Transaction and budget category interactions
(1) Why does YNAB allow someone to assign a category to a cash transaction when that individual has not budgeted enough money to the category that the individual is assigning to the transaction?
(2) Why does YNAB allow someone to remove more money from the Budgeted column of a given category than has already been spent in that category when the spending was done with cash?
YNAB can't tell if you mean to fill that category after, or are intentionally creating debt, or are unaware of the consequences. Since the first two are valid workflows, the action is allowed & you are notified by the category available changing color.
But sometimes it would be nice if YNAB were a little more aggressive about warning you about creating an overspend.
I understand that intentionally creating debt can be "valid" as it's something we do whenever we use a credit card. And sure in YNAB when we enter a transaction using a credit card or cash we can always fill the category we spent towards after the transaction is entered in YNAB.
However, the fact that YNAB even allows one to enter a transaction made from a cash or checking account using money one does not have seems strange. If shopping for example, how could one pay with cash he does not have? And although the money is located in accounts and not the budget, I still don't see why YNAB would allow that behavior of categorizing a transaction made with money (from a cash or checking account) that one does not have.
Transaction categorization is a data entry process and needs to be completed for accuracy. Some of it is automated through import.
The budget process is entirely human-controlled. YNAB can't stop you from spending the money, the best the software can do is encourage you to fix it when spending introduces a problematic state into your budget.
In other words, software can't solve your problems. It can only encourage you. Ultimately, it's a reflection of your budgeting and spending decisions, and as others have said, it needs to match reality.