YNAB You Need A Budget

[los lobos marinos]

Meanwhile...I only reconcile with YNAB to lock the transactions. I've already manually reconciled as I check my accounts online every few days during the month for any transactions that look wrong or does not visually balance with YNAB and mark my transactions cleared accordingly. At the end of a calendar I lock the transactions with the reconcile wizard and don't wait for statement to arrive.

So for me, reconcile function is only to lock...

[ZeroBuffer]

I think there may be some cultural differences involved here that confuses me.

There are a lot of cultural differences around here that confuse me! I'm learning all kinds of strange things about how financial stuff works in all sorts of places. Here in the US we're still giving our card to the waiter or walking it up to the counter to pay. :shrug: My problem is usually that they leave the tip off even though I've written it on the slip, which means a good server might not get what I think they deserve.

Actually, in many restaurants when they go to process the check, they look at what you wrote, take that out of the cash register and hand it to the server and process your receipt in a batch. If they miss one or two in the whole night, they might not go through every slip to find which one didn't have the tip keyed in. Depends on who's closing the register whether they are going to be entirely anal or just blow off an error of a few bucks (compared to the take for the entire night, chasing down a few bucks at 2 am doesn't seem appealing, perhaps. And it's often "somebody else's money" so the motivation is different.)

[YYC27]

The ideal workflow would be something like this ....

1) Enter your transactions into YNAB. This will adjust your Working Balance (what you actually have, taking into account outstanding items like cheques)
2) Every so often, check your account online, and mark any transactions that show up as Cleared in YNAB. This will adjust your Cleared Balance. Your Cleared Balance should be equal to what the bank says you have. If it isn't, either you've made an error, the bank's made an error, or there was something the bank new about but you didn't (e.g. interest, fees).
3) When you get your statement, go through the reconciliation process, and reconcile all the transactions that appear on the statement. This is a final check that ensures your records match the official record of the bank. (the statement is official .. the online balance, less so).

Reconciliation goes back to the paper-and-pen days where you'd sit down with your chequebook and statement, and match up the items that appeared on both. After adding interest and fees to your working balance and adding outstanding cheques and deposits to the bank balance, the reconciliation process would be complete when both balances matched.

[olafmoriarty]

So you're saying I should reconcile only once a month when I get my statement? I just watched the What's new in YNAB 4 video, where Erin recommended (or said she was doing it) reconsiling twice a week when the numbers were still fresh in your mind. Hmm. Dilemma.

[Malisa]

I reconcile every few days/twice a week or so.

[YYC27]

eh, I'm old school in my approach to reconciliation.

The idea of 'reconciling on the fly' has been built into personal finance software for as long as I've been using it, so it's certainly not wrong. I just prefer the idea of Clear on the fly, reconcile to a fixed target (the statement).

[Turf_Hacker]

I also reconcile every 3 days or so. Makes it quick and easy, and I catch any errors (usually transactions I missed entering) quickly.

[Patzer]

I also reconcile every 3 days or so. Makes it quick and easy, and I catch any errors (usually transactions I missed entering) quickly.

It's largely a matter of materiality. I reconcile my checking accounts and credit cards monthly, to the statements. I reconcile my savings accounts whenever I look at the online balance. I count my cash every few days and reconcile to the physical cash on the days I count. Why the discrepancy?

Checking and credit cards are active accounts, but I make very few data entry errors on these. Reconciling monthly works. I've gone as long as 4 months forgetting to reconcile the most active checking account, because I don't get paper statements as a reminder. [Less than ideal work flow: email tells me statement is available. I'm busy, I'll deal with it later. A month later another email tells me statement is available. Eventually I print out the statements since last reconciliation and reconcile.] But my checking account has reconciled without errors every time.

Reconciliation is part of my payment process for the credit cards. I reconcile to the statement, then I schedule payment in full. Once in a while I find an error, typically that I recorded a charge on the wrong card. Less than once a year, I find a merchant error; I think the last one was a restaurant that made an apparent typo in the tip I meant to add on. (For $0.20, I'm not going back to try to change it.)

Savings accounts are low activity. The most common transactions are scheduled deposits (automated at the credit union, scheduled in YNAB) and interest (which I know from the online display.) When I go online to get the interest, I reconcile to the last online balance as a matter of convenience because I'm already there.

