Can You Trust Your Budget? What You Should Know About Reconciliation

Break out your checkbooks and flip to the transaction registry, it's time to reconcile your account! Wait, no, never mind -- who even uses a checkbook these days? Well, reconciliation is a word that starts glaze over many people's eyes, but it's actually a powerful tool for budgeting, and it doesn't have to be tedious or boring! Ernie even reconciles in the bathtub!
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And a meme for good measure: / 10159139651953703
Timestamps:
0:00 What is reconciliation and why is it important?
7:14 Reconciliation routines
19:27 Reconciliation misconceptions
33:25 Outro
33:54 Blooper
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[@catharinekarow6654]

My 4 year old asks me to reconcile daily so he can see the little confetti 🎉 on the mobile app. I’m happy to oblige.

[@YNABofficial]

That's so awesome! Maybe you two can create a reconciliation dance! ~Ernie

[@amandajmb6228]

Count me in the "every weekday" reconciliation club. It's nice to have a morning ritual that gives me an easy win before breakfast...like "hey, I'm doing something to maintain control of my finances here..."

[@YNABofficial]

Totally! It just feels good to have something like that sorted early in the morning. :) ~BenB

[@amyg3525]

Oh my I definitely remember reconciling checkbooks! And we really would work until every discrepancy was resolved. One thing THAT whole conversation reminded me of is how I spent money-actual money-to buy and use pretty checks. Lol. I was so silly.

[@laurar8660]

re: credit vs debit transactions - it has to do with how they go through the system - debit transactions are almost immediately sent to your bank - credit transactions go to the merchant's account first, then go to the clearing house as a batch transaction, and when the merchant closes their accounts to trigger the batch can really affect the timing.

[@YNABofficial]

Thanks for that info Laura! ~Ernie

[@elizabethgadsby9641]

Reconciliation has both saved me money and earned money! I had bank errors in my favor twice that were small enough the bank just let me keep the money. I've had a bank error not in my favor that I was able to bring to their attention and have corrected. Reconciliation saves so much hassle down the road!

[@YNABofficial]

Oh wow-cool to hear how reconciliation has EARNED you money! ~Ernie

[@sharleenslaunwhite8653]

I graduated high school in 2003. I remember being taught in one of our social studies classes in 6th grade, how to write checks and how to balance a checkbook. I kept a very detailed check register!!

[@jolenefarley3241]

I graduated in 2011 and did the same thing in 5th grade! We all kept checkbooks for a little while and practiced using and balancing them. So funny how things like that stay in curriculum at different paces in different areas.

[@itsGabrielaCristina]

I reconcile my checking and credit card account daily, but monthly for my savings, loans and tracking accounts. I love reconciling daily to make sure I enter any transactions from the previous day (I do manual entry only) and to always have up to date category balances!

[@JG-no4qr]

Ah, but what does you reconciliation dance look like?

[@Mustela8098]

Ernie I remember those days of reconciliation on check register and hated those days cuz I would work HOURS trying to find that $0.02! As you said it was monthly and if it was December statement, I would prepare for tears and pain! But thanks to YNAB, reconciliation is my favorite thing to do, next to Rule #1. Thank you YNAB!

[@christineteffenhart5722]

OMG! I graduated high in 1986! Totally remember balancing my checkbook.

[@terpinator24]

I graduated in 1993! I remember avoiding balancing my checkbook as much as possible! I do think it is a mindset switch to reconciling anytime.

[@hooksbookspodcast]

Ernie I STILL balance my checkbook!!!! I’m a total nerd!!! It has to be to the penny or I’m searching for it!!! I enjoy it and this YNAB app is something I never knew my nerdy heart needed!!!! Love watching you guys!!! #1997graduate too!

[@gabriellebradley3566]

Since the 30 day challenge for this year I've reconciled daily, except for the weekends. It is just so satisfying to see it. Also, I recently caught up on all these episodes and have therefore cleaned up my payees, reorganized my budget themes/categories, and created a BMI note on my phone for budget meetings with my husband. So glad I'm not alone 😂

[@christopherrosas2738]

Reconciling accounts or balancing books is a lost art in the modern world..... still it's probably the most important thing you have to do to ensure you don't go over the budget

[@adairw]

I love the audio upgrades. I'm a budget nerd as well as an audio nerd!

[@YNABofficial]

Sooooo long overdue! ~Ernie

[@dreambig7425]

I came to this video because I have applied for a job where I will manage budgets. I have no clue!!! And 24:45 is so funny! Great video for newbies like me.

[@stormybrook75]

I said it’s like a dopamine hit every time I reconcile! ❤️☀️

[@mellowyello1478]

I reconcile biweekly, as i get paid. Buuuut since I'm frugal as all hell i dont usually have many transactions to question so its always a simple procedure.

[@muhsina_khan]

I also reconcile every weekday as my start of work routine... which I always thought as kinda extreme. But today I feel validated 😂

[@Shello58]

I'm so old I had a Bank Book that the teller entered the transactions MANUALLY. IN WRITING. Then they came up with the fancy printer you could update the book with...

