Author Topic: YNAB and investments?  (Read 17754 times)

orcas50

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YNAB and investments?
« on: May 15, 2013, 07:07:57 PM »
Hello YNAB-loving Mustachians. I've been tracking spending with Mint for a few years now but honestly, have never really liked it. I agree that it is backwards looking. We are high income and have a good sized portfolio and a high savings rate, but still I feel like I spend too much and I'd like to reign it in, and am hoping YNAB can help motivate me.  So I have finally started using the YNAB software I bought over a year ago.

One question I have is about investments and how to include them on YNAB. If I create a category called "investments" and allocate $ there every month (currently about 40% of our take home pay), won't it be seen by YNAB as an "expense" rather than as savings we don't intend to spend (as opposed to rainy day funds, which seem to be savings that will eventually be spent). Maybe I'm confused, but it seems that YNAB will then tell me I'm "spending" 100% of our income, when we are really saving 40%. Perhaps I should just enter the 60% amount  into the budget, ignoring the invested amount and not including it at all? What do other saving Mustachians do?

Also, I have a credit union savings account that is not intended to be used for cash flow purposes, it's more of an e-fund/car replacement fund. I have not added that account to my YNAB budget yet. Is there any reason I need to? Sorry, I realize I should post these questions on the YNAB fora, but we are not new to the concept of a buffer, saving a large percentage of our income, and having no debt besides mortgage, and this seems to not be the norm over there.
« Last Edit: May 15, 2013, 07:14:00 PM by Susan »

madgeylou

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Re: YNAB and investments?
« Reply #1 on: May 15, 2013, 07:40:30 PM »
I just have an off-budget account called 'investments.' Transfer money in from other accounts using the transfer feature, and just d a new transaction every once in while to keep the balance up to date with gains and losses. Works pretty well for me so far, but I've only been using YNAB for about 6 weeks.

nonsequitur

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Re: YNAB and investments?
« Reply #2 on: May 15, 2013, 08:29:12 PM »
I don't do the off-budget account for investments, but that is certainly one solution.  What I do instead is split my paycheck into several categories: whatever I'm planning to spend gets counted as income for the relevant month, and whatever is going towards FIRE is categorized as in inflow into the FIRE category.  Then when I transfer to the brokerage/whatever, the outflow exactly cancels the inflow and it doesn't count as spending. 

I also don't include my emergency fund in YNAB, but I personally think I should (since I may spend it someday) and have just been too lazy to get around to it.

smalllife

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Re: YNAB and investments?
« Reply #3 on: May 15, 2013, 08:57:04 PM »
I have investments as off budget accounts.  The reporting features are "sticky" so I just turn off that category when doing my reports.  It took me a while to get to there, but I think it's the optimal combination of MMM and YNAB.

I have my emergency fund on budget.

Joel

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Re: YNAB and investments?
« Reply #4 on: May 15, 2013, 11:04:25 PM »
You could always have a FIRE category (I call mine "Future") which has an equivalent amount equal to what is in your investment account. My category balance is actually greater than the investment balance. My investment account is in a VTSAX fund at Vanguard. At the end of each month, I update the balance and categorize it towards the Future category. This way my net worth is accurate, and that category is whether the gains/losses go. That way if I need money, I can pull money from the category balance & make a transfer from the account. I keep between 15-20k in my checking though while doing this.

Nothlit

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Re: YNAB and investments?
« Reply #5 on: May 16, 2013, 10:19:27 AM »
I keep my investment accounts off-budget in YNAB. Only two of my investment accounts (Roth IRA and taxable) ever get any contributions from my budget, so I set up budget categories for them and transfer accordingly. The rest of my investment contributions all come via pre-tax payroll deductions, so I never even enter those into my budget. They just get entered as off-budget transactions directly into the off-budget accounts.

