Using Scheduled Transactions for Cash-Flow Projection in YNAB
This question came up in another thread, and while the answer has been presented in the replies of many other topics, I don't think there's actually a post dedicated to it. If this is a duplicate, sorry! (Mods, feel free to act accordingly)
Ok, so a very useful application of YNAB's software is looking at the account registers to project cash-flow needs. This is especially efficient if most of your variable spending happens on credit cards.
Set up scheduled transactions for known, repeating expenses (rent, mortgage, bills, etc). It doesn't matter if you have to manually pay them or if you're on auto-pay with those companies. If you have regular income, put that transaction in as well. This scheduled transaction saves you the work of typing redundant information every month.
Even if your bill will change every month (credit card statement, electric), you can leave a scheduled transaction that captures payee, approximate date due, average amount (or $0), and put the month in the memo. Then, when you get the bill, update the scheduled transaction to the correct info (only needs a small change). If it's March and the transaction memo says February, then you know you haven't updated the amount to the current bill yet.
Aside from saving work, if you turn on the running balance in your account register, you'll easily see how your outflows impact your account balance. This is even more impactful if you time everything for a month view (mainly because it matches the budget screen).
For example, if you're paid every two weeks, have two, separate, scheduled transactions. Each repeats every 4 weeks, and is offset by 2 weeks. Similarly, if there's a weekly outflow, I'd do 4 transactions, repeating at 4 weeks, and offset appropriately.
Then, as you're deciding how much money to shift to/from savings, just look at the running balance.
There are lots of ways to make the decision of how much to move to/from savings. Here's three that I can think of:
1. Pick a low number that will be your account floor. Make the lowest point of your running balance equal to that number. To save math, make a scheduled transaction (of course) and do Current Low Point (minus) Wanted Low Point within the outflow field. Voila! There's the number you need to transfer in order to achieve your goal. This option is good if you can easily transfer money from savings to support any high, unexpected expenses from your checking.
2. At the beginning of the month, ensure that your account balance equals your Average Monthly Spend + Any Large, Upcoming Outflows + a cushion of your choosing. This option is good if you're worried about overdrafting.
3. Take advantage of your credit card use. Using a method above, you're already earning savings interest on your reverse float (dunno what to call it) by putting excess cash-flow in the savings account. To take it a step further, you can earn interest on the credit card statement by transferring that amount to savings for a few weeks, then back out in time to pay the bill. To save work, you could set it as a (lower) average-ish amount and automate it. That's more for fun, as the return isn't huge, but it's a possibility.
Hope it helps!
Good explanation of how to use scheduled transactions. It's funny, I was just playing around with this before I read your post. I mark scheduled transactions with a red flag if they need some sort of action (update variable amount, renew CD, update credit card expiration...). I was thinking about changing the flag color to green after I verified the variable amount but then that would be green for the next month too after that. I like the idea of putting the month in the memo field.
Maybe YNAB needs to create a flag that resets to red at the beginning of the month and you change it to green after you take action during the month. Another option would be to provide a special action needed flag that resets every month that you can clear after that action is taken.
Edit: I guess another option would be to use a red flag for action needed, change it to green when completed, and then use flag bulk edit at the beginning of the month change all scheduled greens back to red, just thinking out loud here.
Move Light Sound Life said:
To save math, make a scheduled transaction (of course) and do Current Low Point (minus) Wanted Low Point within the outflow field.
I do basically what you described, but hadn't gone to the point of making the transfer to/from savings a scheduled transaction. I may give that a shot, and see what happens. At the very least, make it a scheduled transaction with 0 amount, so I can change it to the appropriate inflow or outflow at the beginning of each month, depending on if I'll have a surplus or shortage.
I basically look down my Running Balance of my checking account, and see what the lowest point will be. If it's below my threshold, I move money from savings. If its above my threshold, I move money into savings.