[@YNABofficial]

🤯 ~Ernie

[@loukasmaki]

Anyone else think that the volume could be a bit higher?

[@YNABofficial]

We got these new mics and I placed mine a bit too far away. 😔We got it sorted next episode. ~BenB

[@loukasmaki]

@@YNABofficial No worries. Get things tuned in :D

[@cdw81960]

Although I login to YNAB daily, I save the reconcilations for the 1st of the month. It lets me build the suspense and have something to look forward to. In reality I'm reconciling daily, but I don't hit the reconcile button till the 1st. That's also the day I gather any left over monies in spending categories that vary from from month to month; such as groceries, dining out or the electric bill. Then I smile from ear to ear as I apply that surplus to some debt item. Even better, with the new loans piece I get to see how that has reduced the payoff time and the interest saved. I'm going to be so bored once the mortgage is paid off. I'll probably sulk for a while, after the debt loss happy dance of course.

[@JeffreyEllingson]

Credit Card companies are in no hurry to collect on the debts you make. I'm sure they could invest money to decrease the time for you to see it clear, but what would be the motivation? It certainly isn't so you can remember to pay your balance off early. I first realized this when I checked my credit report and saw that it shows a credit card balance (even though I pay them off at their due date). The grace period is nice, but allows you to be more comfortable in carrying debt longer into the future which is basically the credit card company model.

[@Tiredmum]

I do it during breakfast most days. Sometimes I don’t if I know there’s been no transactions the day before.

[@sabinapieterse5855]

Thanks for the cleared hot key tip! I reconcile almost daily, sadly there's often times the balance didn't change. #CheapBudgetNerd

[@TrishaAnnwithanE]

I can't wait for your podcast! Also, I can attest to reconciling the tangible checkbook. It was so difficult for me. Back then you didn't always know what fees you would have incurred until the statement came.

[@melissamcfadden3623]

Ben, to answer your question (as a small business owner): A client pays for a service and uses his credit card. The client would see that "pending" charge when he logs on to his bank account. However, if I don't run a "Settlement" right away (on my point of sale terminal - this "closes" the batch of transactions completed since my last settlement) this would prolong the time it takes for the transaction to be processed by the bank. This might explain why some stores will "clear" transactions sooner than others - it might just depend on how often they run their settlements.

[@melanierose9015]

Looking good Ben!

[@margaretcraig6538]

I add the amount in "pending" to cleared and reconcile to the actual amount spent.

[@ccosephvv]

I think the bigger stores that process their own payments post faster. Smaller stores use 3rd party processors like toast or square which has to clear them then the business which takes longer to go through both accounts vs just the big store

[@malinalander3864]

Thanks for sharing and for being entertaining - as always! :) I would love to see you guys do a video on how to manage your budget when you're "in between priorities". Like if you've got your budget pretty much figured out, and you're not struggling to make ends meet anymore, but now the budget feels a bit on autopilot or without direction. Perhaps you've just accomplished a big financial goal and now you get to reprioritize, or perhaps life has thrown you a curve ball or two and you no longer know what to make your priority. I guess the question is, how do you make budgeting fun and engaging when you don't really know what you're aiming for anymore?

[@MrsSauer-vh6kh]

Ernie, your retelling of balancing the checkbook took me back to the 90s, when I called the bank each evening for the balance & the day's cleared transactions. Daily was easier even then!

[@YNABofficial]

🤯I didn't even know that was an option back in the day! ~Ernie

[@owlexb1124]

Yay podcast!!!

[@catherinenoble5788]

Delays in clearing could be related to any p.o.s. (point of sale) transactions where it becomes a pending transaction waiting for the business to submit their deposit of their p.o.s. payments... Weekends & Holidays the bank is not open to complete those transactions... and if business did not get to the bank for a couple of days, that may also impact how long it takes for entries to get completed. I love to reconcile bi-weekly on pay-day, and also a few times during the week. Paydays being Thursday, and a review on Monday or Tuesday as well.

[@YNABofficial]

Interesting. Thanks for that pos info! ~Ernie

[@karenwoodside9076]

I know this was a couple months ago but I googled why it takes so long for CC purchases to process. Most retailers batch the day's CC transactions and do it at the end of the business day - weekend batching takes longer. Also if your CC company suspects a fraudulent purchase you may be notified with the question so I guess be thankful for the delay in the event that someone snagged your CC and just went shopping! LOL Hope this helps.

[@amandacollins518]

I love the link symbol! Lock is nice too. But the link means I was tracking spending before ynab.

[@alibopper199]

Super nerds! Love it! Definitely have only been doing this once a month max, maybe I’ll join the weekly bandwagon.

[@edwardhanson1572]

A few days ago, I was reconciling my cash and I came out short by 40 cents. Today I reconciled again and I was over by 40 cents, so the two adjustments cancelled each other out and I ended up just deleting both of them as though they never happened.

