Ynab Pro Setup Guide

YNAB Pro for Windows User Guide 2.5.6

Table of Contents The YNAB Method ........................................................................................ 6 What are the YNAB Rules?: (And why do I need them?)...................................... 7 Rule One – Stop Living Paycheck to Paycheck.................................................................. 7 Rule Two: Give Every Dollar a Job ..................................................................................... 8 Rule Three: Prepare for Rain ............................................................................................10 Rule Four: Roll with the Punches...................................................................................... 11

Getting Our Terms Straight: The YNAB Glossary of Words You Only Thought You Understood ................................................................................................... 12 The YNAB Glossary.......................................................................................................... 12

Starting the YNAB Way: Applying Method to Your Budgeting Madness ..............15

Meet Your YNAB Pro Software................................................................... 16 Setting Up Your Software..................................................................................... 17 System Requirements....................................................................................................... 17 Installing YNAB Pro .......................................................................................................... 17 Opening YNAB Pro for the First Time............................................................................... 18 For First-time YNAB Users................................................................................................ 18 For Returning YNAB Users............................................................................................... 19

Exploring YNAB Pro: Learning the Lay of the Land ............................................ 20 Program Overview............................................................................................................ 20 Menu Bar...........................................................................................................................21 The Navigation Bar........................................................................................................... 22 The Register......................................................................................................................22 The Budget....................................................................................................................... 24 The Scheduler................................................................................................................... 27 Reports.............................................................................................................................. 29 Spending by Category...................................................................................................... 30 Category Balances............................................................................................................ 31

Where the Rubber Meets the Road:Tutorials to Get You Started and other great information......................................................................................... 32 Starting Without a Buffer ......................................................................................33 (or the “98% of Us” Club)..................................................................................... 33 Step One of Six – Set up a Budget................................................................................... 34 Step Two of Six: Set up the Register................................................................................ 35 Set up your Register Accounts.......................................................................................... 35 Step Three of Six: Budget your Categories....................................................................... 36 Step Four of Six: Arrive at a Zero-Based Budget.............................................................. 37

Step Five of Six: Track your Spending ..............................................................................38 Step Six of Six: Adjust your Budget throughout the Month ............................................... 40 Now - Create your own Budget! ........................................................................................ 42

Starting With a Buffer…Hey, It Could Happen!.................................................... 43 Step One of Seven – Determine if You Have a Buffer.......................................................43 Step Two of Seven – Set up a Budget .............................................................................. 43 Step Three of Seven: Set up the Register.........................................................................44 Set up your Register Accounts.......................................................................................... 45 Step Four of Seven: Budget your Categories....................................................................46 Step Five of Seven: Arrive at a Zero-Based Budget ......................................................... 47 Step Six of Seven: Track your Transactions...................................................................... 48 Step Seven of Seven: Adjust your Budget throughout the Month .....................................50 Now - Create your own Budget! ........................................................................................ 52

Happy Day! Moving to a Buffer-Based Budget.................................................... 53 Moving Buffer Funds......................................................................................................... 53

Using YNAB PRO: Different, but not Difficult.............................................. 54 Working with the Budget...................................................................................... 55 Getting Started with Budgets............................................................................................. 55 Opening an Existing Budget............................................................................................. 55 Managing Categories........................................................................................................ 56 Setting up Categories........................................................................................................ 56 Budgeting by Categories................................................................................................... 57 Budgeting into Categories................................................................................................. 58

Working with the Register .................................................................................... 60 Setting up Accounts........................................................................................................... 60 Entering Transactions........................................................................................................62 Working with Budget Categories....................................................................................... 65 Getting Hands-on with Transactions..................................................................................67 Interacting with your Bank................................................................................................. 70

Working with the Scheduler................................................................................. 74 Performing other Common Tasks ........................................................................ 76 Setting up Next Month’s Budget ....................................................................................... 76 Backing up Your Budget....................................................................................................77

Cash, Credit Cards, and the FAQs of Life .................................................. 79 Cash Talks ........................................................................................................... 80 Option # 1: The Easy Method........................................................................................... 80 Option #2 : Opting for the Straight and Narrow................................................................. 80

Handling Credit Cards ......................................................................................... 82 Handling Credit Cards You No Longer Use...................................................................... 82 Handling Credit Cards You Pay Off Each Month.............................................................. 85

Handling Credit Cards You Are Still Using........................................................................ 87

Starting Out Behind: When you find yourself in Overdraft................................... 90 Our Most Frequently-Asked Questions (FAQs): Other than the one about Credit Cards ................................................................................................................. 109 Transferring funds you budgeted this month .................................................................. 111 Transferring Savings (or other funds budgeted in previous months).............................. 111

Appendix................................................................................................... 116

Keyboard Shortcuts......................................................................................................... 116 Resources....................................................................................................................... 117

ICON KEY

The Rules in Action

Note This!

Cool Tip

Keyboard Shortcuts

Updates from previous YNAB versions

Check it Out

On Your Own: Tips

OUR RECOMMENDATION FOR YOU:

The YNAB Method In this Section

What are the YNAB Rules? (And Why do I Need Them?) Getting Our Terms Straight. The YNAB Glossary of Words You Only Thought You Understood Starting the YNAB Way: Applying Method to Your Budgeting Madness Before you fire up YNAB Pro for the very first time, you should understand one thing: The software that you have purchased is, like any other piece of software, simply a tool. In this case, the tool’s job is to simplify the task of implementing the YNAB Budgeting Methodology. The YNAB Methodology is a set of four simple Rules that will guide you and keep you on track with your money. To be successful with the software, you must first understand the Rules. Once you understand the essence of the YNAB Methodology, you and your new software will be poised for success! • If you are new to the YNAB Rules, read every word of this section. (And, for further information on the rules, the method, and the story behind them both, refer to The YNAB Way, which is included with this software.) • If you’ve read The YNAB Way, you’re already well on your way – refer to this section whenever you feel the need for review.

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Chapter

What are the YNAB Rules?: (And why do I need them?)

1

In this chapter: • • • •

Rule One – Stop Living Paycheck to Paycheck Rule Two – Give Every Dollar a Job Rule Three – Prepare for Rain Rule Four – Roll with the Punches

Rule One – Stop Living Paycheck to Paycheck Rule One simply states: “Live on last month’s income” as illustrated below:

Why Follow Rule One? Rule One is simple – but we won’t pretend that getting there is easy. It takes motivation. We can provide you some of that by answering the age-old question, “What’s in it for you?” •

Your variable income problem is solved. When you’re living on last month’s income, you know how much to budget for February because you know exactly how much you earned in January. What you make in January, you budget in February. Plain and simple.

•

You can forget about timing your bills according to your paychecks. Since all of the money you need for the month is sitting in your checking account on the 1st of the month, you can pay all your bills when they come due, without any worry. 7

•

You can breathe again. Rule One creates breathing room. It creates a Buffer that protects you from the unexpected expenses in life. When you get nailed with an emergency (e.g., the car’s transmission dies), you have an extra month of income to figure out how to handle things with less urgency and stress. “Should I take money from the emergency fund?” “Should I try to earn some extra money?” “Should I readjust the budget and funnel money into the now-needy Car Replacement category?” It’s now up to you, you have the time.

Meet The Buffer: Your New Best Friend A Buffer is, essentially, a very large cushion of money that sits in your bank account, protecting you from the embarrassment of a debit card being declined at a department store and decreasing the chances of bouncing a check again. In fact, as long as you stick to your budget, your checking account will keep a pretty nice balance. It feels great. And it looks pretty, too:

Your Buffer in Action $3,000

$2,250

$1,500

$750

Last Month's Income This Month's Income

$0 1st

7th

15th

24th

31st

As you can see from the Your Buffer in Action chart, at the start of a given month, the buffer contains the total income from the previous month (shown in blue). As that money gets spent, the buffer is being refilled with the current month’s income. At the end of the month, you will once again have a full month’s expenses waiting to be budgeted. The Buffer provides security and peace of mind. Strive to live under Rule One!

Rule Two: Give Every Dollar a Job Rule Two demands that you operate with a zero-based budget. Which simply means you must first budget – or plan for - every dollar of money you have available, and then adjust as needed. Life happens, of course, so don’t be too concerned when your plan goes over or stays under in any given Category. You can adjust each one up and down to balance it all out as the month goes on.

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This doesn’t mean you are actually spending every penny of income, just planning for it. In fact, much of it will go into categories of the “Saving for a Rainy Day” type, such as “Junior’s college education,” or “New car fund” and wait to be put into action later. To implement Rule 2, at the start of every month, you will look at the total Available funds, and assign each dollar to one of your budget categories, until you reach zero. Example: You begin the month with $3,000. From this money, you assign an amount to each category in your budget, until you reach 0, as shown in the chart below. Available to Budget

$3000

Rent

<$1,000>

Available Remaining

$2000

Gas

<$300>

Available Remaining

$1700

Utilities

<$400>

Available Remaining

$1300

Groceries

<$400>

Available Remaining

$900

Credit Card Available Remaining

<$200>

Car Payment

<$300>

Available Remaining

$400

Insurance

<$100>

Available Remaining

$300

Entertainment

<$300>

Available Remaining

$0

$700

As a result, you enter the new month with every dollar having an assigned job and YOU now have the entire picture of what and where those dollars need to go.

Why Follow Rule Two? Imagine a business where the employees had no job descriptions. What if you went into the grocery store and no one was working at the registers? What if the people trained to work at the deli were stocking shelves instead? What if some employees came and went as they pleased? How long would this store remain in business? A household where the dollars are not told what to do will eventually go under as well. With spending easier now than in the past, due to fast-and-easy credit available everywhere, it is very important that we intentionally assign a job to each and every dollar that comes into our hands each and every month.

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Rule Three: Prepare for Rain Rule Three helps you prepare for those bills that don’t come every month and for those unplanned expenses that are as inevitable as…well, rain. If you do not spend all the money you have budgeted in a specific category during a month, Rule Three rolls the category balance forward to the next month. The following example shows how YNAB Pro allows you to build up money in a category to save for a future expense, in this case, car insurance. Month

Budgeted

Spent

Balance

January

$50

$0

$50

February

$50

$0

$100

March

$50

$0

$150

April

$50

$0

$200

March

$50

$0

$250

April

$50

$0

$300

At the end of each month, YNAB Pro rolls your balance forward automatically. At the end of six months, the car insurance can be paid because the money is there.

Why Follow Rule Three? Rule Three helps you prepare for regularly occurring expenses as well as those unexpected, but inevitable expenses. Regular, but periodic expenses include: •

Car Insurance

•

Property Taxes

•

Christmas/Birthdays

•

Vacation

•

Magazine Subscriptions

•

Annual Organization Dues

•

Tuition

Unpredictable, but inevitable expenses include: •

Car Repairs

•

Home Repairs

•

Car Replacement (saving for a car, rather than borrowing for one)

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Rule Four: Roll with the Punches Rule Four covers those times when, for one reason or another, we have to overspend in our budget. We’re human. It happens. YNAB Pro does this by allowing you to start again fresh for the next month. At the end of every month, YNAB Pro looks at all your balances in every category. When you overspend in a category in month one, rather than carrying a negative balance into that same category the following month, YNAB Pro allows you to start the new month with that category zeroed out and ready to start fresh. How does this work? YNAB Pro obviously can’t create money for you, but it can help redistribute the overspending by allowing you to absorb the overage across your entire next month’s budget, instead of punishing any one (or more) categories where you overspent. Here is what Rule Four looks like:

January – Available to Budget

$3000

Overspending in December

($100)

Adjusted Available for January

$2900

By adjusting your available January budget, you are able to return the $100 you overspent in December and get back on budget.

Why Follow Rule Four? The advantage of living with Rule Four is that you’re fixing mistakes you made in the previous month before you move on to the next month. You’re forced to look at them and, if need be, find a solution. It’s just a gentle nudge (or rough push, when necessary) from YNAB Pro, telling you to be heads-up, keep your game face on, and do something about the problem. Rule Four allows a fresh start to each month and keeps you honest about mistakes.

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Chapter

Getting Our Terms Straight: The YNAB Glossary of Words You Only Thought You Understood

2

In this chapter: •All the words you need to understand to make your YNAB experience successful The YNAB glossary consists of words that you may presently know, but which take on new meaning when applied to your new budgeting method. Take the time to read through them now, and then refer back to this Glossary whenever you come across a word or term you thought you knew, but doesn’t seem to make any sense. Once you do, you’ll be sure to have an - “AHA! So that’s what that meant!” - moment.

The YNAB Glossary Accounts YNAB accounts are tabbed register pages that match up with the real life places that you keep your money (checking account, savings account, cash – for what’s in your wallet, etc.) It’s within these registers that you will track all of your spending, as well as the money you earn. YNAB accounts can include, but are not limited to, the following: • Checking and Savings Accounts • Loans • Cash-on-Hand • Credit Card/Department Store Charge Accounts My checking account plus my cash-on-hand account hold most of my available monthly funds.

Available Funds The total of all funds to be budgeted within a single month. Between my job and my rental income, I have $4,000 in Available Funds each month.

Balance Remaining (unspent) funds. There are two types of balances: Category Balance: The amount remaining in an individual category or the amount remaining in all categories combined. Account Balance: The balance of any given account Note: While it’s important to know what is in your bank account, it is more important to pay attention to the category balances. That is what you will use to make spending choices. The balance of my clothing category is $32, so I can buy this cool t-shirt.

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Budget A spending plan for all of your money, regardless of its source or destination. Checks, debit, electronic transfers, or cash are all treated the same within your budget. My budget has organized all of my monthly income and expenses.

Budgeted The amount of money that you assign in any particular category. I budgeted $400 for food last month.

Buffer At a minimum it is the equivalent of one month’s necessary expenses, saved up over time in order to stop living paycheck-to-paycheck, but instead to live one month behind your income. I finally have a $4,000 buffer.

