How do you categorize Wealthfront?

I've started putting our savings into a high-yield savings account with Wealthfront. But YNAB wants to categorize these as expenses. Our expenses are registering as super high each month when a big chunk of that is actually going into this account. Anyone have a tip on how to better categorize this?

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  • 1. Make your HYSA an on budget account. 

    2. Create a savings category (or a few) if you haven't already. Income Replacement, Home/Car Maintenance, Medical, Vacation, Down Payments, etc. are seemingly common examples.

    3. Budget your money into those categories as fits your priorities.

    4. Transfer to the HYSA any excess money from your checking account that you want to earn higher interest on. There will be no category attached, because YNAB doesn't care which account your money lives in. 

    5. Ensure you have enough money in your checking to support spending (after checking the appropriate category first, of course).

    Like 3
  • Thanks for your reply! I don't think this answers my question though? YNAB automatically adds Wealthfront to the Tracking section, and any money I transfer to it registers as an expense. So when I look at my month's expenses, it looks like I've spend the money which I in fact moved to my savings. 

    How can I change that? 

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      • dakinemaui
      • dakinemaui
      • 12 days ago
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      Slate Blue Guitar You have to create a new on-budget, savings account, as you cannot change the type of an existing account. In the new account, enter a transfer for the balance, categorizing as Inflow: To Be Budgeted.

      Unlink the old account from Direct Import, and link the new account if you like. Also close the old account.

      Like 1
    • Superbone
    • YNAB convert since 2008
    • Superbone
    • 12 days ago
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    Slate Blue Guitar said:
    YNAB automatically adds Wealthfront to the Tracking section

    Add the account as an “unlinked” account. This gives you a choice of account type. Choose Savings. You can link it afterward. The issue is that Wealthfront is usually an investment account that you generally do want as a Tracking (investment) account (if in YNAB at all) but in this case you’re using it as savings account.

    Like 1
  • I am honestly still confused. My Wealthfront savings account is also on-budget. When I move money from my checking account to the Wealthfront account, I use the transfer option in the "payee" field. This prevents me from taking advantage of the goal setting feature for categories on the main budget page. How can we better categorize Wealthfront so that we can take advantage of additional features like goal setting without making our expenses blow up? I would like to do the same for my Wealthfront IRA too.

    Should I make a new post? I think our questions are similar but who knows :D

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 4 days ago
      • Reported - view

      kaleidoscope It sounds like your Wealthfront account isn't in your budget and is a tracking account. That's the same issue as stated above. You need to make an on-budget Wealthfront savings account. Read my instructions immediately above your post on how to do this.

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    • Superbone Nope, my Wealthfront savings account is in the budget section (though the IRA is in the tracking section so I need to change that). The only option I see to make a checking account to Wealthfront savings account transfer work the way I want is to:

      1. stop using the transfer option in the "payee" dropdown menu and assign Wealthfront savings transfers to a new "payee" (in my checking budget)
      2. categorize the "transaction" the way I want (in my checking budget)
      3. repeat the above in my Wealthfront savings budget
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      • dakinemaui
      • dakinemaui
      • 3 days ago
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      kaleidoscope said:
      I would like to do the same for my Wealthfront IRA too.

      The problem with this is that IRA funds have one job -- fund your retirement -- so there will only be a single category; not much point in that. Additionally, those funds are not really available to spend until you've reached retirement age. Even then, they are typically transferred into a normal account before you can use them. For this reason, it is recommended that IRAs are either not even in YNAB or they are Tracking accounts.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 days ago
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      kaleidoscope I see what you're saying now. Those funds are already in your budget and have already been categorized. Moving funds from checking to savings will have no effect on your budget (and shouldn't have!). Location is separate from purpose. 

      Also, you don't want your IRA in your budget. Leave it as a tracking account. When you transfer to it, those funds will leave your budget.

      Like 1
  • kaleidoscope said:
    This prevents me from taking advantage of the goal setting feature for categories on the main budget page

     If by this, you mean that your transfers do not allow you to categorize them, then your HYSA is actually correctly on budget. 

    Read this to understand why and how to meet those goals:

    https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/

    Like 2
    • Move Light Sound Life Okay. Is there a method to set goals for on-budget savings accounts that I've completely missed? If on-budget transfers cannot take advantage of the goal setting function, then what's the point in having a goal setting function that you can't apply to savings that are on-budget? I'm very confused.

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      • dakinemaui
      • dakinemaui
      • 3 days ago
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      kaleidoscope That money has already been assigned to various categories. Money is "saved" as soon as you put it in a category and don't spend it. Moving to a different account doesn't make it any more saved.

      So no, goals work with categories. There is no goal to cause you to transfer $X per month because that's merely a change of location. Categories are concerned with defining purpose. Make sure you read the document linked above.

      Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 days ago
      • Reported - view

      kaleidoscope You don't set goals on accounts. You set them on categories. 

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 days ago
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      kaleidoscope Read the linked article about the relationship between categories and accounts. Here's the classic example. Say you have $1000 on your person. $500 in your left pocket and $500 in your right pocket. You transfer $500 from your left pocket to your right pocket. Now you have $1000 in your right pocket but the same total, $1000, as before the transfer.

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      • dakinemaui
      • dakinemaui
      • 3 days ago
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      Superbone You must have expensive taste. 😋 The classic example I've seen is $5 for a burger in your back pocket. You move it to the front pocket (for increased security), but that hasn't changed the fact that it's supposed to buy your lunch. 

      Like 2
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 days ago
      • Reported - view

      dakinemaui Ha ha. Yeah, I thought about that after I posted. That's a lot of cash to carry and would make you walk funny. 🤣

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  • kaleidoscope said:
    repeat the above in my Wealthfront savings budget

     Here's where you need a paradigm shift:

    You only have one budget. It includes all money in your accounts - checking, savings. 

    kaleidoscope said:
    Is there a method to set goals for on-budget savings accounts that I've completely missed?

     When you get the money, budget it into the budget cell for your savings category. 

    If you, like me, had savings pre-YNAB, but didn't put that savings amount into your savings categories at the very beginning when you started your budget, you have some rather annoying (possibly painful) reallocations to do.

    Like 1
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