Yes, I need to work on my emergency fund. Tardigrade  I budget into the future as well. Most people have a lots of competing financial goals -- large purchases (e.g. YNAB works differently than other budget apps. But saying it's for car repair/replacement, and job loss, and medical deductible, etc., tends to make us really underestimate our need for savings. C) that's a generality that is generally true but likely not always. Now that you have that picture in your mind, start putting your emergency fund in place! I don't have a problem if your off-budget savings account only has one purpose. Jobs can be whatever you like. When I make a deposit from my chequing account I do it as an outgoing expense to my "emergency fund" category. If you're having trouble making things add up with that account on budget, we'd be more than happy to take a closer look to see exactly where things are going wrong. Matthew Sure. Can you imagine a financial computer program that can't do simple math?! Post screenshots of YNAB messing up that math, please. It's not even complicated math. Then make a line that says ‘emergency savings’ and budget it there. Habanero Salsa That's not what I asked. Do you have a category for emergencies or do you cover most things with your True Expenses categories? Therefore it is more complicated. Merging that "system" with YNAB has been....fun. Here are a few resources: I'm 100% with you, but that's not how ynab thinks of savings. By soloing it into a separate account it's safe from being accessed. The money sits in one savings account with the exception of something similar to a personal petty cash fund in a checking account. More money on budget it more problems to keep everything in sync. Habanero Salsa sorry I didn't save a collection of ynab screwups for you. That way, you can give every single dollar a job! Ben K. TFSA is Tax-Free Savings Account. I love how you are all more dogmatic about how to record savings than some people are about religion.... Navy Blue Foal You can’t provide a single example of the software screwing that up. I lived it for years. What are you keeping it in sync with? Get on a budget, pay off your debt, and begin saving. Maybe instead of telling bbn people they are doing it wrong because they dobt do it your way you can learn to accept bot everyone does things your way. Annieland I would sure hope so! Existing debt gives a 100% probability of interest expense, so it would be the primary focus of all available money, even at the expense of a smaller emergency fund. new car/house, vacations, etc. (Deep breath.) You can make this work, but it's a whole lot of unnecessary work. If the sending account is the only one set up in YNAB, this is a spending transaction.If the receiving account is the only one set up in YNAB, it's an income transaction.. Navy Blue Foal Wait, you seriously think YNAB just randomly glitches and spits out random numbers? Your millage may vary. If you've made a transfer between real-world accounts and both of those accounts are set up in YNAB, you'll be making a transfer in the app.. The software gets screwy many ways all on its own. He calls the optimal way, the "lazy" way. Less cash on budget means less opportunities for this to occur and at smaller amounts. So I switched it around. In the rare event of a true emergency that catches you off guard, Jesse recommends that rather than spending money out of your global emergency fund, set up a new category for that expense. That's a big leap for me, who had like 5 separate savings accounts... Khaki Storm Yeah, I'm trying to understand this. Someone on the old board had their teenage daughter drive the car into the garage, and wipe out three deductibles in one day - auto insurance, medical insurance, AND homeowners insurance. Why stop at just "Emergency Fund"? If YNAB didn't want you to track net worth, they wouldn't have tracking accounts. Navy Blue Foal I believe I outlined exactly how your external account will be diminished. If you know your monthly expenses are $x, then you can set an "income replacement" category as $x times 3, or 6. My point is you COULD keep extra money (on budget) in a savings account while still having a off budget emergency account, if you wanted to. About to make a large purchase? It makes me feel better to see the slice and know that some of my "spending" is for future emergencies. I'm not intending to single anyone out here. Managing separate bank accounts for each of those goals is impractical. But I think to call it a ton of cement is unreasonable, and I have yet to hear any real reason why its so bad other than because we said so. Any overspending should be avoided, but if it happens, cover it by other categories or increase your allocation in those categories in the future. Only tried YNAB, not a regular user, but here's my take. It works well for how I need it. Change 6 months. I’m a YNAB newbie and trying to figure out why you would do it that way when it seemed that the beauty of YNAB is that you don’t need to. I don't want to spend the Annual Out of Pocket Max category in my Medical group, but it's there just in case. In the case of an off-budget emergency fund, there is no additional value -- logical separation, interest earned, even the risk of accidentally spending it is the same in either case. So I moved the account back on budget to more easily allocate the balance between the 2 categories. Habanero Salsa boy they should hire you to work for ynab. And if you are implying that by having it off budget means you cant mix it all into one account that still dosent matter. The rest