Categories The “job descriptions” for your money. For tracking purposes, all transactions are assigned a category. I spent $25.00 of the funds from my “Fun Money” category.

Inflow An inflow takes place any time money comes into your life. My $600 tax-rebate was a welcome inflow to my June budget…

Outflow An outflow takes place every time money flows out of your life. I had a $600 outflow because of unexpected car repairs.

Primary Income Primary income is money that flows into your life (from any source and at any frequency) that the software earmarks as available to spend next month. You will not enter income as Primary unless you do not need the money in the current month. Now that I have a Buffer, I can finally enter my income as Primary Income, to provide next month’s Available funds.

Supplemental Income Supplemental Income is money that flows into your life from any source and at any frequency that you decide needs to be made available in the current month to budget and spend as needed. Until you have a buffer in place, ALL income should be entered as Supplemental. When my tax-rebate arrived, I entered it as “Supplemental Income” and assigned the $600 to be spent in the Car Repair category.

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Transaction The record of any movement of funds, whether it be outflow, inflow, or a transfer from one account to another. After entering this week’s transactions, I could look at my Budget and see I am still on track.

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Chapter

Starting the YNAB Way: Applying Method to Your Budgeting Madness

In this chapter: • The answer to “Where do I start?”

3

The YNAB Methodology works best when all Four Rules are used. But for many of us, having an entire month’s income as a buffer, seems to be an out-of-reach goal. Even though the first rule states you try to live on last month’s income, you can and should start with YNAB even without that buffer in place. Do not put off the remaining three rules because the first one seems difficult to implement. You will make significant strides on your way to Rule One if you start by following the other Rules. If you start today, you will get there. (For ideas and suggestions for attaining your buffer, refer to The YNAB Way, which is included with this software.) Regardless of how long it takes to build your buffer, know that the process and the end results are well worth any sacrifices you may make to arrive there. Einstein once defined insanity as “doing the same thing over and over again and expecting different results.” If you don’t begin doing something different, nothing will ever change. Buffer or not, start with YNAB Pro today by reading the following sections: •

Setting Up Your Software will walk you through installing and launching the YNAB Pro software.

•

Exploring YNAB Pro: Learning the Lay of the Land will introduce you to the program interface and screens.

•

Where the Rubber Meets the Road contains tutorials that will walk you through setting up your first budget. Pick either “Starting without a Buffer” or “Starting with a Buffer” depending on your circumstances.

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Meet Your YNAB Pro Software In this Section

Setting Up Your Software Exploring YNAB Pro: Learning the Lay of the Land

16

Chapter

4

Setting Up Your Software In this chapter: • • •

System Requirements Installing YNAB Pro Opening YNAB Pro for the first time

System Requirements The minimum system requirements for YNAB Pro are: •

Windows 98, 2000, XP, or Vista

•

Microsoft .NET (if .NET is not currently installed on your system, it will be installed automatically, free of charge, provided you are connected to the internet, during the YNAB Pro installation)

Installing YNAB Pro Open the YNAB Pro Setup Wizard using one of the following options: To Install from a CD Rom Insert the CD disc to begin the installation process. The Welcome to the YNAB Pro Setup Wizard will automatically open. If for any reason, the wizard fails to open, follow these steps to launch the setup: 1. From My Computer, click the drive letter for your CD or DVD drive. 2. In the file list, click setup.exe. The YNAB Pro Setup Wizard opens. To Install from a YNAB Pro Download File 1. Navigate to the location where you downloaded YNAB Pro, and then click the YNAB Pro Installation icon . The YNAB Pro Setup Wizard opens. 2. In the Setup Welcome screen, click Next. 3.

In the License Agreement, after reading the agreement, click I accept the agreement to continue, or I do not accept the agreement to cancel and close the setup wizard.

4. In Select Destination Location screen, click Next to place your YNAB Pro files in Program Files (recommended default location), OR you may browse to a different file location, and then click Next to continue. 5. In the Select Start Menu Folder screen, click Next to place your Start Menu program shortcuts in the YNAB Pro folder (recommended default location), OR you may browse to a different folder, and then click Next to continue.

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6. In the Select Additional Tasks screen, you may: a. Select to add a desktop icon and/or a toolbar Quick Launch icon. b. Select to automatically open common bank file formats with YNAB Pro (recommended). 7. Click Next to continue. 8. Click Install. 9. In the Complete the YNAB Pro Installation screen, click Finish to exit the setup wizard and launch YNAB Pro.

Opening YNAB Pro for the First Time The first time you open YNAB Pro, you will be prompted for your license key. Locate your license key as follows: •

For Purchases with YNAB Pro CD: Locate your license key on the inside of the DVD case.

•

For Purchasers with the YNAB Pro download: Locate your license key in the first email you received when you ordered.

Once you’ve entered your license key, the Welcome screen opens.

For First-time YNAB Users From this view, you will select the Start a new blank budget option. •

Take a few minutes to explore the views with the help of the Program Overview section below.

•

Then move on to the “Rubber hits the Road” section where the Getting Started tutorials will guide you through setting up your first budget.

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For Returning YNAB Users From the Welcome screen, you have the following options: •

When upgrading from YNAB for Excel, select Import my budget from YNAB for Excel to access your YNAB budget sheet.

•

When upgrading from a previous version of YNAB Pro, select Open an existing budget. YNAB Pro will automatically open the last budget file you used. To open a different budget, select it after the program opens, using File → Open on the menu bar.

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Chapter

Exploring YNAB Pro: Learning the Lay of the Land In this chapter: • • • • • • •

Program Overview The Menu Bar The Navigation Bar The Register View The Budget View The Scheduler Reports

5

Program Overview The YNAB Pro program consists of a main menu bar (which runs along the top of the program) and a navigation bar which provides four main views: •

The Budget

•

The Register

•

The Scheduler

•

Reports

Using these views, you will keep track of all accounts, maintain and monitor your budget, schedule recurring payments, and view financial snapshots. Refer to the following sections to familiarize yourself with the “lay of the land.”

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Menu Bar Compared to some of the more terrifying menu bars you may have encountered in the other programs, the YNAB Pro menu bar is simple and straightforward:

That’s because most of the tools you need are embedded within the program itself. You may use the menu bar to access the following options: •

The File menu allows you to: o

Create new budgets

o

Open and save existing budgets

o

Backup your budget data (and restore old budget data)

o

Import transaction history from your banking accounts

o

Print reports

o

Change your personal settings preferences

•

The View menu provides an alternative way to navigate from view to view and also provides keyboard short-cut reminders.

•

The Help menu contains links to help sources, including: 21

o

Tutorials to guide you through many of the basic setup functions

o

The online YNAB forums – where you’ll find many avid YNAB Pro users, eager to offer assistance and tips.

o

The YNAB online support area, for more tools and tips, as well access to the YNAB support team.

The Navigation Bar Located on every view, the navigation bar is a quick way to switch from view to view.

When navigating between views, YNAB Pro “saves your place” for you. When you return to a previously-visited view, it displays the same information you were viewing and working with when you left.

The Register You will use the Register view to record all of your monetary inflows and outflows. Similar to a checking-account register, the Register allows you to enter transactions, using the following information: •

Date of transaction—lets you enter dates manually or select the date from a calendar

•

Category – allows you to designate the transaction as income or expense and to assign it a budget category (i.e.: groceries)

•

Payee—keeps track of whom you are paying

•

Memo—lets you record notes about the transaction

•

Inflow & Outflow columns—lets you enter the amount of your transaction

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The Register View

Things to note about the Register view: •

You may setup as many accounts in the Register as you want.

•

The tabs across the top of the Register view display all of your YNAB Pro accounts, along with their balances.

•

Clicking on an account’s tab displays the transaction register for that account.

•

As you enter new transactions in the Register, the balance shown on the account tab updates to reflect the new total.

•

Transaction flags let you make note of specific transactions. Use them to mark transactions you wish to revisit, to note the point where you last reconciled your account with the bank’s records, etc.

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•

Register categories mirror your Budget categories.

•

Transactions may be sorted by column, allowing you to view by date, category, payee, etc.

•

If you mouse over the date of any transaction, a popup will appear that tells you what your bank balance was on that date.

The Budget The Budget view is command central of YNAB Pro. Here is where you will: •

Plan and record your monthly budget

•

Monitor your progress: View exactly where you stand with respect to your budget plans and your actual spending.

•

Make any changes or updates necessary to keep your zero-based budget on track.

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The Budget View

Thing to note about the Budget View • Down the left side of the Budget view are your budget categories. Though YNAB Pro provides default categories to get you started, these are totally customizable to match your life and your needs—add what you like, rename or delete the ones you won’t use or even move them around by right-clicking and choosing where to move it to. •

The YNAB Pro Budget view defaults to show the current month’s budget. You can navigate between months by using the calendar tool arrows or by selecting a month from the drop-down list.

•

At the top of the current month’s totals is the Available amount. At the beginning of every month, it is this Available number that you care about. It’s your job to assign the entire amount to the categories that need funding. (Remember, in the YNAB terminology, “Available” refers to the amount available for budgeting. Remember budgeting is simply creating a plan for your money, not spending your money.

•

YNAB Pro provides you with quick snapshot explanations of the numbers you see on the screen. By placing you cursor over specific fields, you can view details of transactions and see the math behind the totals:

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o

To view details about the money you’ve spent in an individual category, place your cursor over the Spent total.

The transaction information you entered in the Register appears, providing a quick answer to the “Where the heck did I spend that money?” question.

o

To view the math behind a category’s balance, place your cursor over the Balance total.

o

Note that any positive balance from the previous month is added to your total per Rule # 3 Prepare for Rain. (See sidebar.)

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To view the details about your Available funds for budgeting, place your cursor over the month’s Available total. This view shows you the math.

o

Note that any overspending from the previous month is subtracted from your total per Rule # 4: Roll with the Punches. (See sidebar.)

The Scheduler Using the Scheduler view, you can set YNAB Pro to automatically enter any regularly recurring transactions. You enter the information into the Scheduler once and each time the transaction occurs, YNAB Pro takes over and enters the recurring transactions into the Register for you, on a schedule you have set. This will spend the money in your budget as well; so, don’t forget to budget the amount each time so that there is money available for the transaction. The Scheduler looks and feels a lot like the Register. It allows you to enter the following information for each recurring transaction: •

Account – allows you to select the account associated with the transaction

•

Category– allows you to designate the transaction as income or expense and to assign it a budget category (i.e.: groceries)

•

Payee—keeps track of whom you are paying.

•

Memo—lets you record notes about the transaction

•

Frequency the transaction occurs—offers you a wide-range of recurrence options, from daily to biannually.

•

Next occurrence date—allows you to set up the starting date for the transaction

•

Accounting columns—let you enter the transaction’s inflow or outflow amount

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The Scheduler View

Things to Note about the Scheduler •

The Scheduler automatically assigns any new entry into the last account you opened in the Register.

•

You may change the account assignment by right-clicking on the transaction and selecting EDIT or simply by choosing a new account from the drop down menu.

•

By right-clicking on a transaction and choosing SEND TO REGISTER, you will move the transaction to the assigned register immediately. This is helpful if a scheduled transaction clears the bank early.

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Reports From the Reports view, you can view different analytical snapshots of your spending, when you want an “at a glance” summary of where the money has gone.

Things to note about the Reports view •

The Report view opens on the Spending by Category report. Using the reports tab at the top of the screen, you can navigate between the three reports views.

•

By default, reports show a three-month snapshot of your spending. The date range selector allows you to customize the report to the dates you need.

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Spending by Category The Spending by Category report provides an easy way to see proportionately where your money goes.

The Total Spending (Month to Month) view provides a comparative view of your spending on a monthly basis. You can easily see where your spending varied, and by placing your cursor over any amount, you can view the spending details for that category.

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Category Balances Using the Category Balances view, you can quickly see what your remaining balances are for the current month.

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Where the Rubber Meets the Road:Tutorials to Get You Started and other great information Starting a new budget in YNAB Pro involves six steps. 1. Create a new Budget. 2. Set up the Register 3. Budget your categories. 4. Arrive at a zero-based budget. 5. Track your spending. 6. Adjust your budget as life happens. During the Budget set-up process, you will go back and forth between the Register, the Budget view, and even the Scheduler several times. The tutorials in this section will walk you through the set-up process. Choose the tutorial that is right for your needs and get started!

In this Section Starting Without a Buffer (or the 98% of us Club) Starting With a Buffer (Hey – It Could Happen!) Happy Day! Moving to a Buffer-based budget

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Chapter

6

Starting Without a Buffer (or the “98% of Us” Club)

In this chapter:

•

The six steps to setting up a budget without a buffer

If you already have a buffer, congratulations – go to the head of the class and skip to the next chapter. The rest of us will stay here and learn how to start the YNAB way without a buffer in place. This chapter contains a tutorial that will walk you through the six-step process of setting up a budget without a buffer. Work through the examples provided for some hands-on experience. Once you’re through, you will be able to create your own customized budget. The On Your Own tip windows provide tips for setting up your personalized budget.

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Step One of Six – Set up a Budget To Create a New Budget 1. From the File → New → Blank Budget menu, create a new budget and name it “My Sample Budget.” (See Starting a New Budget.) 2. On the Budget view, make the following changes to the Budget categories: a. Under the Housing master category, delete the Furniture and Other categories and add a new category of Home Repair. (See Setting up Categories.) b. Under the Utilities master category, change the name of the Phone and Internet category to Phone, delete the Gas, Garbage, and Water categories, and add a category of Cable. c. Continue making changes to the budget categories until your sample budget matches the following example:

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Step Two of Six: Set up the Register Once the Budget categories have been established, the next step is to set up accounts for all the funds in the Register. Remember, “Accounts” in the YNAB vocabulary include, but are not limited to, traditional banking accounts. To track all of your money (and all of your spending), YNAB includes the following account registers: •

Checking

•

Savings

•

Cash

•

Credit Card

YNAB Pro comes with default accounts set up for you.