[@erikahagan8767]

I have a Saturday reconciliation ritual - me, my coffee in my YNAB mug, my laptop. I look forward to it, even all the zillion Amazon transactions ;)

[@kristin1847]

Ben, I also have never used the official reconcile feature and I've had YNAB since 2014. I took workshops and classes way back in 2014, and I don't think I was taught about it either. Instead, I reconcile manually every Friday. Now, I'm so used to doing it manually hitting the reconcile button seems scary lol! I've also never linked accounts and have always entered everything manually. But just yesterday I linked my checking account to try it out! I use my credit card for day to day spending (and pay it off every month) and will probably always keep that unlinked to do manually.

[@arubafanatic]

👊Right back at you ! 😊

[@SarahEpieikes]

I hate reconciling my credit card - my bank doesn't show a running total so I have to go through every single transaction on each side and just hope it is correct. Why can't my bank just show the running total!

[@mariog7682]

Reconciliation daily! 🤝

[@jgambl02]

Is there a hotkey legend that can be referenced? I would love to know them.

[@YNABofficial]

Yep! Right here! docs.youneedabudget.com/article/160-keyboard-shortcuts

[@boda.t]

Can you please explain to us in a next episode the proper way to add an extra one time payment for a loan using the new YNAB loan accounts tracking? Thanks!

[@SpaZn509]

When are we going to get mobile YNAB reports???

[@mikesushynski8175]

Hi Ben and Ernie! Great talk today! Wondering about the 'trust your budget' title and the uncleared/unreconciled/incorrect entries that are never matched with linked accounts. Even while using the reconcile button, it took us a few months to realize that we were double charging ourselves when a transaction was previously entered, then the linked one posted, but their values did not match. The incorrect value will stay uncleared but applied to the budget category. Then when we would go back (sort by cleared/uncleared column) we find the errors and delete the incorrect entries and get money back in the category - win! Have you experienced this in your budgets?

[@YNABofficial]

That's a good point, Mike. After reading your comment I realized that I do keep an eye on uncleared transactions, and if there's something that stays uncleared for more than a week I'll dig into what's going on. The culprit is usually a transaction that got entered in the wrong YNAB account register, or the pending amount was different than the final. It would be rad if this double-checking of the uncleared transactions was built into the actual reconciliation process in YNAB! ~Ernie

[@anniemilakovic7683]

Old comment I know but if you auto import you can do what I do. If a cleared transaction comes in and it doesn’t have that little symbol to indicate it matched to a pending transaction, I go to that account and see what’s up. Maybe have to manually match them bc the amounts are different. Occasionally transactions do skip pending and go right to cleared so I can approve those, but I check first.

[@kardrynka]

The most infuriating for me are my public transportation tickets transactions, they take foreeeeever to clear. Those suckers will sit uncleared on my account for weeks and they will randomly be substracted from my bank account balance. Those cause the most problems when I reconciile xd

[@jazzdraws3505]

same here!

[@vincentapa1376]

Real nerds do not need to adjust. Reconcile quick and often. The pending to cleared depends on the merchant and the processor the merchant uses.

[@YNABofficial]

Thanks for the pending-to-cleared info, Vincent! ~Ernie

[@justinlindholm2679]

What the name of the podcast? When I searched for it, the only thing that came up from YNAB was from Jesse about being a budget nerd back in September 2021.

[@sabinapieterse5855]

Budget Nerds :)

[@pascalraven5736]

It doesn't seem to have propagated over to Google Podcasts yet! FYI

[@nigilvalikodath]

Does anyone get any joy from NOT reconciling and manually figuring out and entering what isn’t reconciled? It feels so satisfying to find the missing transaction and entering it… Am I missing out on anything?

[@nigilvalikodath]

Oh you guys are reconciling even when the numbers match! Just heard the bit about the $0.17 🤯 Gonna try this, but I think I’ll just start as a weekly reconciler for now.

[@Oscar-vd4cv]

I am a little confused about why everyone reconciles so often. I only reconcile when my cleared transactions don't match, this isn't very often. If you're entering every transaction, why would you need to reconcile all the time? Is it just so you don't have to worry about toggling individual transactions to a cleared status?

[@TrishaAnnwithanE]

I reconcile often because I feel a sense of accomplishment when my numbers all match up. I swear it builds confidence. It seems you've built yours and that is awesome!

[@Oscar-vd4cv]

@@TrishaAnnwithanE Yup, when those numbers match it feels so nice. Before YNAB I was overdrafting all the time. Now I can spend to 0.00 and not worry about overdrafts. 😁

[@anniemilakovic7683]

It’s so that when you do encounter a problem, you have a save date for the last time the cleared balances match so you don’t unnecessarily review transactions that were right. I have only ever once had an account that didn’t match the bank, and it was bc the bank account balance was showing wrong. I have never created a reconciliation adjustment.

[@devinwindell8002]

😉 Promo-SM.