Win! To be Budgeted + ΣAvailable = Σ(Positive Bank Balances)

I just started using YNAB a couple of weeks ago and was extremely frustrated with YNAB because I couldn't figure out why I would budget money to a bill that I've already paid when the money was already removed from my bank account.

But after noodling around with YNAB for a couple days, I think I've finally wrapped my head around it! It seems so simple now I'm wondering why I didn't get it.

The key insight for me seems to be that if you add up all the values (negative and positive) in the Available column of your budget and then add that result to the To be Budgeted amount then you get your total YNAB balance. This total amount will equal the sum of the positive balances on all your bank accounts. If those amounts don't match your bank account, then you missed importing or recording a transaction somewhere. 

 

To be Budgeted + ΣAvailable  = Σ(Positive Bank Balances)  

 

So when I add some funds to the Budgeted column of a transaction, it doesn't change my overall amount of funds. It just transfers some funds from the To be Budgeted amount to the Available column for that transaction.  Either way, my overall balance doesn't change. It's just moving the numbers around to mark it as budgeted. 

So if I paid a $50 bill, it reduces my funds on both sides:
To be Budgeted + ΣAvailable  = Σ(Positive Bank Balances)  

$0                             +   (-$50)              =   (-$50) (Bill paid from bank account)

 

Then when I budget for a bill I've already paid, I'm simply moving the amount over from To Be Budgeted to Available:
To be Budgeted + ΣAvailable  = Σ(Positive Bank Balances)  

$0                             +    (-$50)              =   (-$50) (Bill paid from bank account)

(-$50)                      +    (+$50 )             =       $0 (Funds budgeted, but no change in total balance)

 

So when I budget for a bill I've already paid, the overall balance doesn't change!  I'm not paying the bill twice, I'm just moving numbers from the To Be Budgeted amount to the Available column.

So if you want to see your To Be Budgeted amount match your bank acounts, then allocate budget for only the amounts you've already paid so that all of your Available funds are zero. They might still be orange based on your goals. Then your To be Budgeted amount matches the sum of your bank account balances.

People learn in different ways and perhaps this is something obvious to most people but I was delighted to figure it out. Perhaps this explanation can help someone else! :)

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  • Hi Aquamarine Case !

    What you described is exactly how we recommend doing a self audit to make sure all of your funds in your bank account are accounted for in your budget. I'll leave the official steps below, but making sure the full amount you have available matches your bank accounts means everything is up to date! :)

    Different people do think in different ways, so thank you for sharing how things clicked for you!

    Here are the steps you can use to verify that the amount in your account(s) matches exactly with your budget in YNAB – no more and no less.

    1. Advance to next month's budget. (The math is easier there, because all overspending is covered.)
    2. In the right sidebar, when no categories are selected, you’ll see your Total Available amount, which is the sum of the Available column.
    3. Add that to the amount you have left To be Budgeted and any amount Budgeted in Future, if applicable. Let’s stop here for a minute, just in case your To be Budgeted was negative. If it is, you would need to subtract it from Total Available, because that means you’ve given jobs to funds you don’t yet have. Preferably though, you would go back to this month’s budget and budget less in a few categories until To be Budgeted is back in the green at zero.
    4. Now, add up the cash in your accounts. That includes checking, savings, and cash accounts, plus any positive balances on credit cards if applicable.
    5. Your totals in step 3 and 4 should match up exactly.

    If those numbers don't match, let us know and we can take a closer look at things! :)

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