Set up your Register Accounts For purposes of this tutorial, we will be using two accounts: a checking account and a cash-on-hand account. After accounting for all outstanding transactions, we determine our bank account balance to be $1350. After emptying our wallets and our pockets, we discover we have another $50 in cash that must be budgeted, as well. To enter starting available income amounts: 1. On the Register view, click the Checking account tab. 2. In the first line of the Register, click in the Date field. 3. By default, today’s date appears. Accept the default date by clicking the Tab key to move to the Category field. 4. Click in the Category field to open the category list. Select the Income: Supplemental (Budgeted this month) option. (Remember- only when you have your Buffer in place do you use the Income: Primary option, as those funds are not available for budgeting until the following month.) Click the Tab key to move to the Payee field. 5. In the Payee field, enter Household. (We are using this term to represent coming into the household. For your own budget, select a term that makes sense to you.) Click the Tab key to move to the Memo field. 6. In the Memo field, enter Starting Balance, and then click the Tab key twice to move to the Inflow field. 7. In the Inflow field, enter 1350, and then click the Enter key. YNAB Pro enters your total as $1,350.00. Your Register view now looks like this:

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Notice that the account balance on the Checking account tab reflects your new entry. 8. Repeat Steps 1 – 7 to enter the $50 cash into your Cash account. Again, note the account balance on the Checking tab after you’ve created this entry.

Step Three of Six: Budget your Categories Back on the Budget view, notice the Available amount now reflects the total amount of funds entered into the register.

This is the point where Rule Two kicks into place: assign every dollar a job. You now need to distribute the total amount into your budgeting categories. For this tutorial, we are going to budget the following amounts: Rent - $800 Cable - $75 Groceries - $150 Car Payment - $125 Phone/Internet - $100 To Budget Categories 1. On the Budget View, click the Budgeted field for the Rent category, enter 800, and then hit Enter. The category is now budgeted for $800.00. 2. Repeat Step One for each of the listed budget items above. 3. When finished, your Budget View will look like this:

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Notice: as you assigned amounts into categories, the Available amount shrunk. This allows you to see at a glance how much is left for you to budget.

Step Four of Six: Arrive at a Zero-Based Budget Now you must give the remaining $150 a job in order to get the Available amount to $0. (Rule Two, remember?) We’re going to place that $150 into the Buffer category and get a start towards achieving Rule One. To arrive at a zero-based budget • Assign $150 into your Buffer category.

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The Available amount now stands at $0.

Now that all Available funds have a job, the budget is complete. It’s time to start tracking our spending.

Step Five of Six: Track your Spending Tracking spending in YNAB Pro is as simple as entering transactions into a check register. As you spend down your budgeted funds, you will enter each transaction in the appropriate account register. YNAB automatically updates your Budget view to reflect the current totals for amount spent and amount remaining. For this tutorial, we are going to enter the following amounts: Rent - $800 Cable - $75 Groceries - $55 Phone/Internet - $100 Groceries - $18.50 To enter outflows 1. On the Register view, inside the Checking account, click the row line with the message. 2. Click the Tab key to accept today’s date and open the Category list.

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3. Select Housing: Rent, and then click the Enter key. 4. For Payee, enter Acme Mortgage, and then click the Enter key. 5. In the Memo field, enter August Rent, and then click the Enter key. 6. In the Outflow field, enter 800, and then click the Enter key. Notice that the Balance on the Account tab has been adjusted. Go to the Budget view and see that the monthly totals row has been updated as well.

7. Enter the remaining transactions listed above for groceries, cable, and phone bills to duplicate the Register shown below.

Check the Budget view to view the updates there. Notice the following YNAB Pro features: •

The Master Category Utilities has updated to show the total spending for the category from the Cable and Phone/Internet Spent amounts.

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•

Place your cursor over the Spent amount for groceries, and YNAB Pro displays detailed transaction information.

Step Six of Six: Adjust your Budget throughout the Month Budgets are, by nature, ever changing. Adjustments have to be made for the unexpected emergencies or windfalls that come our way. If you choose to budget paycheck-to-paycheck, you will need to update your budget during the month, as well. Fortunately, even if life is unpredictable, the YNAB process remains a constant. Whether you encounter unexpected car repairs or a much-welcomed bonus, the steps to adjust your budget are the same: 1. Enter the transaction (outflow or inflow) into the Register. 2. Adjust your Budget categories until you reach $0 remaining as your Available amount.

Adjust your monthly budget to account for inflow First, we are going to update the month’s budget to for the following reason: •

Your second monthly paycheck arrives and is deposited in your checking account.

To adjust your budget for this transaction 1. In the Register, on the Checking Account tab, enter a transaction for the $1,500 paycheck, using the following parameters: o o o o o

Today’s date Income: Supplemental (still not on a Buffer) Payee: household Memo: paycheck Inflow: $1500.00 40

Open the Budget view and view the results. Note that the Available number now reflects the additional $1500 deposit. You are no longer operating a zero-based budget. Per Rule Two, you will need to budget the $1500 down to zero. 2. Adjust the Available amount down to $0.00 by entering amounts in categories with no budgeted funds and/or adjusting the currently existing budgeted amounts. Remember: any surplus funds can always be used to boost the total in your Buffer savings category.

Adjust your monthly budget to account for an un-budgeted outflow Next, we are going to update the month’s budget for the following reason: •

an unexpected $250.00 IRS bill creates an un-budgeted Tax Bill amount

To adjust your budget for this transaction 1. Enter a new Master Category and name it Taxes 2. Enter a new category and name it Federal. 3. Enter a transaction for the tax bill, using the following parameters: a. Today’s date b. Category: Taxes: Federal c. Payee: IRS d. Memo: 2007 mistake e. Outflow: $250.00 View the results on the Budget view.

Note: •

The $250 un-budgeted expense gives you a negative Balance in your Taxes: Federal category. Note: It also decreases your Available funds for the next month, noted by the negative number in the Available cell. (See sidebar)

•

This month’s Available total is still at $0.00. You will NOT adjust this month’s budget to maintain zero-balance budgeting; however, you will need to find the money somewhere. You have three options to avoid running out of money before you pay all this month’s expenses: 41

o

Adjust the budget to move funds from another category this month.

o

Pay the bill with unbudgeted funds (savings account, etc.).

For this tutorial, you are going to use the first option. We will lower some category balances so we can make more money available to budget where needed. Looking at the Categories, lower the current amounts budgeted in various categories, until the Available amount reaches $250. (Choose any categories where you can cut back, or don’t have an immediate expense coming up.) 4. Enter $250 in the Budgeted field for the Taxes: Federal category. Note that the negative numbers no longer appear on the Budget view, and the next month’s Available amount has returned to $0.00.

Now - Create your own Budget! Using the same six steps as you followed in the previous tutorial, you are now able to set up your own budget. From this point forward, all you need to do is: •

Record and track spending, entering transactions into YNAB Pro as you spend money.

•

Enter your income as you receive it, and then budget it to zero.

•

Continue to work on building your buffer.

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Chapter

Starting With a Buffer…Hey, It Could Happen! In this chapter:

•

7

The seven steps to setting up a budget with a buffer

This chapter contains a tutorial that will walk you through the seven-step process of setting up a buffer-based budget. Work through the examples provided for some hands-on experience. Once you’re through, you will be able to create your own customized budget. The On Your Own tip windows provide tips for setting up your personalized budget.

Step One of Seven – Determine if You Have a Buffer Having a buffer means you have enough money on hand to pay all of this month’s bills without touching this month’s income. (It does not have to equal your monthly income, if your monthly expenses are less than that and if you can give up any “extras” to get through the month without touching your new income.) Before you jump in, you need to know what that number is for you, and be prepared to live on that amount as you hold the current month’s income to use during next month. For the purposes of this tutorial, we have determined that we need a $1,350 buffer to meet the current month’s expenses and be able to bank all of the current month’s income. We have that much, so we’re good to go.

Step Two of Seven – Set up a Budget To Create a New Budget 3. From the File → New → Blank Budgetmenu, create a new budget and name it “My Sample Budget.” (See Starting a New Budget.) 4. On the Budget view, make the following changes to the Budget categories: a. Under the Housing master category, delete the Furniture and Other categories and add a new category of Household Repair. (See Setting up Categories.) b. Under the Savings master category, delete the Buffer and Retirement categories. (You do not need to save for a Buffer, since you already have one.) c. Under the Utilities master category, change the name of the Phone and Internet category to Phone, delete the Gas, Garbage, and Water categories, and add a category of Cable.

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d. Continue making changes to the budget categories until your sample budget matches the following example:

Step Three of Seven: Set up the Register Once the Budget categories have been established, the next step is to set up accounts for all the funds in the Register. Remember, “Accounts” in the YNAB vocabulary include, but are not limited to, traditional banking accounts. To track all of your money (and all of your spending), YNAB includes the following account registers: •

Checking

•

Savings

•

Cash

•

Credit Card

YNAB Pro comes with default accounts set up for you.

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Set up your Register Accounts For purposes of this tutorial, we will be using two accounts: a checking account and a cash-on-hand account. After accounting for all outstanding transactions, we determine that we do have the $1,350 we need for our Buffer, sitting in our Checking Account. When we empty out our pockets, our wallets, and our purse, we discover that we have an additional $50 in cash that needs to be accounted for in the budget as well. To enter starting available income amounts 1. On the Register view, click the Checking account tab. 2. In the first line of the Register, click in the Date field. 3. When starting a new budget, by default, today’s date appears. Accept the default date by clicking the Tab key to move to the Category field. 4. Click in the Category field to open the category list. Select the Income: Supplemental (Budgeted this month) option. (We are entering the money we need to budget this month, so we enter is as Supplemental). Click the Tab key to move to the Payee field. 5. In the Payee field, enter Household. (We are using this term to represent coming into the household. For your own budget, select a term that makes sense to you.) Click the Tab key to move to the Memo field. 6. In the Memo field, enter Starting Balance, and then click the Tab key twice to move to the Inflow field. 7. In the Inflow field, enter 1350, and then click the Enter key. YNAB Pro enters your total as $1,350.00 Your Register view now looks like this:

Notice that the account balance on the Checking account tab reflects your new entry. 8. Repeat Steps 1 – 7 to enter the $50 cash into your Cash account (Click on the Cash tab to open that register – you will always know which register is open because it will highlight orange). Again, note the account balance on the Cash tab after you’ve created this entry.

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Step Four of Seven: Budget your Categories Back on the Budget view, notice the Available amount now reflects the total amount of funds entered into the register.

At this point you will begin Rule Two: assign every dollar a job, by distributing the total amount into your budgeting categories. For this tutorial, we are going to budget the following amounts: Rent - $800 Cable - $75 Groceries - $150 Car Payment - $125 Phone/Internet - $100 To Budget Categories 1. On the Budget View, click the Budgeted field for the Rent category, enter 800, and then hit Enter. The category is now budgeted for $800.00. 2. Repeat Step One for each of the listed budget items above. When finished, your Budget View will look like this:

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Notice: as you assigned amounts into categories, the Available amount shrunk, reflecting the amounts you budgeted. This allows you to see at a glance the total left for you to budget.

Step Five of Seven: Arrive at a Zero-Based Budget You’ll notice that you still have $150 left to budget. You have to give that $150 a job in order to get the Available amount to $0. (Rule Two, remember?) We’re going to place that $150 into our Emergency Fund savings category. To arrive at a zero-based budget • Assign $150 into your Emergency Fund category. The Available amount now stands at $0.

Once all Available funds have a job it’s now time to start tracking our spending.

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Step Six of Seven: Track your Transactions Tracking spending and income in YNAB Pro is as simple as entering transactions into a check register. As you spend your budgeted funds, or deposit income in your accounts, you will enter each transaction in the needed account register (checking, savings, etc). YNAB Pro automatically updates your Budget view to reflect the current totals for amount spent and amount remaining. For this tutorial, we are going to enter the following amounts: Outflow Rent - $800 Cable - $75 Groceries - $55 Phone/Internet - $100 Groceries - $18.50 Inflow Paycheck - $1500 To enter outflows 1. On the Register view, on the Checking account tab, click the row line with the message. 2. Click the Tab key to accept today’s date and open the Category list. 3. Select Housing: Rent, and then click the Enter key. 4. For Payee, enter Acme Mortgage, and then click the Enter key. 5. In the Memo field, enter August Rent, and then click the Enter key. 6. In the Outflow field, enter 800, and then click the Enter key. Notice that the Account Balance on the Account tab has been adjusted. Go to the Budget view and see that the monthly totals field has been updated as well.

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7. Enter the remaining transactions listed above for groceries, cable, and phone bills to duplicate the Register shown below.

Check the Budget view to view the updates there. Notice the following YNAB Pro features: •

The Master Category Utilities has updated to show the total spending for the category from the combined Cable and Phone/Internet Spent amounts.

•

Place your cursor over the Spent amount for groceries, and YNAB Pro displays detailed transaction information.

Entering Inflow We are going to update the month’s budget with the following transaction: •

Your $1,500 paycheck arrives and is deposited in your checking account.

To enter inflow 1. In the Register, on the Checking Account tab, enter a transaction for the $1,500 paycheck, using the following parameters: o o

Today’s date Income: Primary (Remember: this month’s income is for next month’s expenses, therefore it is entered as Primary.)

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o o o

Payee: Household Memo: paycheck Inflow: $1500.00

Step Seven of Seven: Adjust your Budget throughout the Month Budgets are, by nature, ever changing. Changes have to be made for the unexpected emergencies or windfalls that come our way. Fortunately, even if life is unpredictable, the YNAB process remains a constant. Whether you encounter unexpected car repairs or a much-welcomed bonus, the steps to adjust your budget are the same: 1. Enter the transaction (outflow or inflow) into the Register. 2. Adjust your Budget categories until you reach $0 remaining as your Available amount.