On the last day of each month, I manually update the investment account balances to reflect that month's gains/losses, so my net worth report remains accurate over time.

aj_yooper

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Re: YNAB and investments?
« Reply #6 on: May 16, 2013, 11:07:34 AM »
Also, I have a credit union savings account that is not intended to be used for cash flow purposes, it's more of an e-fund/car replacement fund. I have not added that account to my YNAB budget yet. Is there any reason I need to? Sorry, I realize I should post these questions on the YNAB fora, but we are not new to the concept of a buffer, saving a large percentage of our income, and having no debt besides mortgage, and this seems to not be the norm over there.
Since the account is conceptualized as an e-fund/car replacement fund (future expenses), I think you could have the credit union fund in the budget, especially if you periodically add to the account from your budget income.  If the account is dormant, I would list it as an asset not in the budget.


oldtoyota

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Re: YNAB and investments?
« Reply #7 on: May 26, 2013, 08:17:30 PM »
I have been using YNAB only a few days. I love how the directions say to start with the now instead of importing a lot of history. Yay for that.

My question is whether you all count your take-home pay only--what is deposited into your back acct--or do you count the gross and then deduct 401k contributions, health insurance, etc from the gross number in your paycheck?

Right now, I have YNAB using my net income, which is in the checking account import. Therefore, it looks like I have no health insurance costs in YNAB, and my 401k contributions are not reflected.

Does that matter?


Joel

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Re: YNAB and investments?
« Reply #8 on: May 26, 2013, 08:24:38 PM »
Ynab is about budgeting your cash flow. What value will you add by taking the additional steps to include all your pretax contributions?

Personally I find it worthwhile to record my retirement transactions as I include my 401k as an off budget account, and update the balance monthly. I like seeing it grow and I like monitoring my net worth.

I do not find it worthwhile to track my tax with holdings or health insurance premiums because the totals are all readily available, and keeping that information in ynab provides me no value.

I personally have a very simple category structure to make things easy to record at the pos because that adds value to me. It's all in what you want. Don't over complicate things if they don't add value.

I have been using YNAB only a few days. I love how the directions say to start with the now instead of importing a lot of history. Yay for that.

My question is whether you all count your take-home pay only--what is deposited into your back acct--or do you count the gross and then deduct 401k contributions, health insurance, etc from the gross number in your paycheck?

Right now, I have YNAB using my net income, which is in the checking account import. Therefore, it looks like I have no health insurance costs in YNAB, and my 401k contributions are not reflected.

Does that matter?

aj_yooper

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Re: YNAB and investments?
« Reply #9 on: May 26, 2013, 08:36:01 PM »
For me, the simplest way would be to record the 401k amounts in an off budget account and enter the data for each pay period or monthly.  YNAB is more of a snapshot of net worth, rather than a real time measure.  The health insurance could be made a part of the budget, if you want, but you will have to do the adding to your net income.  I am not as concerned about all those numbers, so I don't bother, but if you have credit union or car payments, etc., you probably should.   YNAB encourages entering the data manually initially so you have more feel for the expenses.  Are you able to do their tutorials on how to use YNAB?

oldtoyota

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Re: YNAB and investments?
« Reply #10 on: May 26, 2013, 08:52:52 PM »
Thank you for your answers.

Yes, I've listened to several of the recorded courses and read through tutorials. I could not find an answer to the question above, so I really appreciate your feedback.

Based on what you all said, it sounds like recording pre-tax expenses doesn't matter. It's good to know about the "off budget" account. I'd not encountered that yet.




Koshka

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Re: YNAB and investments?
« Reply #11 on: May 26, 2013, 10:55:34 PM »
I use YNAB and at different times have recorded net pay and have recorded the gross pay and then categorized each deduction.

Basically when I recorded gross pay I did so because there were some things being deducted that I specifically wanted to include in my budget and to know the totals.  Right now I don't need that so I don't. 

As far as retirement accounts, I show them as off-budget accounts.  In our case, DH is retired and I'm semi-retired and working very part-time.  So we actually do withdraw periodically from the retirement accounts.  So, I withdraw from the retirement accounts monthly (shown off budget) and then deposit each month to our checking account (shown in YNAB as income).

Through doing this the net worth amount is correct and the budgeted amount is also correct.  I typically adjust the retirement account balances on a weekly basis so that the value of the accounts stays up to date.