If you are wondering about savings accounts and how to handle savings accounts in YNAB (which we know many of you are, because you ask us), this one’s for you.
The location of your money, where it physically sits in a checking account or a savings account, is somewhat irrelevant. However, your money’s occupation is of the utmost importance. What is your money doing? What is it for? What is its job?
Where your money lives has nothing to do with what your money is for.
For example, if I was to say, I want to get a beat on my kids, specifically, I’m wondering about Harrison. Where is Harrison?
“Hey guys, where is Harrison?”
“He’s in his room, Dad.”
Ok, great. I know where he is. He is safe in his room. Except, then I really haven’t done my job if I don’t ask the follow-up question, “What is he doing?” It might be that he is reading a very thought-provoking novel. Great. I know his location and I like what he’s doing in his location. But the answer could also very likely be that he is climbing out the window with the escape ladder. And I have different feelings about that.
I would submit, that the most important question is, “What is my money doing?” Where Harrison is, is less important than what he is doing. I care about what he is doing much more than where he is sitting specifically.
Checking account, any number of savings accounts, credit card account—where your money is sitting might give you a little bit of information—but what is really important, is what your money is going to do.
The occupation of your money is far more important than it’s location. What will my money do while it sits in my fill-in-the-blank account?
As you start to follow YNAB, many people start chipping away at the accounts and start closing things, not because it’s the only way to do it, but mostly because you aren’t concerned with where your money is, you are focused on its purpose.
So if I have a bunch of kids in a house—which I do—they are all in the house, great. But if I have a four-year-old downstairs with red paint (true story) that is the most important information.
Start thinking more about your money’s purpose and spend less time worrying about where it physically resides.
That’s why we encourage you to put your savings accounts on budget, because we don’t want you to lose sight of what that money should be doing.
And in closing, Harrison is a really good kid. I don’t mean to pick on him.
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