Adjust your monthly budget to account for unbudgeted outflow First, we are going to update the month’s budget to accommodate the following occurrence: •

an unexpected $250.00 IRS bill creates an unbudgeted Tax Bill amount

To adjust your budget for this transaction 1. Enter a new Master Category and name it Taxes 2. Enter a new category and name it Federal. 3. Enter a transaction for the tax bill, using the following parameters: a. Today’s date b. Category: Taxes: Federal c. Payee: IRS d. Memo: 2007 mistake e. Outflow: $250.00 View the results on the Budget view.

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Note: •

The $250 unbudgeted expense now appears as a negative number in the Balance column of budgeted funds, reflecting the fact that you’ve overspent funds for this category.

•

The $250 also has been subtracted from next month’s Available funds. (See sidebar)

•

This month’s Available total is still at $0.00. You do not need to adjust this month’s budget to maintain zero-balance budgeting; however, you will need to find the money somewhere. You have three options to avoid running out of money before you pay all this month’s expenses: o

Adjust the budget to move funds from another budgeted category this month.

o

Pay the bill by taking money from an unbudgeted balance in a savings account

For this tutorial, you are going to use the first option. We will lower some category balances so we can make more money available to budget where needed. Looking at the Budget categories, lower the current amounts budgeted in various categories, until the Available amount reaches $250. (Choose any categories that appear logical and available to adjust, just as you would in real life.) 4. Enter $250 in the Budgeted field for the Federal Taxes category. Note that the negative numbers no longer appear on the Budget view, and the next month’s Available amount has returned to $1350.00.

Adjust your monthly budget to account for inflow Next, we are going to update the month’s budget for the following reason: •

Your aunt sends you a belated $100 birthday check

To adjust your budget for this transaction: 3.

In the Register, on the Checking Account tab, enter a transaction for the $100 check, using the following parameters: o o o o o

Today’s date Income: Supplemental (so you can spend it this month) Payee: household Memo: gift Inflow: $100.00

Open the Budget view and view the results. Note that this month’s Available number now reflects the additional $100 deposit. You are no longer operating a zero-based budget. Per Rule Two, you will need to budget the $100 back down to zero. 4. Looking at the Budget categories, you could adjust the Available amount back down to $0.00 by entering amounts in categories with no budgeted funds and/or adjusting the currently existing budgeted amounts. For this instance, add the $100 to the Fun Money category (His or Hers, whichever is appropriate!) so you can spend it as your aunt intended.

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Now - Create your own Budget! Using the same seven steps as you followed in the previous tutorial, you are now able to set up your own budget. From this point forward, all you need to do is: •

Record and track spending, entering transactions into YNAB Pro as you spend money.

•

Enter your income as you receive it, and then budget it to zero.

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Chapter

Happy Day! Moving to a Buffer-Based Budget In this chapter: •

Making the transition to your buffer

8

So, you’ve finally got your buffer – Congratulations! Great work. You have removed yourself from the paycheck-to-paycheck cycle. This chapter will tell you how to handle that transition in YNAB Pro.

Moving Buffer Funds You’ve been accumulating your buffer funds in a savings category. Now that you have enough saved to start living a month behind your income, you need to move those funds from their current savings balance into our Available amount. Example It’s August 1st. You’ve been saving $500 a month into your Buffer Savings category. Rule Three has been working to roll that money forward every month. Now you’ve saved up the $3,000 you need for your buffer. You’re ready to move that money into this month’s Available amount.

You’re going to move these funds by the method outlined in Transferring Savings (or other funds budgeted in previous months) •

In the Budgeted column for your Buffer category, subtract the $3,000 by entering it as a negative number: -3000 (you must type the minus sign before the number). The Available amount for this month now shows $3,000, and the Buffer fund balance is now empty. Congratulations! You’re now ready to budget your buffer. All inflows you receive this month will be entered as Primary, and will be available for next month’s expenses.

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Using YNAB PRO: Different, but not Difficult This section contains all the ‘how-tos’ for the YNAB Pro program. It is set up for easy reference by views and by tasks. Refer to this section whenever you need a quick lesson about a particular YNAB Pro feature.

In this Section Working with the Budget Working with the Register Working with the Scheduler Performing Other Common Tasks

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Chapter

9

Working with the Budget In this chapter: • • •

Getting Started with Budgets Managing Categories Budgeting by Category

Getting Started with Budgets This section explains how to start new budgets: creating a new budget, adding budget categories, and entering your budget figures. These are sample budgets you are creating. The steps will be the same when you create your budget.

Creating a New Budget If you’re new to YNAB Pro, you’ll start by creating a new budget. To begin a new budget in YNAB Pro 1. From the File menu, point to New and select Blank Budget. A new blank budget opens. 2. On the File menu, click Save. The Save screen opens. 3. In the File name field, enter a name for your new budget, and then click Save. A new budget has now been created and is ready for your information.

Opening an Existing Budget To open an existing budget in YNAB Pro 1. From the File menu, click Open. The Open window opens. 2. Browse to the correct budget file, and then click Open.

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Managing Categories The heart and soul of your YNAB budget are the categories you setup to direct where your money goes. A quick glance at the Budget view shows the two types of YNAB categories: Master categories and their related categories.

In this example, Clothing and Food are Master Categories. The items listed beneath are categories. Things to Note about Categories: •

Master categories serve as labels to name related expenses. Think of them as folders, containing a group of similar budget items.

•

You assign budget outflow for each category. YNAB Pro then adds these amounts and displays the total amount budgeted for each Master Category.

•

You can adjust the screen display for any Master Category to hide or show the categories by clicking the plus sign (show categories) or minus sign (hide categories) next to each Master Category name.

Setting up Categories YNAB Pro comes with a set of example categories already in place whenever you open a new budget. You may adjust these categories to suit your needs by creating new categories, renaming categories, moving categories to a different Master Category, and deleting categories. To create a new Master category 1. On the Budget view, right-click anywhere in the Monthly Totals column. The Category edit box opens. 2. Point to New, and then click Master Category. The New Master Category box opens. 3. Enter a name for the Master Category, and then click OK.

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To create a new category 1. On the Budget view, right-click anywhere in the Monthly Totals column. The Category edit box opens. 2. Point to New, and then click Category. The New Category box opens. 3. Select a Master Category from the drop-down list, enter a name for the new category, and then click OK. To rename a category 1. On the Budget view, right-click in the Monthly Totals column for the category you wish to rename. The Category edit box opens. 2. Click Rename. The Rename Category box opens. 3. Enter a new name for the category, and then click OK. The category now appears with its new name. To move a category to a new Master Category 1. On the Budget view, right-click in the Monthly Totals column for the category you wish to move. The Category edit box opens. 2. Click Move. The Move Category box opens. 3. Select the name of the new Master Category, OR enter a new name to create a new Master Category, and then click OK. The category now appears under its new Master Category. To delete a category 1. On the Budget view, right-click in the Monthly Totals column for the category you wish to delete. The Category edit box opens. 2. Click Delete. The Delete Category? confirmation box opens. Click OK to continue deleting the category, or click Cancel to exit the window without deleting (side sidebar).

Budgeting by Categories Each month’s Available funds will be divided up among the categories in your budget. At the start of the budgeting process, the Available amount shown for the month on the Budget View will equal the total amount of inflow entered into the Register for that month.

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As funds are allocated into categories, the Available amount decreases.

The ultimate goal of zero-based budgeting is to have all of your available funds put to work within your budget.

Budgeting into Categories As shown in the figure below, each category has three fields: •

Budgeted—shows the amount budgeted for the month. You plan how much you’ll spend in each category and enter your budget figures here.

•

Spent—shows the amount spent so far this month. This figure is automatically entered from your Register transactions.

•

Balance—shows the amount remaining to spend. This figure is automatically calculated by YNAB Pro,

•

To budget a category 1. Click the Budgeted field for the desired category.

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2. Enter the amount to budget by one of the following means: a. If you know the amount you want to enter: In the highlighted Budgeted field, enter the budget amount, and then hit Enter. OR

If you need to do a bit of math to figure out how much you want to enter: In the highlighted Budgeted field, click the down arrow

to

open the calculator tool.

b. Key in your calculations until you arrive at the budget amount, and then click OK. 3. Repeat Steps 1 and 2 until the entire month’s funds have been allocated to your individual categories. Adjust category amounts as necessary until the Available amount for the month equals 0.

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Chapter

10

Working with the Register In this chapter: • • • • •

Setting up Accounts Entering Transactions Working with Budget Categories Getting Hands-on with Transactions Interacting with your Bank

The Register view is Banking Central for YNAB Pro. It holds the data for all of your accounts and tracks the inflow and outflow of your funds. On this screen, you will set up your accounts and enter the details of every inflow and outflow. Once this information is entered, the Register sends it to the Budget view, keeping your budget balances current. To truly understand the power of the Register, you must first understand the term “accounts.” Accounts in YNAB Pro terms include, but are not limited to, traditional banking accounts. To account for all of your money (and all of your spending), YNAB accounts may include the following: •

Checking and Savings Accounts

•

Cash-on-Hand

•

Loans

•

Credit Card/Department Store Charge Accounts

Checking, Savings, and Cash-on-Hand accounts all (generally) have positive balances, while any Loan or Credit Card accounts will (generally) have negative balances. By registering all transactions involving these two types of accounts, YNAB Pro maintains an allencompassing view of your financial picture. This chapter covers the nitty-gritty of working with accounts, including setting up accounts, entering transactions, and transferring funds from one account to another.

Setting up Accounts YNAB Pro comes with a few default accounts in place. You can modify the names, change the appearance, or add to these accounts to create your personal Banking Central.

Creating New Accounts Create a new account for each bank account as well as your cash-on-hand. You may also wish to create accounts for credit cards and loans.

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To create a new account 1. On the Register view, in the Account Tab, click the Add button . 2. The Create a New Account window opens. Enter a name for the account (i.e.: John’s Checking, 1st National Savings, etc.) 3. Select a starting date for the account. Note: you may not enter any transactions dated prior to the starting date 4. Enter the starting balance. 5.(Option) Select an account type. Click Ok. The new account and its balance appear on the Account Tab.

Modifying or Renaming Existing Accounts You may wish to edit the starting date or the name of an YNAB account. To edit an account 1. On the Register view, in the Account Tab, right-click the account you wish to modify. 2. Click Edit account. The Edit Existing Account window opens. 3. Enter the appropriate information, and then click OK. The new information now appears on the Account Tab.

Changing the appearance of the account register You can change the appearance of your account registers to allow for single-line or double-line entry. Single-line entry

Double-line entry

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To change the account register appearance 1. On the File menu, click Settings. The Settings window opens. 2. On the Register tab, select the desired display option, and then click OK.

Hiding and Deleting Unused Accounts Over a period of time, you may end up with accounts that you no longer use and find yourself wanting to “clean house” by removing them from the Account Tab list. YNAB Pro gives you two ways to handle this: a. hide the account so that it no longer appears on the Account Tab (recommended) b. delete the account entirely (not recommended, as all transactions in that account will also be deleted, which will affect not only your historical Budget data, but all calculations based on the deleted transactions) If you wish to delete an account completely, it is recommended that you move all transactions from that account to another account. To hide an account 1. On the Register view, in the Account Tab, right-click the account you wish to hide. 2. Click Hide Account. The account is removed from the Account Tab. To view or restore a hidden account 1. On the Register view, right-click anywhere in the Account Tab. 2. Click Show hidden accounts and select the appropriate account from the list. The account is restored to the Account Tab. To delete an account 1. On the Register view, in the Account Tab, right-click the account you wish to delete. 2. Click Delete account. The account and all its associated data is deleted from the Register and from the Budget (not recommended).

Entering Transactions A transaction in YNAB Pro is the record of any movement of funds, whether it be inflow, outflow, or a transfer from one account to another. The transactions you enter into the Register become the accounting records for the Budget, and are instantly calculated into the budget totals for the month.

Creating Transactions There are four basic types of transactions you can create in YNAB Pro: •

inflow into an account

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•

outflow from an account

•

transfer of money between accounts—This sort of transfer does not affect the Budget

•

transfer of money from one account to pay down a debt in another account (i.e.: transferring money from checking to pay on a credit card account)—This sort of transfer does affect the Budget.

To create an inflow transaction 1. On the Register view, on the Account Tab, click the desired account. 2. In the register line with the message, click in the Date field. 3. When first opening the program, by default, today’s date appears. If you have been entering transactions, the date will default to the last date you entered. To accept the default date, click Tab to move to the next field, or change the date by one of the following means: a. Type a new date in the date box, and then click Tab to move to the next field. OR b. Click the drop-arrow to open the Calendar control, select a new date, and then click Tab to move to the category field. c. Use the up or down arrow to manually adjust the date one number at a time in either direction. 4. Click in the Category field to open the category list. Select the appropriate Income option, and then click the Tab key to move to the Payee field. (Note, when selecting the Income option, you will select: a. Income: Primary if you are using a Buffer and this deposit will be sent to the following month’s Available on the budget window to be budgeted next month. b. Income: Supplemental if the money is to be budgeted for the current month.) 5. Enter the name of the Payee, (i.e.: household), and then click the Tab key to move to the Memo field. 6. Enter a memo about the transaction (Optional), and then click the Tab key twice to move to the Inflow field. 7. Enter the amount of the deposit, and then click Enter.

To create an outflow transaction 1. Follow Steps 1-3 as outlined in under creating an inflow transaction. 2. Does the transaction involve more than one budget category? a. If No: go to Step 3. b. If Yes: split the receipt into categories as follows. i.

Click the Category field to open the category list and select Split (Multiple Categories).

ii. Select a budget category, enter a Memo note (optional), and enter an amount for each portion of the transaction expense and then click OK. (For more information on splitting receipts, see Splitting Receipts.) iii. Move to Step Four. 63

3. Click the Category field to open the category list. Select the appropriate Category option, and then click the Tab key to move to the Payee field. 4. Enter the name of the Payee, and then click the Tab key to move to the Memo field. 5. Enter a memo about the transaction (Optional), and then click the Tab key to move to the Outflow field. 6. Enter the amount of the expense, and then click Enter. 7. (Option) Click on the next line of the register to continue entering transactions.

