Emergency and Sinking Funds
I am trying to figure the best way to do this. I started using YNAB last year and have been using it in a pretty basic manner. Now I'm getting into areas I can't really find an answer for so maybe you all can come up with something I didn't think of.
I have a Checking account (Budget) and a High yield savings account (HYSC) (Tracked) at a different bank. I do all transactions out of the checking account and have my Emergency fund in my HYSC. I transfer $250 a month from checking to my HYSC.
Now I have started sinking funds for long term replacement Items, car, roof, appliances, etc. that I'll put money away for 10-30 years. I don't want to keep this money in my checking account, I want it in my HYSC and I want to be able to track the progress in my Budget.
What would be the best way to set this up? Remember I want to track the progress in the budget.
I'm probably over thinking it so any help would be greatly appreciated.
Bring your savings account on-budget. (Create a new account and make a transfer of the balance from the old, categorized as TBB. Close the old account.)
Create an EF category and budget the same amount of money to it.
Moving forward, the categories tell you the amounts you have reserved for various purposes. Transfer as much as you like into the higher rate account. I look at scheduled transactions over the next few weeks to gauge how much to leave in checking.
OK, got it working right, built an EF/Sinking Fund category and then put my different goals under that so I can keep track of what I'm putting in it. This category represents my high interest savings so I can keep it separate. The first transfer took place last night and I just assigned it as a transfer and it worked perfect. Now I have set up a set amount to be transferred each month to this account and will budget the money accordingly. Thanks for the guidance dakinemaui everything worked as advertised.
So below is how I set it up this is all the categories for my HIS and I set up an automatic payment from my checking to my HIS for $521.24. Each category has what it needs to be funded next to it. When the money is available in my checking account I immediately budget the money till all categories are funded and then when the transfer takes place from checking to HIS I just change the payee to "Transfer - Money Bank". This works perfect. Each catagory I made notes for how long the item lasts and average cost then calculated how much I would need to put in each month to replace the item after the time period, for example.
10 Year Lifespan
$ 6.25 per month
$75 per year
Once that item is fully funded I'll change the catagory to (FUNDED) and then subtract that from the monthly requirement and adjust the automatic transfer. Hope this makes sense, it does to me.
It works for me. And so far it will be easy peasy to maintain. Once the EF hits a certain amount I'll invest 2/3rds in my taxed account with Vanguard and start building the EF again. TBH I could lessen the time and increase the amounts and that might be the next step just want to ensure I have it down pat and understand the process before going there.