YNAB You Need A Budget

[lindy]

Patzer,
Thanks again for the clarifications and explanations.

Before YNAB, I scrambled to come up with my self-employed retirement contribution each year. Because I had good credit, I "solved" the problem by getting new credit cards with 0% cash advances or 0% balance transfers if I was still paying the cash advance off when the promo period was over. I never used those cards for anything else until the cash advance/balance transfer was paid off. I was lucky to get no-interest cards (once it was 1% until I discovered creditcards.com and found cards for 0% again), but what a drag it was to constantly be paying them off.

With YNAB, I continued my usual monthly payments to the "loan" card till it was paid off and I also budgeted monthly for my retirement contribution. With YNAB, when my accountant tells me what I can contribute, it's a relief and a thrill to see that the money is there.

Thanks also for reminding me that YNAB didn't have accounts in 2007 and for that rundown to date of YNAB improvements and their corresponding confusions. It was informative and it gave me a good laugh.

Linda

[jdawg101]

You would make a savings account on-budget if your focus is on how much you have saved and what jobs that savings is supposed to do. When you transfer money from an on-budget checking account to an on-budget savings account, there is no category in either account because the money is staying in the budget universe. The real action showing what is saved happens on the budget page, where you may budget dollars to Savings:Car Replacement, Savings:Home Improvements, and so on.

I'm restarting my YNAB budget and want my Savings acct to be an "on-budget" account. Because I want to follow the "on-budget to on-budget" method, does this mean I:

1) do not create a Savings category in my Budget
2) do not categorize transfers from my Checking account into my Savings account ?

Thanks!

[chrish]

1) You should create some category(ies) that are savings related, but don't name them the same as your account.
2) Correct!

[brown685]

The proper way to think about it is to name your categories based on the purpose you are giving to the money. Name your accounts to identify where the funds are being held.

So I might name my accounts:
Chase Savings
Chase Checking
Capital One Savings

I would name my Categories:
Groceries
Car
Emergency Fund
Vacation
Christmas

In this case, Emergency Fund, Vacation and Christmas could all be considered Savings, but I have assigned them a purpose in addition to just saving the money. I don't think I have a category called just Savings, or one that is even has savings in the name.

James

[jdawg101]

Gotcha. These ideas make sense to me. I just wanted to make sure I understood and implemented reminder #2 in Lau Tzu's reminders correctly:

Lau Tzu's reminders:

1. Everything needs a category, *except*
2. On-Budget to On-Budget: NO category
3. On-to Off-: Category ONLY on the on-budget side
4. Off-to On-: Category ONLY on the on-budget side
5. Off-to Off-: NO category

Per Chrish in the post earlier, to implement #2 above I should create specific categories in my Budget under Savings, but I shouldn't need to label my transfers from my "on budget" checkings to "on budget" savings acct under any category....right? Sorry if I'm paranoid, I just want to get this right.

[mozzie61]

I should create specific categories in my Budget under Savings, but I shouldn't need to label my transfers from my "on budget" checkings to "on budget" savings acct under any category....right?

Right. A transfer of funds between on budget accounts does not cross the budget threshold, you are simply moving the money from one holding place within your budget to another, so there is no category required. This Whiteboard Wednesday about on/off budget accounts may help relieve your paranoia.

[jdawg101]

I should create specific categories in my Budget under Savings, but I shouldn't need to label my transfers from my "on budget" checkings to "on budget" savings acct under any category....right?

Right. A transfer of funds between on budget accounts does not cross the budget threshold, you are simply moving the money from one holding place within your budget to another, so there is no category required. This Whiteboard Wednesday about on/off budget accounts may help relieve your paranoia.

Awesome, thanks so much!!