Funds transferred between accounts that do not affect the Budget Simple transfers of money from one bank account to another do not impact the budget, as there is no change in the sum of your personal funds. To make a simple funds transfer between accounts: 1. Follow Steps 1-3 as outlined in under creating an inflow transaction. 2. Do not make a selection in the Category field, as this transaction is not a part of the budget. It is merely a means of moving funds from one account to another. Click the Tab key to move to the Payee field. 3. Click the down arrow in the Payee field to open the Payee selection box. This is where you will activate the transfer feature. From the Transfer: options, select the destination account which will begin with the word Transfer, and then click the Tab key to move to the Memo field. 4. Enter a memo about the transaction (Optional), and then click the Tab key to move to the Outflow field. The transfer is an outflow from this account, an inflow for the destination account. You will not need to enter a separate transaction in the second account. YNAB will complete the transfer for you. 5. Enter the amount of the expense, and then click Enter.

Funds transferred between accounts that DO affect the Budget You can also make money transfers to make payments on your credit card or loan accounts. This type of transfer DOES involve the budget as you are making the payment to an external party. Money is leaving your life and so needs to impact the Budget. To make a funds transfer to pay down a debt: 1. Follow Steps 1-3 as outlined in under creating an inflow transaction. 2. In the Category field, select the budget category you have created for debt repayment (i.e.: Credit Card Payoff). By selecting a budget category, this transaction will show up in the Budget. 3. Click the down arrow in the Payee field to open the Payee selection box. From the Transfer: options, select the destination credit or loan account, and then click the Tab key to move to the Memo field. 4. Enter a memo about the transaction (Optional), and then click the Tab key to move to the Outflow field. (The transfer is an outflow from this account, and will register as an inflow for the destination credit account.) 5. Enter the amount of the payment, and then click Enter. For more information on handling credit cards and other types of debts with YNAB Pro, refer to Handling Credit Cards.

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Working with Budget Categories The categories in the Register are imported directly from the categories you have created in the Budget. The two views work in sync with each other—as you enter transactions into the Register, the Budget simultaneously credits or debits the appropriate category, keeping your financial picture up to date. At times, you may find that you need to divide a single transaction between several categories, or that you need to create a new category in your budget. YNAB Pro lets you handle both of those situations from within the Register.

To enter a transaction using the Receipt Splitter 1. In the appropriate account register, enter a date for the transaction. 2. Move to the Outflow field and enter the transaction amount. 3. Click the Category field and select Split (Multiple Categories). The Split Transaction Entry Form opens.

4. Select the appropriate category for each part of your purchase, enter any memo you wish to make, and then enter the appropriate amount for that portion of the transaction. Note that YNAB Pro keeps a running total of the balance remaining. 5. Do you have sales tax to enter? a. If No: Repeat Step 4 for each portion of the transaction, and then click OK, and the transaction is posted. b. If Yes: Repeat Step 4 for each portion of the transaction without assigning sales tax to any category, and then click OK. The Assign Remaining Balance window opens. 6. Select Auto-distribute amongst splits to assign the remaining sales tax balance proportionately between the categories you have selected, and the transaction is posted.

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a. (Option) Select Manually adjust splits to return to the Split Transaction Window to assign the remaining amount to categories. b. (Option) Select Adjust original transaction to adjust the total amount of the transaction to match the entries you’ve made. Handling transfers within the split transaction window. Notice that there is a place in the window to indicate that one of these transactions will involve a transfer

Once you check the box, the split transaction form changes:

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Now there is a column for TRANSFER TO ACCOUNT. Simply select the account from the drop down choices and YNAB will take care of the second step for you. To create categories from within the Register 1. In the Register view, enter a date for the transaction, and then click on the Category field. 2. Select Add New Category. The New Category window opens. 3. Select the appropriate Master Category or enter a name for a new one, enter a name for the new Category, and then click OK. The new category is created, and the current transaction is placed in it.

Getting Hands-on with Transactions There are a number of actions that you can take on the transactions in your Register, including: •

copy, delete, or move transactions

•

set a transaction as recurring

•

mark a transaction with a flag

•

create a filtered view of specific transactions

Copying Transactions Creating duplicates of a transaction is an easy way to reenter transactions that share much of the same information. Create a duplicate of an old transaction, then adjust the date and any other fields that have changed, and you can quickly account for the new transaction. To copy a transaction 1. On the Register view, right-click on the transaction you wish to duplicate. The Action Window popup opens. Click Copy to Clipboard. Note: This is to allow you to copy into OTHER applications like Excel. You cannot paste into YNAB in this manner.

Deleting Transactions Occasionally, you may need to delete transactions from the Register. It’s a simple action, but take care: once a transaction has been deleted, the action cannot be reversed. The only way to replace a deleted transaction is to actually create it again. To delete a transaction 1. On the Register view, right-click on the transaction you wish to delete. The Action Window popup opens. 2. Click Delete.

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Moving Transactions From time to time, you may get overly enthusiastic as you enter transactions, only to discover that you’ve created a transaction in the wrong account. Fortunately, YNAB Pro makes it easy to move transactions between accounts. (See sidebar) To move a transaction to a different account 1. On the Register view, right-click on the transaction you wish to move. The Action Window popup opens. 2. Click Move to Account A list of your accounts opens. 3. Select the destination account. The transaction is moved to the new account.

Viewing Transactions When a register contains a lot of transactions, locating a specific transaction or group of transactions can be time consuming. Two features of the YNAB Pro Register make the process easy: the Sort feature and the Transaction Filter. The Sort feature allows you to group like transaction items together within the Register. The Transaction Filter allows you to display only that group of transactions you wish to view. Both tools are accessed in the Register column headings.

To sort transactions into groups 1. Click on the column heading for the group you wish to sort by. The Register arranges all transactions by like group, in ascending order (if alphabetical, items are grouped from A-Z; if numerical, items are grouped from lowest number or date to highest). 2. To reverse the order of the grouping (descending order), click on the column heading again. To filter transactions by group 1. Click on the Filter Tool (see picture above). A category group option list opens. 2. Click the appropriate group you wish to see displayed. The Register view shows only the group of transactions you have selected. 3. To remove the filter, click on the Filter Tool, and select All. 68

Set a Transaction as Recurring Many of your transactions may be recurring—occurring at regular intervals, always to the same Payee, always for the same amount. Perhaps, every month, on the same date, you pay your cable bill, or your car insurance bill comes due every three months, or you are paid on the 1st and the 15th of every month. YNAB Pro provides two ways to enter recurring transactions one time and then schedule them to be automatically re-entered when they are next due. One way is by using the Scheduler (discussed in the next section, Working with the Scheduler), but you can also set transactions to recur from within the Register. To schedule a recurring transaction from the Register 1. On the Register view, right-click on the transaction you wish to move. The Transaction Action popup opens. 2. Click Make recurring The Create a Scheduled Transaction window opens prefilled with the transaction information you entered into the Register.

3. Edit the Payee, Category, Memo, Account, and Amount details, as necessary. 4. Set the Date of Next Occurrence (the next date you want the transaction to be entered) and Frequency (how often the transaction will be entered after the Date of Next Occurrence) By default, those fields are set to recur every month, but you may select from the following time intervals: •

Daily

•

Weekly

•

Every other week

•

Twice a month

•

Every four weeks

•

Monthly

•

Every other month

•

Every 3 months

•

Every 4 months

•

Twice a year

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•

Yearly

•

Every other year

When you are through making changes, click OK.

Flagging Transactions Transaction flags let you make note of specific transactions. Use them to mark transactions you wish to revisit, to note the point where you last reconciled your account with the bank’s records, etc. To flag or un-flag a transaction 1. On the Register view, right-click in the Flag field for the transaction. The Flag window appears.

2. Click the desired color, or click Clear Flag to remove a flag. 3. Alternatively, you can single click to toggle through the different colored flags.

Interacting with your Bank Importing Transactions YNAB Pro makes importing transaction from your online banking site into your YNAB Pro Register a simple 1.2.3.process: 1. Download transaction information file from your bank. 2. Import this file into YNAB Pro. 3. Assign transaction information. Your online banking site will be able to provide specific information on downloading transaction/balance information to file.

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Note: •

You will need to select one of the following YNAB Pro-compatible file formats when creating this file: .qif, .qfx, .ofx, or .cvs. (Note: when using comma-delimited files (.cvs) delete any heading rows before importing into YNAB Pro.)

•

Save this file to an easy-to-locate spot. (See sidebar.)

To import a banking file to YNAB Pro: 1. In YNAB Pro, from the File menu, select Import Transactions. The Import Transactions window opens. 2. Browse to the file you wish to import. 3. Select the YNAB Pro destination account (checking, savings, cash-on-hand etc.), and then click Import selected file. If your imported file’s transaction categories match the categories in your YNAB Budget, the Register view will open. Go to Step 5 below. If your imported file includes categories that are not included in your budget, the following window opens:

4. In the Automatically create categories screen, select the Add new categories to my budget option to automatically create new categories in your budget that match the transaction entries from your bank. OR, select Just write the category in the memo field to import transactions without assigning categories. This option places your bank’s transaction information in the memo section of the register. The Register view opens.

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Note: Imported transactions appear in Bold in the Register view until you assign them to a category. 5. In the Register view, assign each transaction to a Category. Imported transaction do not impact your budget (meaning the transactions won’t be “spent”) until your assign them a category. Once a category is assigned the transaction will no longer appear Bold. OR

1. Once you begin downloading your banking transaction, a popup window appears asking what you would like to do with the file. Notice that Open with YNAB Pro is one of the options:

Select that as your choice and click OK. YNAB Pro will immediately start to open.

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Once it’s open a new window appears:

The selected file will appear in the browse box (blurred her for privacy reasons) Select the destination account for the transactions and then click Import Selected File.A new window appears telling me the import was successful and how many transactions were imported to the register. Now the register appears with the downloaded transactions.

Notice all the transactions are in bold. This is because they have not been accepted yet. To accept a transaction assign it to a category. Once a category has been assigned, the bold disappears.

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Chapter

11

Working with the Scheduler In this chapter: • Creating transactions in the scheduler

Using the Scheduler view, you can set YNAB Pro to automatically enter any regularly recurring transactions. You enter the information into the Scheduler once and each time the transaction occurs, YNAB Pro takes over and enters the recurring transactions into the Register and for you, on a schedule you have set. This will spend the money in your budget as well, so don’t forget to budget the amount each time so that there is money available for the transaction. YNAB Pro provides two ways to enter recurring transactions; one way is to set them from within the Register (see Scheduling a recurring transaction from the Register) and then schedule them to be automatically reentered when they are next due. The other way is by using the Scheduler (discussed in this section, Working with the Scheduler). No matter where you choose to create them, however, all recurring transactions are shown in the transaction list on the Scheduler view.

To create recurring transactions using the Scheduler 1. In the Scheduler view, click on the first available transaction row to select an Account, and then hit the Tab key to move to the Category field. 2. Enter a Category name or select one from the list, and then hit the Tab key to move to the Payee field. 3. Enter a Payee name or select one from the list, and then hit the Tab key to move to the Memo field. 4. Enter a Memo (optional), and then hit the Tab key to move to the Frequency field. 5. Select a frequency interval for the recurring payment (see side bar) and then hit the Tab key to move to the Next Occurrence field. 6. Enter a date to schedule the first occurrence of the transaction, and then hit the Tab key to move to appropriate transaction amount column (Outflow or Inflow). 7. Enter the transaction amount, and then hit the Tab key to finish the transaction.

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To delete recurring transactions from the Scheduler 1. In the Scheduler view, right-click on the transaction you want to delete. 2. In the pop-up, click Delete. The transaction is deleted from the Scheduler. (All previously submitted transactions remain in the Register.)

To by-pass the Scheduler and immediately submit a transaction: 1. In the Scheduler view, right-click on the transaction you want to by-pass. 2. In the pop-up, click Send to Register. The transaction is immediately sent to the Register. (See sidebar)

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Performing other Common Tasks In this chapter: • •

Setting up next month’s budget Backing up your budget files

Chapter

12

Setting up Next Month’s Budget YNAB Pro offers several ways to quickly set up future month’s budgets. You may choose to budget by individual category, or use the Quick Budget feature to copy the current month’s budgeted amounts into all of next month’s categories. To budget by category using the Suggestive Budget feature For each category, you may manually enter an amount, or you may use YNAB Pro’s suggestive budget feature to enter the following amounts: • • • •

Amount budgeted last month—copies last month’s budget amount for this category over to the current month. Amount spent last month—copies the actual amount spent last month for this category over to the current month. Average spent over last three months—calculates the average spent over the last three months for this category and copies it to the current month’s budget. Total scheduled outflows this month—calculates a total of scheduled items for this month and copies it to the current month’s budget.

To use YNAB Pro’s suggestive budget feature 1. For the desired category, right-click in the following month’s Budgeted field. The Suggestive Budget window opens. 2. Click the suggestive budget option you wish to use. YNAB Pro fills the budget category with the amount of the option you have chosen. Budgeting using the Quick Budget feature Rather than budgeting by individual category, you may use YNAB Pro’s Quick Budget feature to transfer all of the current month’s budgeted amounts to the next month. To use YNAB Pro’s Quick Budget feature 1. In any category, right-click in the Budgeted column of the month you wish to budget’s. The Suggestive Budget window opens. 2. Click Quick Budget. YNAB Pro duplicates all previous category amounts.

