YNAB You Need A Budget

[olafmoriarty]

This may be a horrible newbie question, but now that YNAB has got a button I can press to reconcile an account - what does it do? According to Jesse's blog about it I'm going to love it, but I still can't quite figure out what it does.

When I enter a transaction, it's automatically listed as Uncleared. Which kind of annoys me, because I would prefer the transactions to be cleared as default. According to the support pages, uncleared transactions are the one my bank doesn't know about yet... But my bank knows about my transactions the second I swipe the card, so all that means is that I have to change the uncleared status to cleared every time I enter a transaction. The only time I do a transaction the bank doesn't know about is when I transfer money from one account to another and the accounts are in different banks, in those cases the bank I transfer the money from knows that it's gone and the bank I transfer the money to doesn't know it's on its way yet.

... and now there's a THIRD status I need to pay attention to? How? Why?

I decided to test this on my "Cash" account (which brings up another cleared/uncleared question: When I pay something with cash, why shouldn't the bank, in this case my wallet, know about it?), and a dialog box told me how much money I should have in cash, I clicked okay and then the big green button, and now all my transactions in that account have tiny padlocks instead of green C's. Okay. What just happened? What is different from the way it worked in YNAB 3, where there was no reconciliation function to worry about? Should I use the reconciliation function? How does it affect my account?

[litterbug]

Let's see, there must be a topic on this on the support page...

http://www.youneedabudget.com/support/article/how-to-reconcile

"Reconciliation is the process of making sure your YNAB account registers match your bank accounts, and resolving any differences between the two." Basically, even though you've imported your transactions, reconciling them locks them to keep you from changing them without getting a warning.

Because of this, there's no need to mark things cleared in your register. Some people want to do this to indicate that their manually entered transactions have already been matched to transactions in the bank's records, but it's not necessary, because the reconcile function pulls all unreconciled transactions within a time period, whether they're marked cleared or not.

If you import, BTW, you should do so frequently. That way your category balances will be accurate. Of course you'll check the balances after they've been added to the register, so you can spend by those category balances instead of bank balances.

[olafmoriarty]

So I no longer has to mark transactions as cleared? That's good, I guess, but I can't stand looking at the "Uncleared transactions" number knowing there's something there I haven't cleared, so I will probably either keep clearing it - or reconcile at least once a day, which sounds like a lot of work.

No, I don't import - I prefer entering transactions by hand.

(I must admit I kind of miss YNAB 3 now. YNAB 4 looks like it can do much of the same job, but YNAB 3 was... prettier. And I really miss always having my net worth in the sidebar. But I guess it's a question of habit.)

[litterbug]

Reconciling every day or two is actually very easy because you're only doing a few at a time. Try the reconciliation wizard once and I think you might agree. I'm a manual enter-er too, and the reconciling wizard makes it much, much easier than doing it in YNAB3 ever was!!

[olafmoriarty]

When I say "a lot of work" I was thinking about having to log into the bank every day. I thought one of the points of YNAB was that I could stop logging into my bank every day

I'm a manual enter-er too, and the reconciling wizard makes it much, much easier than doing it in YNAB3 ever was!!

Not quite sure if I understand what you mean. What is easier? Okay, I've only been using YNAB 3 for a month, but in that month I've never had any use for... Whatever reconciling is. I've entered transactions in the register, marked them as cleared, and that was it. YNAB 4 adds an additional step, having to reconcile it. Which, as far as I can tell from testing it, only means confirming that the account balance is correct, which it normally is (and I kind of wonder why it wouldn't be). How is that easier? (If you were in doubt, this is not intended as sarcasm - I'm honestly curious to find out what I'm missing here and how reconciling my bank account will make manual entering easier. Easier is good!)

[Jade E.]

You don't have to use that feature at all The usual way to do it would be to leave them 'uncleared' when you enter them, mark them 'cleared' when they show up in your bank balance (not just pending, but cleared the account). If you're downloading transactions, they'll be cleared when they're matched, and you never have to touch that field. If you're manually marking things as clear to keep your cleared balance matched to the bank balance, then the Reconcile feature is just a quicker way to mark those as clear. The 'lock' state is just to note that a transaction won't show up in future reconciliations, it doesn't 'mean' anything different than cleared.

