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New post: Tracking Cash with You Need a Budget

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Annika Backstrom 5 months ago
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+Title: Tracking Cash with You Need a Budget
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+Slug: tracking-cash-with-you-need-a-budget
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+Summary: You Need a Budget (YNAB) is a budgeting app for web and mobile that helps
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+    you track your spending and save for the future. Here's how I track cash spending
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+    in YNAB without wanting to tear my hair out.
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+Date: 2019-01-30 00:00
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+Category: Technology
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+Tags: money, budgeting, ynab
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+
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+You Need a Budget (YNAB) is a budgeting app for web and mobile that helps you
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+track your spending and save for the future. Here's how I track cash spending in
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+YNAB without wanting to tear my hair out.
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+
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+## What's YNAB?
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+
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+If you're already familiar with YNAB, feel free to skip ahead! For those of you
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+who haven't used it, YNAB is a bit like a spreadsheet in Turbo Mode. As a
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+budgeting app, it lets you allocate your money into categories of your choosing,
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+like a virtual "envelope" system. You can track spending by category or category
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+groups, differentiate between budgeted funds and other assets like 401(k) or
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+investments, and link accounts to a bank to import transactions.
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+
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+If you're using a debit card, YNAB is pretty straightforward. You plug your
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+paychecks in as income, that money goes into a "To be Budgeted" pool, you
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+allocate those funds into your categories. Enter in your transactions, assign
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+each to a category, and the "balance" in your categories goes down. If you
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+overallocate or overspend a category, YNAB will warn you that you've spent more
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+money that you have. Credit cards are a just a shade more complicated, but the
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+basics are the same.
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+
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+For more background on the basics, check the quick intro video [on their help
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+site](https://www.youneedabudget.com/learn/).
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+
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+## Why cash?
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+
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+Credit and debit transactions are convenient, because both can be auto-imported
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+right from your bank or card company. Missing a transaction isn't the end of the
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+world: you can just get it off the credit card statement later. Your wallet has
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+no such safety net.
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+
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+But, cash is a necessity in lots of situations. I tried to fudge it for a while,
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+using throwaway categories like "Stuff I Forgot to Budget For" (yes, this is a
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+default category). That wasn't helping me understand where my money was going,
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+which was one of my early goals. Rather than continuing to ignore the problem, I
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+tweaked my setup. Now I can use as much cash as I need without breaking my
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+budget.
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+
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+## Taming your Wallet
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+
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+The first thing I did was **create a new Cash account**. The initial balance of
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+the account should be whatever's in your wallet. YNAB will add that money into
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+*To be Budgeted*, and you'll have to allocate it to categories.
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+
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+At this point, **your wallet is now part of the budget.** Just as importantly,
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+your budget is just **a pool of money** spread across several debit and credit
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+accounts. What's in your wallet isn't specifically allocated towards coffee or
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+gas or groceries or anything else. If you stop at a food truck to spend the last
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+$10 in your Dining Out category, YNAB doesn't force you to spend from a certain
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+source. Cash only merchant? No problem, it's in the budget.
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+
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+This sounds straightforward but it takes discipline. You can't be lazy with
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+entering your expenses: the auto-import safety net is gone. There are a few
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+things that make cash tracking easier for me:
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+
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+- **Enter ATM withdrawals as a transfer.** You don't have to recategorize
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+  transfers. Move money around between your checking and cash as it suits you,
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+  without affecting the budget.
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+- **Try and enter expenses as you make them.** It's tempting to batch receipts,
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+  but you can lose track of them, or the stack can become overwhelming. If
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+  that's a risk for you, try to enter your transactions as soon as you make a
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+  purchase. Added bonus: the app will associate the Payee with a location and
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+  suggest it next time.
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+- **Round up to the nearest dollar.** This one is critical for me. It's too
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+  overwhelming if I have to track pennies and reconcile them away when my wallet
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+  doesn't match YNAB. I usually make a handful of cash transactions every week,
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+  and the change gets donated or saved for parking meters.
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+
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+Tracking cash helps me every week. I can carry cash without guilt that it's
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+unaccounted for. I can stop at cash-only shops. I have a few dollars on hand for
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+a tip. My spending habits are more accurately reflected in YNAB, not quite down
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+to the penny but certainly better than before. My budget is about as accurate as
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+it can be. 💸

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