goes into "long term" savings. the total of on-budget accounts does have to add up to the total of all the categories. How do you all manage your emergency fund in YNAB? How inconsiderate of me right? The way that you are doing this is perfectly acceptable. If you believe YNAB can’t do simple math, you’d be a fool to keep using it, regardless of which accounts are on or off budget. yes because any on budget money has to match up with on budget  account balances (after accounting for uncleared transactions). Navy Blue Foal The program does the math. Best? But especially if your emergency fund is the only thing in the savings account it really doesn't matter. This allows my emergency fund "spending" to be adjusted down in my reports. And with each increase, you have to change your budget. An emergency fund is sort of like insurance—it costs you some money upfront, but it covers you when things go bad. The balance keeps going up, and I've stopped spending all my money without realizing where it's going. If the market corrects resulting in a drop of 30%, which category takes the hit? Karine The community will answer without fail. Maybe instead of telling bbn people they are doing it wrong because they dobt do it your way you can learn to accept bot everyone does things your way. It is OK for a budgeted amount to carry from one month to the next. My apologies. Navy Blue Foal How about this? You don't need extra complications when you're just starting out and learning the method. One of the YNAB principles is that "Every Dollar Has a Job". The fact that I use it anyway is testament to how well it ha does most things. dakinemaui the point is it makes no difference either way. But when you look at one big lump of money, it will seem like it can do all of those things because it might be able to do one or two of those things. It doesn't even have to be an emergency to make changes. Make your savings part of the budget is scary. They are really important to understand before you even start to budget. About six months ago I moved my emergency fund to a higher interest rate savings account and moved it out of budgeting and into tracking. But what happens if a massive storm hits as you are driving home and you skid off the road and there is a bunch of damage to the car and you break your leg in 2 places. Others aren't as concrete. Tardigrade it's not that you have to make changes for emergencies, it's that you have to make changes for the little things: when your cable bill goes up $1.23 or do to an escrow analysis your mortgage goes down $7.81 or if you do balanced billing on your utilities. You really, really don’t know what you’re talking about. Because as i said if the money is in a separate account is CANNOT be spent apart from fraud or an explicit action by the account holder. (You shouldn't have a green "to be budgeted" amount with a budget plan like YNAB. On or off budget are equally valid ways to do it. I had to use my Emergency fund awhile ago to buy a beater $1k car (I'm doing Dave Ramsey's baby steps and on BS2), but I just moved the money into my vehicle category and then spent it. (In the case of your emergency fund, hopefully it will be a very long time!) A YNAB Review. If you haven't gotten to the point where you really trust your categories, it feels a little like withdrawing all of the money in Benjamins and putting it into your wallet along with the money you were going to spend at Wendy's. I have a category called Loss of Income. Either to learn better (or worse) methods, or just have fun. You’ve probably heard of an emergency fund. Separating it out makes clear answers to those questions. It's cheap, fast & easy to create dozens of categories and shift money between them as often as you like. There is, however, more effort involved with it being off-budget. I know what others have said about changing things in the next nine months but I have everything set up as goals or recurring payments. Or even better, make several lines that say things like "Vet emergencies" "Income replacement" "Auto repair" "Future house downpayment" or whatever it is you are saving for, and break that savings up into its purposes. That's it. Your categories are what gives your money purpose; the bank account is just a location. I just discovered this awesome Youtube channel that explains how to use YNAB with such clarity. The less fine-tuned your budget is, the greater your need for an emergency fund will be. Making these little changes in 6 different months increases the chances for typos. With no difference in value, I would contend that the approach requiring more effort is the wrong way to do it. This will build your budget off the money in every account you have. I think this is right, Bret, and I also think it's okay if it takes someone time—even a long time—to get there. Habanero Salsa sorry was that not clear enough? If not, that bit of funkiness is irrelevant. edit: It's basically a Roth IRA with no minimum age for distribution, IIRC. How do I add a savings account, but not have YNAB think it's money I can spend now. Just need a second facings account. The ynab view is the gospel truth when you agree with it? I use GnuCash for my accounting purposes (which is great for accounting, but it's budgeting sucks, so I'm trying out YNAB to be used as well. Not in the banking sense, in the computing sense. HappyDance Um you obvious havent read what I said because that is not even close. . For example, I have a 2k "emergency FUNd" for if something unexpected but not tragic comes up, and I can't just move money from other categories (like a sudden … I stopped seeing my emergency fund as "emergency fund" (unusual or unlikely happenstance) and began seeing it as a Life Happens fund (inevitable expenses with unknown timing). It feels like I’m having a stroke. Let’s start by defining what a financial emergency is. A step-by-step guide to show you exactly how to set up savings accounts and categories inside YNAB. In my mind, I know the $ value I need to cover 3 - 6 months of expenses. Budgeted does not mean spent. WordTenor That is the problem, this insistence that only you way is correct. Tracking net worth is a more advanced financial concept after you have budgeting under control. Unexpected Expenses (… Can you truly say with 100% certainty there has never been a bug with the formulas it uses? Navy Blue Foal I can truly say that you’ve never seen an arithmetical error in YNAB. We all know we need to save, but it can be hard to know HOW to save. Habanero Salsa what is that supposed to mean? And since I'm funding the accounts every week, it's keeping me honest on how much money I actually have. If I have an emergency expense I currently transfer money to my chequing, so it shows as "to be budgeted" then I move that money to the category that best suits the emergency (e.g. I added it as  tracking account, not a budget account, so I can see it but it isn't included in my money. B. Navy Blue Foal It requires more effort. When things like that happen, it helps to have money in the bank to deal with it. If you spend $20,000 making a down payment on a house, do you have enough money left over if you get into a serious car accident on the way home from the closing? Habanero Salsa that made precisely no sense in relation to the topic at hand... Navy Blue Foal It would if you understood the topic at hand. In my opinion, budgeting out 3-6 months in advance then becomes the emergency fund. Every software is going to have bugs. If you stick around, you'll get there. What will matter, is if you've already broken down exactly what you can cover. I've done it two different ways: Have an actual emergency fund category. But between YNAB’s own materials, and Nick True becoming the unofficial official material, the idea that savings shouldn’t be a tracking account gets lost. And it can do more than that: having your savings in your budget is the only way to truly reap the benefits of Rule 3, because if you can draw on a pool of off-budget savings, you're not really rolling with the punches, because you can't see the tradeoff you're making. You leave interest on the table when you silo out only certain funds to go to a savings account. Additional note: An emergency fund turns a crisis into an inconvenience. I have a couple of TFSA accounts. I re enter it in excel and it balances out. It is working pretty well for me, except for my age of money metric, that has really suffered. bret first off you can do that if you keep off budget savings. More money on budget it more problems to keep everything in sync. This is dangerous information he is giving out in my opinion. In our case, most of the money in our Ally Bank account is considered emergency fund, but some of it is earmarked for college tuition for our daughter. And each time it happens I find nothing that was mis-entered. Navy Blue Foal You’re just wrong. Navy Blue Foal Well, generally speaking, the person making the claim bears the burden of proof. As for the original topic, almost everything I do operates out of my online savings account. I've adopted a slew of workarounds to suit my needs. I do something similar to track money to be repaid when my other half has borrowed from our joint savings account for a personal spend. Entering a Transfer And I was every bit as indignant as our friend here when people told me I was wrong. Give the money its own category - emergency fund - and don't use it for your overspending. YNAB’s method teaches you to give every dollar a job, ... And, then there’s your emergency fund. Superbone And if there's one thing YNAB can do, it's MATH. WordTenor Moreover, that off budget account doesn't even prevent you from spending it. If the sending account is the only one set up in YNAB, this is a spending transaction. The best thing to do is look to the Baby Steps. The average person with “savings“ is saving for big goals, saving for things going wrong with their house or car, and maybe saving for a major health setback or a job loss. Ceeses when the software works as intended...not always true however as I have explained elsewhere in this thread. YNAB categories: This is the closest thing we have to a cash emergency fund. I do all transactions out of the checking account and have my Emergency fund in my HYSC. Habanero Salsa that's funny because it sounds to me you're the one with the sub-optimal setup. I evaluate my averages every 6-12 months to make sure I'm budgeting appropriately. That is the basis for an emergency fund. What to do in your first days of budgeting; The 4 rules. I personally do many things that go against ynab's recommendations. If you overspend in the budget account, that's obviously missing money. You can also get that information by instead of directly using the emergency fund category, just move the money to the category it was needed in, and look at your average spending to see if you are budgeting enough. I tried using Quicken and it was entirely horrible). The difference with YNAB is you can do that by budgeting out the moths ahead so long as you have the money. Categorizing the shifts in account value in your budget are a major pain. 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