Cash is where there can be errors. I can lose change, find change, record things wrong, or get the wrong change back without noticing. So it needs reconciliation most frequently. My practice when the physical cash doesn't match the YNAB register is to enter a balance adjustment with the category of Fun Money. This gives me an incentive to track my cash accurately. The incentive works so well that my typical balance adjustment is a small inflow representing found change.

My recommendation: Frequency of reconciliation should be driven by your details. A high volume account, or an account with a higher chance of errors, should be reconciled frequently. A low volume account, or an account with low chance of errors, does not need to be reconciled more often than a statement is received.

Patzer

[Malisa]

My recommendation: Frequency of reconciliation should be driven by your details. A high volume account, or an account with a higher chance of errors, should be reconciled frequently. A low volume account, or an account with low chance of errors, does not need to be reconciled more often than a statement is received.

Yeah, I guess I should have said I reconcile my high frequency use, PIF CC that often. It's got a 'higher chance of error' in that that's the account that DH uses but is only approaching 50/50 on using the iphone and entering things. The checking account, he's almost never in unless it's to pull cash out for his fun money, but it's set to text me when that happens, so if I'M on track, when I see the text I enter it. So I only get into that account once every week or 10 days. Target card can go either way. And savings, no more than once a month.

[Turf_Hacker]

To be more specific, the every 3 days or so is for my checking account. My savings accounts are reconciled monthly after I enter the interest amounts. Credit card and HSA are reconciled at frequencies somewhere in between these. I never wait for the statements and reconcile using the online banking information.

[INAB26]

Personally, once the newness of the new feature wore off, I've gone back to just clearing every couple of days and reconciling much less frequently. The biggest reason for that is probably kind of lazy, but I figured out that if I go ahead and clear first, then I don't have to type the current balance in the reconcile wizard, just verify that it is indeed correct so all I actually do by reconciling is lock them. They're already matched and cleared.

I very rarely look at actual monthly statements, much less print them so I'd never use that interval in reconciling at all. It tends to more coincide with times of activity which is the middle of the month credit card transfers and end of the month interest deposits.

[Superbone]

Credit card companies however will show transactions as pending and this has actually helped me catch some erroneous charges before they were actually billed to me.

I've been looking at this lately on my AmEx account and it sometimes gives me concerns. It will show a $100 pending charge from the gas station but when it does go through, it's for the correct amount.

[Superbone]

I can personally tell you that First Tech Federal CU (all up and down the west coast), Rivermark CU (Oregon), Bank of America, Wells Fargo, and Chase all show pending transactions for checking accounts in the US, and the latter 3 were all doing it before I stopped using big banks about 3 years ago...

At my SDCCU website, they're labeled as "Hold"s but it's the same thing.

[litterbug]

eh, I'm old school in my approach to reconciliation.

The idea of 'reconciling on the fly' has been built into personal finance software for as long as I've been using it, so it's certainly not wrong. I just prefer the idea of Clear on the fly, reconcile to a fixed target (the statement).

Same difference, really, except that instead of using the wizard frequently you have everything already cleared and ready to go when you go to reconcile.

I like reconciling frequently because for some reason all those little locks make me happy.

[Darx]

This discussion is fascinating to me. I haven't been clearing my transactions even when they show up as cleared by my bank when I look at my account online. I'm just waiting for the monthly statement to reconcile and clear them all at once. I do my data entry manually rather than using the download feature because one time I tried and it looked like CC stuff was going into my checking register (they are at the same bank). I didn't stick around long enough to see what was going on but went back to a previous version right away and haven't tried again since.

What is the value to people of clearing throughout the month when the working balance shows what you have after the uncleared stuff is taken into account? I kind of wonder if I'm missing something here, some opportunity for YNAB fun.

That said, I just did my first batch o' reconciliations, and what a delight! I found some money from starting with a balance that was off, my cash account is exactly right (yay!), and I love seeing all those little locks and having YNAB congratulate me on my efforts. And I love that I can still go back and change the categories on things if I want to recategorize expenses. Why do I want to reconcile? Because it's fun!