I really enjoyed this and hope that this continues. It helped answer a lot of my questions about getting started.

Excellent. I especially liked it because it was short. I would like to see more of these white boards and keep them under 10 minutes.

Maybe a session on shifting money within the budget between categories.
Like:
Budgeted $200 Groceries you spend $225
$150 Entertainment so you transfer $25 to groceries
Do you up the Groceries budget amount by $25?
and reduce Ent. budget by $25
Thanx again.

Thanks Jesse, that was excellent. I’ve worked in accounts and finance for most of my working life, and it was the best and simplest explanation of the rationale for a budget and categories I’ve ever heard. I would also be interested in your answer to Michael Jones question on shifting the budget between categories. My question would be if you do shift, how do you know your original budget for Groceries of $200 was incorrect – and does it really matter. Sometimes it’s better to just have the total budget balanced and show where in the categories you’ve gone wrong. Then you can adjust accordingly for the following month. This is a question I’ve asked many times over the years.
Once again – thanks, and keep up the good stuff.

Awesome! Not long winded at all! Really really helpful! Great idea, keep em coming!

Oh Yea, I want to know the answer to Michael Jones’ question too!! 8>)

Jesse,

This was helpful and I like how you demonstrated the flow of income and giving the money categories and something to do before leaving the budget or at least setting aside but not actually being spent.

I look forward to more of these weekly tips.

Thanks. :)

Great explanations. Thanks! I hope these continue.

Just FYI

I think it is great that Jesse publishes information like this on a regular basis. Be it videos, articles on how to save on groceries or budgeting problems. I think that all of the information coming from YNAB is great!

Thanks Jesse

Jesse,

Thanks for posting this video. I’m just getting into the habit of using YNAB 3.

This short little explanation was incredibly helpful!!!

I really hope you keep posting these.

@Michael Jones,
You absolutely can do that. There are basically two camps:

1) Camp one wants to keep their Budgeted amounts rigid for the entire month so they can see what they originally thought they needed, and then what they actually used, in a specific category. They like to measure their budgeting accuracy I suppose.

2) The second camp just doesn’t like to see overages, so they’ll shuffle money between categories (as your example did) so everything balances (to the extent possible) and there are no overages. I’m in this camp. I don’t find it particularly rewarding to know that I can guess correctly (or not) at the beginning of a month nearly as much as getting rid of category overages :)

To each his own though!

@Lea, this is probably why you’ve gone back and forth for a while. The two options both have pretty evenly-weighted advantages/disadvantages.

Thanks. Helpful. So your saying that if I want to move some Christmas money out of my checking into my savings, if both accounts are “on-budget,” I just transfer the money between my accounts. Then on YNAB enter the transaction by setting the payee as “Transfer:Account Name” and leave the category blank. Right?

Also how do suggest people guard against the danger of people looking at their Christmas budget and seeing say $500 available and going out writing a check for that much, not realizing majority of that money was physically in their savings account, not checking? To me it seems the fewer the accounts you have the better. One checking, one savings, one credit card (that doesn’t carry a balance).

Also, any strong opinions as to whether its more helpful one way or the other to have things like emergency fund within the budget box or as an off-budget account?

Thanks again. Very helpful.

Hi Jesse!

Thanks for this – it reinforced what I had been thinking about the accounts and now I am going to set up some off-budget accounts I had been thinking of setting up.

I would like to see more about the theory behind the overspending settings. What happens to the different balances when you choose the recommended option (and how do you reconcile the balances in your budget to your bank accounts – I would like to make sure the money I have in my budget matches up to the money I have in my accounts – I’m still a newbie at this and like to have these small reassurances…) vs. pushing the overage to the next month’s version of the same category. (If you already have a training video on this, I must have missed it – can you point me to it again?)

@Nathan,
Honestly there isn’t too much danger in showing $500 in the checking account and writing a check (but the $500 is really for Christmas) because your whole spending perspective is focused on your category balances — not your physical account balance. And you’re right, the fewer the accounts the better. Expect a Whiteboard Wednesday on that very topic as well. I’m amazed at the work people create for themselves by having so many various accounts.
For an emergency fund, I keep it off-budget only because it’s an account where it really physically resides somewhere else (to earn some interest). Actually, I keep all of my savings accounts off-budget. The only accounts I have on-budget are my checking and credit card. (The credit card I’m actually going to close so I can just move to one account and have less work for myself).

@Liz, as far as the overspending goes, you can still have your budget reconcile with your bank balance(s). You’d just need to look at the footer of YNAB 3 and take into account the overspending. (Which really is already taken into account with the category balances, you shouldn’t double-count it). Here’s a link.

Great idea – love it. Suggestion – I’d like to be able to see the whiteboard better (lots of reflection, and too small to read) so we can follow more easily.
Now the (long and involved) question: we have a number of savings accounts that we call “reserve accounts” set up so that we can put away 1/12 of certain non-monthly expenses every month (e.g. Christmas, car repairs, taxes, insurance, household maintenance/renovation, etc.). All of them are contained within the budget, but it helps with the accounting, because once all the transfers are made into those reserve accounts, and the majority of our bills (mortgage, utilities, etc.) are paid on the first of the month, we know that what’s left is available for this month’s regular expenses (groceries, gas, entertainment, etc.).
I’m having trouble with the monthly transfers we make into those reserve accounts. I’m not sure how to keep track of the mounting balances in YNAB. Now that there’s a way in YNAB to “keep money” in certain categories and roll them over from month to month, do I use that feature for those reserve accounts? Do I have to keep an accounting of all those separate reserve accounts so that our monthly totals add up to the same as in the bank account (which is a chequing account and a number of savings accounts, but all under the same account number, so they’re all accounted for on our monthly statement)?
I’m sorry, it’s pretty complicated, but we set these reserve accounts up so that we would be making interest on all that money we reserve for yearly (as opposed to monthly) expenses, and it kept that money out of our chequing account so that we’d keep our paws off it until needed! It has been a life-changing financial decision, so I don’t want to put everything back into our general chequing account, but I need to know how to keep the YNAB accounting system and the different reserve accounts all working in sync.
I LOVE the way you guys support us all, and how this isn’t just a product you’re selling, but really a kind of mission you’re on to help us help ourselves financially. Keep up the good work!

@Jennifer,

Jennifer, I’d recommend setting up matching categories for each of these accounts. For example, if you have a car repair savings account, set up a category for it as well. If you move $100 from checking to the car repair account, that’s a transfer within the threshold …so you don’t need to categorize it. Then just make sure you budget $100 in the same category. The category balance will grow with the account balance. Hope that makes sense!

@Jennifer,

One last thing – I’d recommend keeping that emergency account and all these savings accounts on – budget , and just do the same thing for each – set up a matching category. Since a budget is a plan for your money , and savings is a part of your plan, it’s fine to do that.