Factoring Account Minimum Balances in your budget
Hello all. A lot of banking institutions penalize you for falling beneath a minimum amount for all account types. They make their money from fees, right? However, YNAB wants you to 'give every dollar a job,' including those that are wrapped up by the bank to keep you above a minimum balance, in my case, $100. How do I tell my budget to ignore the $100 minimum that is being held hostage by my bank?
Most people do exactly what eloquentz suggests at first. But note that eventually, you're going to get to the point where an account minimum seriously will.not.matter and you will be able to delete the category. That's the goal.
When I started using YNAB six years and a job change ago, if my checking account had had even a $5 minimum, I would've been in trouble (it didn't). I now have a money market account that has a $10,000 minimum and it's no big deal to keep it above that number.,
A "padding" category is a common attempt, but doesn't actually guarantee you won't overdraft if you have multiple deposit accounts as is typical (e.g., checking and savings).
The location of money in any multi-account scenario is up to you to manage (transferring as needed). If you find that difficult, I suggest you consolidate to a single checking account.
Adding to what WordTenor wrote, the reason it becomes easy to stay above the account minimum is Rule-2. When you adhere to rule-2, then at any given moment you should have lots of money saved across various categories for things like "Car Repairs", "Vacations", "Next Years Taxes", "Christmas Shopping", and many more. The sum of all that money should easily satisfy your bank's minimum balance requirement.
In the unlikely event that all of your various rule-2 expenses become due at the same time -- your car breaks on Christmas, taxes are due, and you had a vacation planned that month! -- then you hopefully had some additional padding in your budget above-and-beyond just your Rule-2 expenses. That's where Rule-4 enters the picture.
This conversation highlights the fundamental flaw with the "Age of Money" (AOM) metric in YNAB. It's inextricably tied to Rule-2. Just as your bank account balances will rise naturally as you save for True Expenses, your AOM will also rise and easily surpass YNAB's suggested 30-day AOM goal. (Money that's sitting around in a True Expense category is aging, after all.)
This leads to the (mistaken!) belief that Rule-4 is merely a consequence of following Rule 2; that the money you've set aside for True Expenses is also "buffer" money. But that's a violation of Rule-1 -- the same dollars can't have multiple jobs.
It's a shame that YNAB broke Rule-4 when they launched the web app.