB more and more, I'm starting to get a hang of it and can now appreciate how it actually kind of forces me to think twice before spending. Loving it so far!

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  • A lot of the comments above echo what I'm about to say. It's knowing what the money is for, and to me, it was everything that had been missing from my financial life.

    Going down memory lane, preYNAB, I was in credit card debt, but also an adult. So every paycheck, I'd take what was left in my checking account and move it to my credit card to payoff debt. Sounds good, right? But then, something would happen to my car where I would need to take it in and it would be a $500 repair ... and that would go right back to the credit card! Being able to say I'm saving $200/month for my car (or whatever other category) has been game changing. It's not that I can't use the money for something else, but I'm intentional about it. 

    Also, since doing this, I have been able to payoff my credit cards and use them exclusively for cash back rewards, earning about $100/month (they're on autopay). Also, I have a high interest savings that is overdraft protection for my checking account. Every payday, I just add up what's on my credit cards and make sure that amount is in my checking account. This way, I know I have the payments and majority of any checking payments that need to be done, but I'm getting the most out of my interest in my accounts. I've never had this much cash in my accounts ever, but I feel more control over my financial state.

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  • Heatskitchen said:
    Every payday, I just add up what's on my credit cards and make sure that amount is in my checking account. This way, I know I have the payments and majority of any checking payments that need to be done, but I'm getting the most out of my interest in my accounts.

    Even easier is to put your upcoming transactions in as scheduled transactions, including paychecks, and you can just look at your running balance to make sure it never goes negative.

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    • Superbone yeah I do scheduled transactions so this is a good thought 

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 yr ago
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      Heatskitchen For your paychecks, I have a trick for you depending on your pay schedule. I get paid every other week and if I put my scheduled paycheck in as occurring every two weeks, I'll only see one paycheck in my upcoming scheduled transactions. So instead, I made two recurring paycheck transactions, offset 2 weeks apart, that occur every 4 weeks. This way I always see my next two paychecks in the scheduler. Hope that helps.

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