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Backing up Your Budget Now that you’ve made the effort to organize your finances, it’s time to take it one step further and organize your computer—at least to the extent of creating backups of your budget files. (And while you’re at it—you might want to think about the other valuable files on your hard drive. Do you really want to risk losing all the pictures you’ve been taking over the past few years?) Accidents happen. So does Mother Nature. Fortunately, YNAB Pro has taken the work out of backing up your budget files, offering you two easy options: •

An automatic backup feature that creates backups each time you save your budget file and turns backing up your budget into a “no-brainer.”

•

A one-click backup process for creating manual backups

Using the Automatic Backup Feature By default, YNAB Pro creates a backup copy of your budget file every time you save it. This file is stored in your YNAB Pro folder. For creating backups you can control the following options: •

Turn on/off the auto-save feature

•

Designate the number of backup copies stored

•

Change the location where backups are stored

To use the Automatic Backup Feature 1. On the File menu, click Settings. The Settings window opens. 2. On the Backup tab, make any desired changes to the auto-save settings, and then click OK.

Creating a Manual Backup File In addition to your scheduled backups, you can create on-demand backup files at any time. To create a manual backup file 1. On the File menu, click Backup. The Backup window opens. 2. Browse to the location where you want to create the backup file, and then click Perform backup. A new backup file is created.

Restoring your Backup File So, the worst has happened. You’ve lost your budget file – either through human error or an act of nature. But, don’t despair – now is when the beauty of the YNAB Pro backup process pays off. Simply restore the latest backup copy and you’re on your way again.

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To restore a backup version of your budget 1. On the File menu, click Restore Backup. The Restore Backup window opens. 2. Click on the restore option that you wish to use: a. restore most recent backup file, or b. browse to find another backup file. The Name your restored file window opens. 3. By default, the name of the former budget is used when creating a restored budget. You may elect to use the same name or change the name here. a. To use the same name, click Restore. In the confirmation box, click OK. OR b. To change the name, enter a new name for your budget file, and then click Restore. 4. In the Backup successful confirmation box, click OK.

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Cash, Credit Cards, and the FAQs of Life In this Section Cash Talks Handling Credit Cards Starting out Behind: Overdraft Situations Our Most Frequently Asked Questions (other than the one about credit cards)

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Chapter

Cash Talks In this chapter: • •

Option # 1: Accounting for Cash the Easy Way Option # 2: Accounting for Cash with more Detailed Tracking

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Cash can often be tricky to deal with since it leaves no trail. All electronic transactions can be tracked through your bank or online institution. With cash, however, if you forget to ask for a receipt, all traces can vanish and it can easily get lost from your budget. We have two methods for dealing with cash, the second a bit more complicated than the first.

Option # 1: The Easy Method The first method relaxes the rules—just a little—about making every penny fit neatly into a budget category. You still budget it, and you still account for it in your budget, but you don’t track every detail of how it was spent. To track cash the easy way: 1. Create a category just for cash and budget some money into that category. Name it what it is—Fun Money, Spending Money, Cash, etc. It doesn’t really matter. 2. Whenever you take cash out of the bank or ATM, immediately record the entire sum in the Register as spent. (Or as soon as you get home). Now YNAB Pro thinks the money is gone. 3. Spend the money without worrying. No need to write down every cash purchase; no need to collect receipts. Ahh, the freedom. You could also use this method for groceries or eating out (or any other category you could make it fit. This is referred to as envelope budgeting. You’d take out $100 for groceries (or take-out) and account for the $100 as spent. Keep the money in an envelope, or in a separate place in your wallet or purse, and when the money is gone, you are either done spending in that category, or you need to make another transaction in your budget. No need to track every cup of coffee, or lunch sandwich, but you still know how much you spend on takeout.

Option #2 : Opting for the Straight and Narrow If you prefer to know the specific category each of your cash dollars was spent on, then Method # 2 is for you. To track cash with more detail: 1. After setting up your Cash account in the YNAB Pro Register. a. Count all the cash in your pockets (and wallet or purse) and record it in this account. Plan on budgeting it this month, so enter it as Supplemental Income.

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b. Budget the money as you would any other income that raises your Available funds, until you’ve reached zero-balance again. 2. Spend the money, keeping track of each purchase by writing it down or keeping a receipt. 3. Record the purchases in your cash account register, just as you would with any other account you withdrew funds from, placing each purchase in its proper category. 4. Track to make sure the cash in your pocket matches the balance in your cash account. There you have it—two ways of dealing with cash!!

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Chapter

Handling Credit Cards In this chapter: • • •

Handling credits cards you no longer use Handling credit cards you pay off each month Handling credit cards you still use but are trying to pay off

14

There are three types of credit cards: those you no longer use, those you pay off each month, and those you still use while trying to pay off over time. This chapter will guide you through the steps for dealing with each type of account.

Handling Credit Cards You No Longer Use When you are paying off a card and no longer using it, you have two options: a short method and a longer one.

The Short Method The short method is quick and easy, but it does not track the credit card balances within YNAB, eliminating the necessity of setting up accounts within YNAB Pro for each of your credit cards. Instead, you track these balances using your monthly statements or online information from the credit card company. To enter transactions for credit cards you no longer use: short method 1. In the Budget view, create a Debt Repayment master category, and then create categories for each of your credit card accounts.

2. Each month, allocate repayment funds to these categories. 3. When the bills are due, make payments to these accounts, indicating the correct categories in the register. The budget will now reflect the payment, and you are finished.

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The Long Method The long method of tracking credit cards you’re paying off is more involved. If you’re a detail-oriented person who wants to be able to view all your account balances within YNAB and not cross-reference you credit card statements, this is the method for you. This method requires you to set up accounts for your credit cards within YNAB Pro. To create budget categories and accounts for credit cards you no longer use 1. In the Budget view, create a Debt Repayment master category, and then create categories for each of your credit card accounts.

2. Each month, allocate repayment funds to these categories. 3. In the Register, create new accounts for each of your credit cards, using the following parameter: a. Account Type: Credit Card, Loan, Line of Credit b. The starting balance should be the amount you owe on the card.

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4. Click OK. The Account Tab shows the new account and the amount we owe on the card (-$5,000).

To enter transactions for credit cards you no longer use 1. I the Register, enter payments on the cards, selecting the Credit Card category you created earlier. 2. In the Payee field, select the Transfer feature to transfer to payment from your checking account, to the Credit Card’s account.

In the illustration above, $200.00 has been transferred out of the Checking account, and applied against the balance of the Credit Card account.

A look at the Credit Card Account shows that YNAB has entered the transaction automatically.

The payment has been entered in the credit card account and the credit card tab now shows the new balance. 3. Add any interest you were charged on the card to the credit card account. Since this transaction will not affect the budget, do not select a category. (You are simply entering the interest charge to keep the balance accurate on this account.)

 Note This!

The Credit Card transaction does not include a category entry. That was taken care of in the Checking Account transaction. Entering the category a second time would have affected the budget twice. NOT what you want!

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4. When finished, take a look at the Budget view to see how this has affected the budget.

Handling Credit Cards You Pay Off Each Month If you plan to use your credit card, but pay off the balance each month, this is the option to use. You’ll handle these cards in two steps: setting up the initial account and balance, and entering additional charges.

Setting up the initial account for cards you pay off each month This account setup differs from a standard account in that you are going to designate this account as one that is paid in full each month. YNAB Pro then recognizes this account’s balance as budgeted to pay this credit card. To set up an account for credit cards you pay off each month 1. In the Register, create new accounts for each of your credit cards, using the following parameters: a. Account Type: Credit Card, Loan b. The starting balance should be $0 since you pay it in full each month and do not carry a balance.

2. Click OK. YNAB Pro subtracts the balance you are currently carrying from your available to budget this month, so that money is already subtracted from the budget. 85

To enter transactions for credit cards you pay off each month: 1. Enter a transaction indicating the purchase in the Credit Card account. Enter the appropriate budget category for the expense (groceries, clothing, etc.)

The credit card account register now reflects a larger balance. On the Budget view, hover over the Spent field for the category to see information on the transaction. 2. When the Credit Card bill comes in, you will record the payment in your checking account (or whatever account you are paying it from):

Things to Notice: •

Do not select a category when paying off the balance. For the $50.00 transaction, that was done at the time the purchase was entered. For the initial $200 starting balance, it was accounted for when we set up the account.

•

For this type of transaction, use the transfer feature to transfer money from the checking account to the credit card account.

3. Note that YNAB Pro completed the second half of the transaction in the Credit Card account (below)

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Handling Credit Cards You Are Still Using Before we dive in here, it’s important to say that this is by far the most complicated situation. It is strongly recommended that you stop using any card you are trying to pay off. It’s best to set one card aside that has no balance to use for purchases and pay it in full each month. (Or better yet, just use a debit card) But if you must use a card that you are paying down, here is how you approach it. To set up budget categories and accounts for credit cards you are still using 1. In the Budget view, create a Debt Repayment master category, and then create categories for each of your credit card accounts.

2. Each month, allocate repayment funds to these categories. 3. In the Register, create new accounts for each of your credit cards, using the following parameters: a. Account Type: Credit Card, Loan b. The starting balance should be the amount of the prior debt on the card

2. Click OK.

3. The Account Tab shows the new account and the amount owed on the card (-$5,000)

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To enter outflow transactions • the appropriate Credit Card account, enter a standard outflow transaction, selecting the appropriate budget category for the expense (groceries, clothing, etc.).

To enter payments on the credit card 1. In your checking account, enter a split transaction, indicating payment on the card, using the following parameters: a. Amount budgeted for the credit card debt b. New purchases made with the card

2. Finish the transaction, entering the total amount in the Outflow field. In this case, YNAB Pro does not enter the associated payment on the credit card account, so we enter that ourselves. 3. In the account register for the credit card, YNAB has entered an Inflow transaction. Notice a category was not selected for this transaction, as it was accounted for in the checking account register.

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Chapter

Starting Out Behind: When you find yourself in Overdraft In this chapter: • • •

The two types of Overdraft situations Handling starting with a line of credit Handling starting with an overdrawn account

15

Many people seek out YNAB because they are tired of letting their money control them. While YNAB’s goal is for you to live one-month behind your income (Rule One) not everyone starts out that way. Many have to continue to live paycheck-to-paycheck until they can build up their buffer (one month’s expenses) over time. It’s not the ideal way to use YNAB, but it will work. For those of you starting in overdraft you face an even bigger hurdle, but it is not impossible. If you are in overdraft, your goal should be to get rid of that debt as soon as possible. Yes, overdraft is debt because it is money you owe. To get rid of it quickly, you should try to stop all purchases that are not necessary to your survival and that will not make things worse. Cut out anything you can, from that daily cup of coffee to the cable bill. You can make coffee at home and you can catch up on your favorite shows later in re-runs or on DVD. You’ll obviously want to pay your rent, necessary bills, put gas in your car and eat. But if it’s not mandatory or necessary, cut it out for now. Can you cut out extra phone services? Is there a bus you can take to work for a while? Can you eat only at home and cut eating out? How you handle your overdraft will depend greatly on the terms of the overdraft and what the bank rules/fees are. It also makes a big difference how far into overdraft you are and how quickly you can pay back the full amount. This guide deals with two primary scenarios to starting YNAB while in an overdraft situation: •

Scenario One: Line of Credit This situation exists when a separate account called a line of credit (LOC) is in place. This is technically a bank loan. The terms of the LOC will vary from bank to bank, but in nearly all cases there will be interest charges involved, though not necessarily fees. In this case, you pay back the line of credit similar to how you would pay back any loan or debt.

•

Scenario Two: Overdrawn Account. This scenario exists when there is no line of credit present. There are typically fees involved for each overdrawn transaction and you may accumulate interest on the overdrawn part as well. What makes this situation harder is that any money deposited into the account will automatically go toward paying off the overdraft, forcing you to keep making overdrawn transactions to pay bills, etc.

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Starting in Overdraft with a Line of Credit You deal with a Line of Credit (LOC) much in the same way you would deal with any debt: you will budget for it and make payments to it. The following scenario walks through the steps for dealing with an LOC situation. Example Scenario The overdrawn account is a checking account which has a separate LOC. Here are the figures: •

Overdrawn Account: Checking

•

Overdraft LOC: $1,000

•

Paycheck: $1,500

•

Monthly Bills: o Overdraft Payment: $300 o Food:$100 o Gas: $100 o Rent: $1,000

Step One – Create a new account in the Register window called “LOC” (short for Line of Credit), and enter your starting balance for the LOC account by entering an outflow of $1,000. You do NOT want to select a category. Categorized transactions affect your budget. Since we are simply setting up the account balance we do not want it to affect your budget. See below that the account tab accurately reflects the $1,000 you owe to the checking account. Note: Parenthesis and red text indicate that this balance is negative.

Step Two – Create a category called LOC (Overdraft Repayment) under the Master Category Debt Repayment.

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Step Three – Enter your paycheck on your Checking Account tab by creating an entry for Income: Supplemental.

Notice that you now show $1,500 as available on your budget page:

Budget your Available down to zero (Rule 2), making sure to note the amount you plan to pay on the LOC, as well as any other bills you will pay. Using the facts we laid out for our example, your budget page now looks like this:

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Step Four – Paying the LOC consists of making a real life deposit to your LOC. How you do this may vary from bank to bank. You will also record the transaction in YNAB. In YNAB your payment will made with a transfer from your checking account to your LOC account. This requires two steps: 1. Create an outflow entry on the Checking tab for $300. Your category will be Debt Repayment: LOC (Overdraft Repayment). 2. Create an inflow entry on the LOC account for $300. This transaction will NOT have a category. Here is what the two registers will look like in YNAB: Checking

Now your checking account has “decreased” by $300, bringing your balance to $1,200. Line of Credit Account

Notice your LOC account has “increased” by $300, bringing your balance up to a negative $700. Your budget page correctly reflects the $300 as “spent” (See below - You “spent” it on debt repayment).

