YNAB You Need A Budget

[kassy]

I am new to YNAB (3rd Month). I have been very confused about how to handle my Savings. I attended the Online Class which I THOUGHT I walked away from understanding. I did get that I want to show my Savings in a Category whereby the balance of the Category was equal to the total balances of my savings. Sounds simple. In my attempt to apply this to reality - I'm extremely confused.

Here is a brief synopsis of what happens (numbers changed for simplicity) each month. My paycheck is direct deposited. The next day, an automatic transfer of $1,000 goes to my savings. (NOTE: $200 of this is intended to stay in a savings category & $800 will eventually be transferred back to the checking account to be used to pay mortgage and the mortgage gets categorized at that time)

Step 1) Entire amount of paycheck gets recorded as income available: Next Month (I have a full buffer in place)
Step 2) I record a transfer of $1000 from Checking to Savings with no category (just moving money)
Step 3) I record a transfer from savings to checking of $800 (for mortgate). (again, just moving money)
Step 4) In checking account, I pay the mortgage and categorize it according (this updates my budget)

Where the disconnect happens in my mind, is I now have $200 in my Savings Account but at no time have I categorized the $200 for my Savings.

I thought I would do this at the time I made the transfer but when I tried this, it only showed $800 coming out of my checking rather than the $1000. This did not seem correct to me.

Can anyone help clear this up for me. Thank you.

What am I missing here?

[xraymd]

Greetings, kassy, are you using the older software YNAB Pro (from 2009 and before) or have you moved to the newer YNAB 3? (This post was made on the YNAB Pro board so I was just curious and wanted to be sure that this is where you meant to post.)

xraymd

[YYC27]

The way you account for your savings is by budgeting that $200 to a savings category. That will reduce the amount you have available to budget to other items, and your category balance will grow as you budget more in future months.

[kassy]

I am using YNAB 3. It looks like I'm confused about more than just the Savings. Where should this type of question be posted?

[malisab]

YYC27 answered the savings question.

The Frequently Asked Questions forum would probably be best for this type of thing. For that matter, it could go into the YNAB 3 forum. Though that is theoretically for things more specific to the ways that 3 functions vs. Pro. The answer to your question as posed thus far wouldn't get an answer that was different for Pro or 3, but if it got deeper, it could. So just good to be sure which version you have in case it got to an area where there IS a difference and to make sure you got the right answer for your software.

Hope you got your savings question answered. The online classes are great, aren't they? Welcome. If you've got more questions, post away.

[kassy]

AHA! I do believe I've got it. I am not categorizing the money going into my Savings Account. I am simply putting it in my budget to go ahead and build up. Then, when I actually spend- I will transfer it to checking and categorize it as an expense against my particular savings category.

In addition to the Savings Class, I also participated in the Credit Card class. This made me realize I was recording expenditures twice in my budget. I recorded them when they were paid by a CC and then I recorded the entire payment of the CC as Debt Repayment. Once I clearly defined what was spent paying for new purchases and what was spent paying for old debt, then everything made sense. I was having a disconnect because my budget said one thing and my accounts said something different. Now they look more accurate to me.

I have been able to fix my Savings Budget Category which now ties to my balance on my Savings.

I should be able to eliminate any spending using my Credit Card now and simply pay downt my old debt. <-- This is my current goal.

Thank you everyone for your help.

[bookman413]

I believe that you are conflating your actual bank savings account with the concept of having part of your total money be designated as "savings" in your YNAB budget.

Here's an example of one way to look at the situation from a YNAB perspective:

If you have $5000 in a checking account and $500 in a "savings" account, a total of $5500 spread between two accounts,

and, In your budget, you have all $5,500 allocated to different categories like rent, car repair, clothing, food, gas....and "savings".


here's the important part:
In your savings category in YNAB, you happen to have listed a total of $700, which is $200 more than is in your bank savings account. but the fact that they don't match doesn't matter. the fact is that you have designated $700 of your money as savings, and wherever that money is accountwise is not relevant really. Where your money resides doesn't really matter to your budget or YNAB. What you will learn to do is refer to your budget category totals to tell you how much of your money is "savings" and how much is "car repair" and how much is for "food".
As you get used to using YNAB, you'll find you get to a point where the balances in your actual banking accounts become somewhat irrelevant to your decision making, other than making sure that your total cash availabe in them matches the totals of your YNAB budget categories. In other words, just because you have $200 or $500 or whatever in a "savings" account doesn't mean that it's savings. It's savings if you have designated it as savings and you don't touch it. It doesn't matter what account it is in, really.

You can shuffle your actual money around however you like, according to your need for convenience or for better interest rates or whatever--using transfers in YNAB to record where the money goes-- and it doesn't affect your budgeted amounts at all.

What needs to match is your total amount of money in both your savings and checking account. That total should match the sum of your YNAB budget categories' available cash.

I hope that helps.

[tamar]

It does. I had to redo the basics too and found the same issues.

That was put perfectly and now my thinking is starting to change to 'how much is left in my BUDGET category' instead of bank account. I was getting the exact same errors, and couldn't figure out why since YNAB PRO had been so easy, I thought I knew the whole program, I didn't.

I am using ynab3, but never really got the categorizing and budgeting right until recently.

Here's an example of one way to look at the situation from a YNAB perspective:

If you have $5000 in a checking account and $500 in a "savings" account, a total of $5500 spread between two accounts,

and, In your budget, you have all $5,500 allocated to different categories like rent, car repair, clothing, food, gas....and "savings".


here's the important part:
In your savings category in YNAB, you happen to have listed a total of $700, which is $200 more than is in your bank savings account. but the fact that they don't match doesn't matter. the fact is that you have designated $700 of your money as savings, and wherever that money is accountwise is not relevant really. Where your money resides doesn't really matter to your budget or YNAB. What you will learn to do is refer to your budget category totals to tell you how much of your money is "savings" and how much is "car repair" and how much is for "food".
As you get used to using YNAB, you'll find you get to a point where the balances in your actual banking accounts become somewhat irrelevant to your decision making, other than making sure that your total cash availabe in them matches the totals of your YNAB budget categories. In other words, just because you have $200 or $500 or whatever in a "savings" account doesn't mean that it's savings. It's savings if you have designated it as savings and you don't touch it. It doesn't matter what account it is in, really.

You can shuffle your actual money around however you like, according to your need for convenience or for better interest rates or whatever--using transfers in YNAB to record where the money goes-- and it doesn't affect your budgeted amounts at all.

What needs to match is your total amount of money in both your savings and checking account. That total should match the sum of your YNAB budget categories' available cash.

I hope that helps.