If you're not using the cleared balance feature, then I'd say it's easier to just leave everything uncleared than to hit that button on every transaction you enter...

[olafmoriarty]

Hmm. Wait. Do your banks tell you what your cleared account balance is? I can't find any reference to the concept of "pending" in my bank, it just lists transactions without telling me if they're cleared or pending - and both types are clearly included in my account balance. Or well, I guess the transactions that don't have a payee listed in the bank are pending, but I still can't get a "cleared account balance" without breaking out the calculator.

[DonGately]

I was one that never cared all that much that YNAB3 did not have a reconciliation feature but that was largely because I was doing a daily reconciliation by accessing our bank account online an marking checks that had cleared the bank as cleared in YNAB. I always use manual entry for our transactions too.

Unless I'm missing something, reconciliation in any accounting/budgeting program still requires marking transactions as cleared or uncleared. This certainly was true with Quicken before I used YNAB. One of the values to using the reconciliation feature is that it helps catch any mistakes I make either in entering the amount or if my wife or I completely forget to enter a transaction.

That said, I love the new feature and now use it on a daily basis and don't mind the few minutes it takes to access my bank account and once logged on I simply hit the reconciliation button, enter what the bank shows as the balance in the statement amount box and hit the begin reconciliation button. This displays transactions that have not yet been clear and I then mark transactions cleared that have cleared in the account since the last reconciliation until the difference line shows $0.00.

It took me a lot longer to write this than to actually reconcile.

[Budget_Ninja]

Pending: The transaction has not been processed by your bank and does not show up in your account.
Cleared: The transactions have been processed by your bank and the transaction shows up in your account.
Reconciled: They appeared in your bank statement and you have verified they are correct.

Pending transactions could be checks for rent or utilities.
Often transactions are marked cleared on a download, or a visual check of your account.
Typically a reconciliation is done at month end between your bank statement and your YNAB register.

[Jade E.]

When I reference 'Cleared balance', I was referring to the display at the bottom of the YNAB 4 register. "Cleared Balance + Uncleared Transactions = Working Balance". If everything that's showing at the bank is marked clear in YNAB, then the cleared balance should match your bank balance.

Every bank I've had has either had two balances (usually Current which is cleared and Available which includes pending), or has ignored pending transactions and only shown cleared ones. If your bank includes pending transactions in your current balance, then there are cases (like leaving a tip at a restaurant) where that balance will simply be wrong (and personally I'd look for a credit union at that point...)

[DonGately]

Hmm. Wait. Do your banks tell you what your cleared account balance is? I can't find any reference to the concept of "pending" in my bank, it just lists transactions without telling me if they're cleared or pending - and both types are clearly included in my account balance. Or well, I guess the transactions that don't have a payee listed in the bank are pending, but I still can't get a "cleared account balance" without breaking out the calculator.

If you're talking about your checking and savings account the only transactions shown are those that have already cleared the bank. For example, if you just put a check in the mail this morning to your landlord for rent it will have been recorded in your checking account and therefore is pending in your register but won't show in your bank account until it is cashed and clears the bank at which time it should be marked as cleared in your YNAB register. The bank should never show pending transactions.

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.

[kevman479]

My bank shows both balances in my checking account. If I write a check in will show pending for a day or two when it comes in from another back through the clearing house and then clear it when they actually get it. Same with a debit card, it shows pending when the charge comes in and then clears when the merchant actually posts it. Bank fees and interbank account transfers show as cleared right a way.

[litterbug]

I've never seen a pending transaction, and believe me, I've used a lot of different banks and have used a debit card for years. Are you in the US? I've learned during beta testing that some banking systems run differently than others.

[kevman479]

OnlineBankView.png (178.77 KiB) Viewed 1079 times

Yes I am in the us with a us bank

[kevman479]

I just thought everyone got it this way