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Step Five – Record all of your other bills and day-to-day expenses into the Checking register as they happen:

Each time you get paid again you will repeat these steps. It may take you a while to pay back the overdraft, but hopefully these steps will keep you on track. Once you have paid the LOC back you can move forward with YNAB and start building toward that buffer. Starting with an overdrawn account Reminder: Ideally, you should pay the overdraft back as soon as possible and resolve to never use it again. It is strongly recommended that you cut out all necessary spending until your account has a positive balance again. Fees charged for keeping your account in overdraft are considerable, and it’s better when your hard earned dollars are given more productive jobs. The sooner your account balance at the bank is positive, the better. Remember the overdraft debt because it is money you owe. However, since it is not debt you pay to a separate account, you will need to handle it differently.

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What NOT to Do, and Why Sometimes when dealing with debt for separate accounts, people set up different account tabs in YNAB. Then they transfer payments to those accounts. However, when the debt is in your overdrawn account, that won’t work. See the following example to learn why. Facts for our example: Overdrawn Account: Checking Overdraft: $1,000 Paycheck: $1,500 Step One - Enter your starting balance for your checking account in the checking account tab by entering an OUTFLOW of $1,000 (NOTE: for the sake of our example, we have simplified by only entering the related money. You would want to also add any other current balances you have.) You do NOT want to select a category. Categorized transactions affect your budget This means they will show up as deductions/additions on the budget page in YNAB. Since we are simply setting up the account balance we do not want it to affect your budget. See below that the account tab reflects the $1,000 you owe to the bank. Note: Parenthesis and red text indicate that this balance is negative.

Step Two – Enter your paycheck by creating an inflow of $1,500 with the category Income: Supplemental. Here’s what happens:

Since the starting balance was a negative $1,000, adding in the deposit of $1,500 will bring the balance up to positive $500. This will erase the overdraft (of $1,000) in full. Seems good, right? But, if we go to the budget page - we will see that because we entered $1,500 as Income: Supplemental all $1,500 has been made available to budget: 95

This is a problem because your bank has already taken $1,000 back and you really only have $500 “available.” Additionally, if you can’t afford to pay the overdraft in one payment like this, you may be stuck in a cycle of overdrawn transactions for some time. Those transactions will come with additional overdraft charges. But, the good news is, you do have some choices. What TO Do, and Why We need to find a way to prevent over-stating how much money you have Available in your budget to spend. We also need to pay back the overdraft as quickly as possible while still paying our bills. Here are three scenarios to consider: Scenario #1 You have direct deposit but you can temporarily change the account your paycheck is deposited into. Be sure the account is not linked to the overdrawn account or you will have the same problem. Scenario #2 You receive a live check, or you have direct deposit and can temporarily stop your direct deposit and request a live check. Scenario #3 Unfortunately, due to company policy or banking restrictions, you are unable to change your direct deposit or request a live check. One of the first two scenarios is preferable, simply because in most cases it allows you to still pay your bills but to stop getting overdraft charges. Before making a decision, you should know what your fees will be through the bank for overdraft transactions, as well as know your overdraft limit. Many banks will allow overdrafts up to a certain point, but when you hit that point you will “bounce” the account, accumulate even greater fees, and potentially find yourself in legal trouble. Scenario #1: Dealing with an overdrawn account when your paycheck can be deposited into a separate account In this situation, you will deal with the overdraft much in the same way you would deal with a line of credit. Because it is in a separate account, it will be treated in the same way you would deal with any debt. You will budget for it, and make payments to it. For the sake of our example, let’s assume the overdrawn account is your checking account. Let’s also assume that your paycheck is direct deposited

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into your savings account. This setup will work with any two accounts; just substitute the names of your accounts. Facts for our example: Overdrawn Account: •

Checking Overdraft: $1,000

•

Direct Deposit Account: Savings o Paycheck: $1,500

•

Monthly Bills: o Overdraft Payment: $300 o Food: $100 o Gas: $100 o Rent: $1,000

Step One - Enter your starting balance for your checking account in the checking account tab by entering an OUTFLOW OF $1,000 You do NOT want to select a category. Categorized transactions affect your budget. Since we are simply setting up the account balance we do not want it to affect your budget. See below that the account tab reflects the $1,000 you owe to the checking account. Note: Parenthesis and red text indicate that this balance is negative. Step Two - Set up a budget category called “overdraft balance” in a Master Category called Debt Repayment.

Step Three – When your paycheck is deposited into your savings account, enter it into the register as Income: Supplemental on the SAVINGS tab. If you can pay bills through your SAVINGS account then simply pay your bills. If you cannot, and typically transfer to checking to pay bills, it is recommended that you use money orders until your checking account is positive again to avoid any additional fees.

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You’ll notice that you now show $1,500 as available on your budget page

You will budget your Available down to zero (Rule 2), making sure to note the amount you will be sending toward the overdraft. Also budget for any bills you will pay (or will purchase money orders for). Using the facts we laid out for our example, your budget page will look like this:

Step Four – Paying the overdraft will consist of a real life deposit into your checking account as well as recording it into YNAB. In YNAB your payment will be recorded with a transfer (from your savings account to your checking account). This requires two entries: •

Your first entry will be an OUTFLOW on the SAVINGS tab for $300. Your category will be “Overdraft Balance.”

•

Your second entry will be an INFLOW on the checking account for $300. This transaction will NOT have a category.

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Here is what the register tabs will look like in YNAB:

Notice your checking account has “increased” by $300, bringing your balance up to a negative $700. Your savings account has appropriately “decreased” by $300, bringing your balance to $1,200. Your budget page (below) accurately reflects the $300 as “spent” (you “spent” it on debt repayment).

Step Five – Input all of your other bills and day-to-day expenses into the SAVINGS register as they happen. It should look like this:

Each time you get paid again you will repeat these steps. It may take you a while to pay back the overdraft, but hopefully these steps will keep you on track, and prevent you from being charged additional fees. Once you have your checking account positive again, you can return to depositing your paychecks as normal. 99

Scenario #2: Dealing with an overdrawn account when you receive a live (not direct deposit) paycheck The key in this scenario is not depositing your paycheck into your overdrawn account. Instead just cash your paycheck. Try to do this for free, or at the lowest check cashing rate you can find. You will want to pay your bills in person, using cash, or use money orders to pay any bills you must mail in. There may be fees to purchase money orders, but they are usually lower than overdraft fees. The only money you will deposit into your overdrawn account will be money that you want to use to pay back the overdraft. Here’s how it works: Example Overdrawn Account: •

Checking Overdraft: $1,000

•

Paycheck: $1,500

•

Monthly Bills: o Overdraft Payment: $300 o Food: $100 o Gas: $100 o Rent: $1,000

Step One - Enter your starting balance for your checking account in the checking account tab by entering an OUTFLOW of $1,000. You do NOT want to select a category. Categorized transactions affect your budget. Since we are simply setting up the account balance we do not want it to affect your budget. See below that the account tab reflects the $1,000 you owe to the checking account. Note: Parenthesis and red text indicate that this balance is negative.

Step Two - Set up a budget category called “Overdraft balance” in a Master Category called Debt Repayment.

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Step Three- Cash your paycheck and enter it into the register as Income: Supplemental on the CASH tab. You should determine what you will need for money orders BEFORE cashing your check, and get them at the same time. That you will have only what cash you need for your day-to-day living (groceries, gas, etc.).

You’ll notice that you now correctly show $1,500 as available

Step Four - You will now budget down to zero, making sure to note the amount you will be sending toward the overdraft. You will also budget for any bills you have purchased (or will purchase) money orders for. Using the facts we laid out for our example, your budget page will look like this:

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Step Five – Paying the overdraft will consist of a real life deposit into your checking account as well as recording it into YNAB. In YNAB your payment will be recorded with a transfer (from your cash account to your checking account). This requires two entries: •

Your first entry will be an OUTFLOW on the CASH tab for $300. Your category will be “Overdraft Balance”.

•

Your second entry will be an INFLOW on the CHECKING tab for $300. This transaction will NOT have a category.

Here is what the register tabs will look like in YNAB: Cash:

Checking:

Notice your checking account has “increased” by $300, bringing your balance up to a negative $700. Your cash account has appropriately “decreased” by $300, bringing your balance to $1,200. Your budget page (below) accurately reflects the $300 as “spent” (you “spent” it on debt repayment).

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Step Six – Input all of your other bills and day-to-day expenses into the CASH register as they happen. It should look like this:

Each time you get paid again you will repeat these steps. It may take you a while to pay back the overdraft, but hopefully these steps will keep you on track, and prevent you from incurring additional fees. Once you have your checking account positive again, you can return to depositing your paychecks as normal. Scenario #3: Dealing with an overdrawn account when your paycheck is deposited directly into the overdrawn account This is the most complicated method of dealing with overdraft, and likely the most costly. So if you can find a way to make one of the other scenarios work it is recommended. However, there will be cases, where that is simply not an option, so for those cases Scenario #3 exists. Here’s how it works: Facts for our example: Overdrawn Account: Checking

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•

Checking Overdraft: $1,000

•

Paycheck: $1,500

•

Monthly Bills: o Overdraft Payment: $300 o Food: $100 o Gas: $100 o Rent: $1,000

Step One - Enter your starting balance for your checking account in the checking account tab by entering an OUTFLOW of $1,000.

You do NOT want to select a category. Categorized transactions affect your budget. Since we are simply setting up the account balance we do not want it to affect your budget. Note above that the account tab reflects the $1,000 we owe to the checking account. Note: Parenthesis and red text indicate that this balance is negative. Step Two - Set up two budget categories, one called “overdraft balance” and one called “overdraft charges” in a Master Category called Debt Repayment.

Since you know the amount you owe the bank is $1,000 your goal will be to grow your overdraft balance category over time. Once your budget category for overdraft balance has grown to a balance of $1,000, you have successfully paid back your overdraft. You will not spend any money from this category - that is not the goal. You want that balance to grow in your checking account. By budgeting to that category and not spending from it, you ARE paying the debt. By not spending you are allowing that category balance to grow in your checking account – indicated by the balance column of your

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budget page. Once your account balance is positive and you have paid back the amount you owe, you can stop budgeting to that category. The overdraft charges category is necessary in the event that you are charged a fee for a new overdraft withdrawal. Each time you will need to budget that same amount to the overdraft charges category. Always make sure you have earned money and entered it as income before budgeting. Step Three When you get paid you will input your income into the register on your checking account tab by entering an INFLOW as Income: Supplemental. Here’s what it looks like:

Take note of the balance that shows on the checking account tab above. Since the starting balance was a negative $1,000, adding in the deposit of $1,500 only brought the balance up to positive $500. However it did erase the overdraft (of $1,000) in full. But, remember, when you go to the budget page – you’ll see all $1,500 as available to budget:

That’s because we entered $1,500 as Income: Supplemental. However, you know that you don’t have $1,500 actually available, because the bank took back the money owed. Your best choice would be to budget $1,000 to the overdraft balance. That would erase the debt in full, because that is what you owe. If you can do that - great. However, in this scenario, it is assumed that you will have to fall back on the overdraft until you can pay it back in full. Again, it is recommended that you try NOT to do that. Cut all unnecessary spending until the overdraft is paid back. Step Five – After you record your income you will budget down to zero (Rule 2), making sure to note the amount you will be sending toward the overdraft. You will also budget for any bills you will need to pay. Using the facts we laid out for our example, your budget page will look like this:

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You have budgeted down to zero, and have $500 showing in your Checking Account tab. However, you still need to pay your bills. Enter OUTFLOWS for Rent, Food and Gas. You did budget for this with your $1,500 paycheck; however, because of the overdraft reducing your funds, these expenses bring you back to a negative balance. Look at the account balance on the checking tab below. You’ll notice it now shows negative $650. Not perfect, but you have made an improvement from the negative $1,000 you began with:

However, the bank has charged you a $20 fee for each of your new overdraft transactions, and those must be accounted for. You will have to record each overdraft fee into your register as an OUTFLOW. These transactions will be assigned to the Debt Repayment: Overdraft Fees category that you created:

Note above, that your balance on the checking account has now dropped to negative $710. Having overdraft fees piled on has made it more difficult to pay back.

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Let’s look at your next paycheck to see how you will continue to repay your overdraft and get back on track. Once again, you will input your income into the register on your checking account tab by entering an INFLOW as Income: Supplemental.

Your account tab now shows a positive balance of $790. Let’s view the budget page to see how all of these transactions have affected the budget:

Notice that there is a negative balance in the Overdraft Fees category. That’s because you assigned those bank fees to that category in your register, but had not budgeted any money toward that category. Now that you have been paid, that should be your first task.

If you are being paid again in the same month, what you will do based on our example is first budget $60 to the Debt Repayment: Overdraft Fees category to offset that negative balance. After you have budgeted for the bank fees, simply budget the rest of the money to zero (Rule 2). If you are being paid in the following month, your Available will simply be reduced by the amount of the negative balance as per Rule 4.

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You should notice that the three transactions that caused the account to go back into overdraft created $60 worth of bank fees! Yikes! Your bank may charge higher fees for overdraft transactions. It’s critical that you pay back the overdraft as soon as possible and not touch it again. It is strongly recommended that you cut out all unnecessary spending until your account is out of overdraft. As you repeat these steps each time you get paid, your negative account balance will get smaller. Once you build your Overdraft Balance category up to $1,000 it means that you have successfully paid back your overdraft. Then you can begin using YNAB more effectively. FOLLOW-UP Once your checking account is positive, you are faced with a small problem. The category balance that has grown in the Overdraft Balance category isn’t a “true” category balance. Therefore your total category balance is actually wrong. In other words - that money is not really available to spend at all. If having those balances inaccurately reflected in your total balance doesn’t bother you then you are done. Simply ignore the category and move forward with your budget. If it does bother you, follow the steps below to correct the issue. Correcting your total balance Once you have finished the steps above if you want to correct your category balance on the budget page, add these steps: 1. Go to the register page and record an outflow to the Debt Repayment: Overdraft Balance category. The outflow should equal what the balance is for that category (in our example $1,000). That will correct the problem on the budget page. However, now your checking account balance will be wrong since we just recorded an outflow that didn’t really happen. So we will “cheat” YNAB a little bit here. 2. Enter an inflow with NO CATEGORY to your checking account of the same amount. Your checking account will show a correct balance on the register page and your balances will be correct on the budget page.

