What is Budget Reconciliation in YNAB?
Reconciliation is the act of making sure your bank account balance matches your budget. If you’ve ever balanced a checkbook, this is a modern day version. It sounds like a bigger deal than it is—like something people who don’t like math or boring things should avoid at all costs. When, really, reconciliation is just a big word for a little task that can keep you out of financial trouble down the road.
The process of reconciling helps ensure that you, YNAB, and your financial institutions all agree. Once you’ve successfully reconciled, your cleared balance in YNAB will match the cleared balance of your bank accounts (to the penny). Uncleared transactions will be limited to transactions that are still pending with your bank, either because you manually imported them or they haven’t cleared your account yet. (It can take a day or two.)
You can tell which of your transactions have been reconciled because they will have a little green lock in the place of the little green or gray “c” that indicates whether or not something has cleared your bank account. The lock doesn’t mean you can’t make changes to that transaction in the future, it just means that you’ve already checked it against your cleared bank balance.
We recommend that new YNABers reconcile their budget daily, and veteran YNABers do so at least once a month. The more you reconcile your budget, the easier the task is to do since you’ll have fewer transactions to review.
Procrastinating newbies and experienced YNABers who are always eager to play with their budget can safely meet somewhere near the middle with a once-a-week date with the Reconcile button.
How Do I Reconcile My Budget in YNAB?
First, set the mood. Pour some wine, set out a plate of cheese and crackers, go put on something a little more comfortable, light some candles…wait, no. You don’t have to do all of that (but now that I’ve thought about it, that’s exactly how I’m going to start doing it).
- Log into your bank’s website and find your cleared balance. This may be different from your available balance.
- In YNAB’s web app, click the Reconcile button at the top of your account register.
- Does the number YNAB shows match the number you found in step one? If yes, do the reconciliation dance. Oh yeah, break it down, you budget master. No? Continue to the next step. DON’T PANIC!
- All caps made that feel panicky, didn’t it? Sorry. Anyway, this is no big deal. Just hit “no” and then enter the balance your bank account shows.
- Check to see if you’re missing transactions because they haven’t been entered or cleared in YNAB. Add and clear those. Conversely, if you have a transaction in YNAB that’s not listed in your bank account, make sure it is not marked cleared in YNAB.
- Double check to make sure your bank balance isn’t including pending transactions—again, you want to check against your cleared balance.
- Keep making adjustments as suggested above until the top of your register offers the Finish Reconciliation button. Click that, and that’s right…reconciliation dance time.
Learn even more about budget reconciliation in our help doc.
(Side note: There’s no established reconciliation dance yet, so just make up your own. Our TikTok crew should get on that.)
Why Do I Need to Reconcile My Budget?
When you reconcile your accounts, you’re building trust between you and your budget, and between your budget and your bank.
Do you want to be featured on an episode of Divorce Court some day with your bank account and your budget to discuss your irreconcilable differences?
Well, you won’t be, but you should reconcile anyway.
With YNAB, we check our budget to see if we have money available to spend, not our bank account. We have to be able to believe our budget is telling us the truth and reconciliation helps.
6 Budget Reconciliation Myths
Whether it’s genuine confusion or an excuse to put off doing it, budget reconciliation myths abound. Here are a few that we see often:
- I have to wait until pending transactions clear to reconcile: (Insert sound of Family Feud buzzer here) Nice try, procrastinator. I recognize my people. But no, the status of transactions should match the status at the bank, so transactions that are pending should just be marked as uncleared. That check you wrote the electrician three weeks ago that hasn’t been cashed yet? It’s still out there, just uncleared. Once you verify that, you can reconcile your account despite the pending transactions.
- I don’t need to reconcile if my balances match: Your thought process here makes sense, but you should still hit that Reconcile button. Reconciling regularly makes it easier to find discrepancies. Also, it prevents duplicate transactions from importing and if users hide reconciled transactions, it can help reduce the loading times in the register.
- I don’t need to reconcile my credit cards: All of your budget accounts should be reconciled regularly, including your credit cards. If you owe money on your credit card, it should show as a negative balance in YNAB. If you make a balance adjustment to your credit card, you will need to adjust your Credit Card Payment category in your budget as well, for the sake of accuracy. Read that last sentence again because it’s important.
- I don’t need to reconcile if I use Direct Import: Everyone should reconcile. Technology is great and all, but it still needs human oversight.
- Reconciling is hard: If you reconcile on a regular basis and make sure you’re only using your cleared balance, the reconciliation process isn’t difficult. You also shouldn’t have to make an automatic balance adjustment each time you do it. It’s true that you may need to do a balance adjustment the first time you reconcile, or if it’s been awhile, but if you find that your balance is off every time you reconcile, there’s probably a flaw in your process. Review the Reconciliation help doc and if you’re still stuck, take advantage of our other help options.
Budget reconciliation is an easy way to make sure you, your budget, and your bank accounts communicate well so that you can live happily ever after. Make a date of it.
Plus, you look awfully cool doing the reconciliation dance. Probably.
Looking for more tips and tricks to achieve budgeting greatness? Check out the Weekly Roundup.