I’m working with my first official email coaching client (something I’ll be posting about tomorrow in more detail), and he’s been great – totally open to my suggestions and enthusiastic about getting his budget fully dialed in for the new year.
He sent me his budget file for review, and I replied that he and I were going to have a mantra throughout the coaching relationship:
A simpler budget is a more effective budget, because it allows you to maintain fewer pieces of information in your head and on your budget screen.
Rather than explicitly tell you to maintain no more than three to four on-budget accounts while sticking very closely to YNAB’s default category setup*, I’ll just encourage you to ask yourself one question:
What is lost?
“If I drop my second/third/fourth personal checking accounts, what is lost?”
“If I start using just one credit card for personal expenses and one for tax-deductible business expenses, what is lost?”
“If I combine four of my budget categories (since their amounts never change and I can add a note to the category describing the detail of each expense), what is lost?”
There will be cases where the the more-complicated solution pays for itself. Maybe one credit card gets you double airline miles at grocery stores and another is a gas card that earns you couple free tanks of gas every year.
Take the time to quantify the benefit of the complexity. If the more-complicated structure puts substantial dollars in your pocket, great.
But if you’re only maintaining the complexity for emotional reasons, i.e. “I maintain multiple savings accounts for different savings goals” – that’s worth exploring. Not saying it’s wrong, just saying it may not be necessary. After all, that’s exactly what YNAB was built for: to allow you to partition your money on one screen, knowing exactly what job each dollar has been given.
Give YNAB a chance to do its job. Trust it, and simplify.
*Oops, looks like I accidentally did explicitly tell you to maintain no more than three or four on-budget accounts while sticking as closely as possible to YNAB’s default category setup. 🙂