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Chapter

Our Most Frequently-Asked Questions (FAQs): Other than the one about Credit Cards

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In this chapter: Jesse Mecham answers your questions. The one about credit cards got its own chapter. The rest are all here. • • • • • • • • • • •

Can I change my budget throughout the month? Why do I have to budget to zero? How do I move money out of a budget category? How do I handle Flexible Spending Accounts? I’m paid on the last day of the month. Do I already have a buffer? How do I handle savings? Where do I physically keep rainy day funds? Wouldn’t the buffer be put to better use paying off credit cards? What do I do with the occasional third paycheck? What can you suggest for those of us that work on commission? Can I use cash envelopes with YNAB Pro?

Can I change my budget throughout the month? Of course! It’s your budget. It’s your decision. Just be aware that there are two schools of thought on this: School # 1 says: “No. You should never change your budgeted amount, because you lose the historical data and will not be able to look back and see if you have been sticking to the original plan each month.” School # 2 says. “Yes. It’s fine to tweak your budget as long as you budget to zero each month and are taking care of the things that need to be budgeted for.” Some people, for example, tweak and change categories when a balance is leftover that they know they won’t need later. They move that balance some place where it is needed more. It is better, however, to not change numbers in categories where the money has to be there when the bill is due (i.e. car insurance). Basically, it’s your budget and it’s entirely up to you. You should make these types of decisions based on your personal situation and what your needs and priorities are. Note: As time moves on, you will get better at predicting how much money you need for each category for the month, so even if you have to move things around in the beginning you’ll probably move less and less each month.

Why do I have to budget to zero? Budgeting to Zero is the heart of Rule Two: Every dollar must be given a job. There are two situations where people can get into trouble if they do not budget to zero: • Whenever they have more money than budgeted expenses •

Whenever they have more budgeted expenses than money

Recognize yourself in either of those groups?

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Situation # 1: You have a positive balance left in the Available column.

This money has not been given a job, therefore the budget doesn’t know about it. Think of your household finances like a business. You are the boss, the dollars are your employees, and your budget is the manager. Your budget is in charge of making sure that everyone is working. In this example, the manager can’t put these dollars to work because you (the boss) never told the manager you hired them. Imagine how that would work in a real life business. You’d have employees that are being paid to do nothing. If you do not assign a job to those dollars, they are essentially lost and unable to work for you. Now you may be thinking... “But I’ve budgeted for everything I need this month and I’m not sure where to put this.” Remember, any positive balances in a category roll forward in that same category in the next month. Consider it a chance to get ahead in a category. If you need that money somewhere else eventually, you can re-assign it. Let’s go back to the Grocery Store analogy for a second. You have too many employees, so you assign some to cleaning the store. Perhaps later, you need more help at the checkout counter. What would you do? You would tell them to stop cleaning and have them go help at the checkout. That work’s with your budget, too. Let’s say you assign extra dollars to savings, but determine the next month you need them for car repairs. You simply move money between categories. So the solution to the problem of not knowing where to assign extra money is simply Put it Somewhere. Situation # 2: You have a red number, or negative balance, in your Available column.

In this situation, you have created money that does not exist in your life. If we go back to our grocery store example, this would be as if you assigned several people to clean the store, but you never hired them. It’s fair to say it’s unlikely the job would get done. In the world of finances, whenever we create money that doesn’t exist, that’s when we really get into trouble. This can lead to over-drafting your checking account or over-reaching for the credit card. What you need to do at this point is go back through your budget and lower some categories. This is about prioritizing. Do you really need $200 for entertainment? Can you get by with $100? If so, then lower entertainment by $100 and that will help bring your budget back to zero. Whichever one of these situations seems the most familiar to you, remember: Rule Two helps you keep a close eye on your money. Don’t fight it, let it do its job, and make sure each month ends with a Zero Available.

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Your manager (budget) will be very happy that you did.

How do I move money out of one budget category and into another? In YNAB Pro it’s very easy to move money from one category to another. And it is often necessary. You may move money from one category to another to adjust for unexpected outflows. From time to time, you will also need to move money from your Savings category and let it out into the real world. As with so many things in the YNAB Pro world, there are two possible situations when transferring money from one budget category to another: •

Transferring funds you budgeted this month

•

Transferring funds you budgeted in a previous month that have added up per Rule 3

Transferring funds you budgeted this month Transferring funds the same month they were budgeted is a simple process, requiring little more than updating the two categories that are involved. To transfer funds you budgeted this month to another budget category 1. In the category that you want to move budgeted funds from, double- click on the currently budgeted amount, and enter the new, lower amount. The Available amount increases by the difference between the original number the current 2. In the category that you want to move budgeted funds to, double-click on the currently budgeted amount, and enter the new, higher amount. The Available amount returns to zero.

Transferring Savings (or other funds budgeted in previous months) Transferring funds that were budgeted in a previous month is a little trickier. Funds that are budgeted in previous months but are not spent; roll forward in that category’s Balance column each month. (Rule Three: Prepare for Rain). This is the rule that allows you to save money in a category, accumulating funds from month to month. Take a look at the following example: In this account, funds have been accumulating in a category named Emergency Fund. This month, the emergency happened. The hot water heater went out, requiring a $450 unplanned expense. You have the funds in the Emergency Fund category and just need to move them to the Household Repairs category. Look at the example budget below. See the problem?

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The category has plenty of money in its balance, but there was nothing budgeted for it this month. So simply subtracting budgeted funds as we did in the first situation appears not to work here—there’s nothing to subtract from. Actually, though, we can subtract from the Budgeted column, for that is what we are doing – budgeting a withdrawal from these funds, rather than budgeting an addition to budgeted funds. Do this by entering a negative number: -450.00 (you must type the minus sign before the number) in the Budgeted field:

Once you have subtracted the $450 from your Emergency Fund, it returns to the Available amount. Now you can place it where it needs to go, in the Household Repairs budget. To transfer funds you budgeted in a previous month to another budget category 1. Look at the current month’s Budgeted amount. Is it smaller than the amount you want to move to another category? a. if No, follow the instructions above for transferring funds budgeted this month. b. if Yes, double- click on the currently budgeted amount, and enter amount you wish to transfer as a negative number (a minus sign, followed by the amount). The amount is subtracted from the category’s balance and now shows as Available. 2. In the category that you want to move funds to, double-click on the currently budgeted amount, and enter the new, higher amount. The Available amount returns to zero.

How do I handle Flexible Spending Accounts? Again, we offer two different methods. The short method is for those who want to get things entered correctly, but aren’t worried about a detailed historical trail. The long method works for those who want a more exact accounting.

The Short Method Using the short method you do not record an inflow for the money that was deducted from your paycheck – simply record your paycheck net after the FSA deduction (i.e. if your paycheck is normally $2,000 but you have an FSA deduction of $50, you would record an inflow of $1,950 ($2,000 - $50)).

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When a reimbursable event happens, record the purchase as you would any normal outflow. When you are actually reimbursed, record an inflow for the reimbursement and allocate it to the category that had the original outflow. As a result, you show no net effect of any purchases that were FSA-related in your budget for the year.

The Long Method At the beginning of the year, record a supplemental inflow of the total amount you are pledging and create a new “Flex Spending Account” category. When a reimbursable event takes place, record the outflow as you normally would. Once you receive the reimbursement, transfer the funds from the Flex Spending category to the category that had the original outflow. (See Transferring Funds Budgeted in a Previous Month, above.) Example: You pledge $1,000 in January. In March, you have an optometrist bill of $150.00. 1. Record the $1,000 total pledged amount as supplemental income. Your Available amount for that month increases by $1,000. 2. Budget that $1,000 into a newly-created category called “Flex Spending Account” (or something similar). 3. In March, record the $150.00 bill as an outflow from the appropriate category (i.e. Medical). 4. When you receive the reimbursement, do not enter it as income (you have already done that in Step 1). Enter a negative budget: -150 in the Budgeted field for your Flex Spending category. The Available amount increases by $150; the Balance column for the Flex Spending category decreases by $150. 5. Assign $150 from Available funds to the category with the original outflow (Medical). Advantages of the long method: •

You can track your FSA balance inside the budget

•

Your outflows and reimbursements are netted against each other, so the budget shows you how much you actually spent on reimbursable expenses

Disadvantage of the long method: •

It’s longer.

I’m paid on the last day of the month. Do I already have a buffer? Ha- nice try! While it's true that you are "technically" living on last month's paycheck (Rule One), you are certainly not operating with a buffer in place. What you earn on the 31st of March, you may very well need to spend on April 1st. That's no buffer! If I were paid on the last day of each month, I would pretend that the paycheck arrived on the first of the following month. From that standpoint I would now begin to build a buffer. In this instance, you'd want to make sure you lived until the following paycheck without touching the one you had just received before you can declare yourself “living on a buffer.”

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How do I handle savings? Savings funds in YNAB Pro are handled in the Budget, and have nothing to do with what real world account they may physically reside in. To accumulate savings with YNAB Pro, budget funds directly into specific categories, let them accumulate there, and use them when you need them. For example, set up a Master Savings category. Within it, create categories of: “Emergency Fund,” “Saving for Buffer,” “College fund,” etc. You budget funds for these every month, and YNAB Pro will roll over the untouched balances into the next month’s budget, keeping a running total of your built up savings. (You may also save money this way in other Master categories, i.e. a “Future car” category in your Transportation budget categories.) When it comes time to use your savings, you will transfer it into the appropriate expense category. (See Transferring Savings (or other funds budgeted in previous months.)

Where do you physically keep rainy-day funds? What my wife and I have personally chosen to do is to put all rainy day funds that are paid annually in an ING Account (which allows you to break the account down into as many sub accounts as you want). Everything else we just keep in the checking account. I'm not a big fan of transferring money in and out every three months just for a few dollars in interest - but that's me. You'll need to decide for yourself where you'd like to physically keep the money (and be aware of it when evaluating your finances).

Wouldn’t the buffer be put to better use paying off credit cards? NO! While I talk about the huge advantages in paying down credit card debt as fast as you can, we should back up a bit and be pretty clear here. While you're saving one month's expenses you should be going full- bore in that direction—saving every single penny so you can start a month with one month's expenses in a buffer. It's crucial. However, be sure that you are still paying any minimums on your credit cards. Mathematically, of course, that doesn't make sense. As mentioned in Handling Credit Cards, referenced above, if you pay down debt, it's as if you're making a return on your money equal to the interest rate. 18% is tough to find these days! But I’m not just talking about math here when we're evaluating your financial choice. As a matter of fact, very little of it has to do with math. You are taking steps that will enable you to no longer live paycheck to paycheck. That little change in your financial life will be paying far greater returns than you can get anywhere, ever. You'll have greater peace of mind and less stress—both of which lead to an improved environment for making financial decisions. Better financial decisions will be what pays you these dividends ultimately. It’s tempting to knock down that debt, but trust us, get out of the paycheck-to-paycheck cycle first and then attack that debt with absolute unheard of full-bore intensity. It'll be gone in no time.

What do I do with the occasional third paycheck? Handle it exactly as you did the other paycheck. If you are budgeting with a buffer, you enter it as an inflow of type ‘Primary’, and those funds become Available to budget the following month. If you are still working

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toward a buffer, you enter it as in inflow of type ‘Supplemental’, and that third paycheck is Available to budget for the current month. Either way, consider that paycheck to be a bit of a windfall. Use it to pay down debt, invest, build your buffer, or supplement your emergency fund. (Or—save for a cruise!)

What can you suggest for those of us that work on commission? Let Rule One be your best friend. Focus on building your buffer as fast as you can. You’ll find everything about managing your money becomes easier.

Can I use cash envelopes with YNAB Pro? My wife and I have used cash for groceries in the past very successfully (except when we would forget to bring the envelope with us). I don't see any problem in you being able to use cash for all of your spending categories (at least the ones that make sense). When you physically place the money into your envelopes, you’ll just need to virtually budget the money in YNAB Pro. When money is spent from the envelope, you can record it in YNAB Pro (or heck, just record it in YNAB Pro once (when you take it out of the bank) and save yourself some entries).

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Appendix In this Section

Keyboard Shortcuts Resources

Keyboard Shortcuts Global (They work anywhere in the program) CTRL-B: Go to the budget screen CTRL-G: Go to the register CTRL-D: Go to the scheduler CTRL-R: Go to the Register CTRL-S: Save current budget file

Calculator Shortcuts Hitting any of the arithmetic keys (+,/, *), with the exception of the minus sign will bring up the calculator and act as if you had just clicked that button

Calendar Shortcuts Up and down arrow keys: Add and subtract days “+” and “-“: Also adjusts days

Register Shortcuts Delete: Deletes selected transactions F2: Begins editing the row CTRL-A: If editing a cell, selects the entire cell contents. If not editing a cell, selects all visible transactions.

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CTRL-N: Starts editing a new transaction CTRL-T: Accepts selected imported transactions

Budget Shortcuts F2 - If category is highlighted, Renames the active category F2 - If a numerical cell is highlighted, begins editing the cell Left and Right - collapse and expand the current highlighted master category Delete - deletes the highlighted category Insert - If a category is selected, creates a new category

Scheduler Shortcuts Delete: Deletes selected transactions F2: Begins editing the row CTRL-A: If editing a cell, selects the entire cell contents. If not editing a cell, selects all visible transactions. Calendar Shortcuts: Up and down arrow keys: Add and subtract days CTRL-C - copies the selected cell or row(s) - After copying from the register or scheduler, these rows can be pasted in Excel CTRL-V - pastes from the clipboard into the selected cell

Resources For addition support please check out the support page at:

http://www.youneedabudget.com/support/

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