What Are Sinking Funds, And Should I Have Them?

[@BrandonBurch]

Even though I already know all this, I still love soaking this stuff up because I'm a nerd.

[@lizp.9513]

Same lol.

[@YNABofficial]

Also same, double lol. -Hannah 🌻

[@lugo_ayana]

Sinking fund pro here…I have one for car insurance, repairs, medical deductibles, vet bills, Christmas, and the IRS. These are life savers.

[@LupusLifestyle]

No doubt. I have the same as you except the vet bills. Thinking about increasing my medical deductible sinking fund to cover up to the out-of-pocket maximum just in case. I have an emergency Fund but don't want it to come from that. Happy budgeting!

[@debratakagawa4764]

I just started YNAB this month and I am getting hit left and right with those you know they’re coming unexpected expenses. Thank you for reminding me that this time next year things should be more mundane thanks to sinking funds.

[@YNABofficial]

First of all, I'm so sorry! It's so hard and stressful when those out-of-the-blue expenses dog pile on us. I've been in those shoes plenty of times before, and whenever those expenses happen I make sure to make a new category for that expense if I don't happen to have one already! Happened with my music licensing subscription a few months ago. A $199 charge that I was totally unprepared for, but you can bet your bottom dollar I went and made a category for it in my budget right away so the same thing wouldn't happen next year! Hope you can roll with the punches to make it through this tough season of surprises, and that by the time next year rolls around you're ready to fend off any expenses that come your way! Even if you only get halfway there, you'll be halfway closer and that's a HUGE win! -Hannah 🌻

[@richardparobeck6128]

She explains the concept of a sinking fund better than anywhere else.

[@YNABofficial]

Oh! Thank you Richard!! I've learned a LOT from the team here at YNAB :) -Hannah 🌻

[@kme06d]

I love that ynab is teaching financial concepts broadly rather than only within the context of their app. I'm a loyal ynab user, but this is something everyone should be doing, ynab user or not, and they showed you how using any budgeting method. Financial education is more important to them than making a buck from their app and that is much appreciated!

[@YNABofficial]

Absolutely! Thank you for the support! Every deserves to know how to budget successfully-that's all we want! -Hannah 🌻

[@RandomFandomDragon]

Agreed!

[@brookarisa9734]

This video feels relevant. Only been using YNAB for a few months. But I just had to use my car repair sinking fund last week. Granted the repair was more than I’d saved. But it was such a relief to have a decent portion of the amount.

[@YNABofficial]

Yes! I was just there with a vet bill. Was only $30 short in my vet sinking fund, so it made it a lot easier to scrape up $30 from a few other categories than needing to find hundreds! -Hannah 🌻

[@lizp.9513]

Sinking funds are how I saved for my last vehicle and my tiny house! They allowed me to jump on deals because I had a lump sum already saved, even though in both cases it was a couple of years earlier than I had planned! I love that it's so easy to do on the app 🥰

[@YNABofficial]

Tiny house?! A couple years EARLY?! Wow, that's amazing!! Sinking funds really are all about that debt prevention. Game changer. Congrats on the car and home!! -Hannah 🌻

[@Liriel]

I really enjoy your presentation of information. I've done sinking funds in the past but taking them out in cash, then swiping and doing deposits was to many obstacles for me to stick to. I love that YNAB just keeps track but its all in the same account so if you make an online purchase or swipe your card its easy to track where your at. This is also the first program (i've tried a lot) that i'm not thinking "How do I spend all this money this month" but rather "How far into the future can I make our money go". Its really changed my spending habits and avoid unnecessary spending, simply because I like to move a month ahead and place money. Thanks YNAB and your crew for the program and video information!

[@YNABofficial]

Thank you Liriel!! SO glad to hear that! Wow, I really love that mental shift you've had. That's powerful. I feel like I experienced the same, and it kinda gamifies the whole thing (which is SO helpful to me because I'm competitive and like to see how "high I can score" on my age of money). -Hannah 🌻

[@ksk881]

I have a "Future Debt Prevention" category with 14 sub categories (sinking funds), I transfer the money that I set aside each month into one savings account. When one of those bills come due, I just transfer the appropriate amount into my checking account and pay it. It's funny, but I've never been tempted to touch the money in that account. I have some regular expense categories that I can move money between (groceries, household, spending, etc) but never the sinking funds. This is a huge win for me ... I'm actually saving money for things!

[@YNABofficial]

I've totally done the same most of my budgeting history! But recently, I've gotten so lazy about the savings account-not even quite sure why I have it, because I'm never moving money out of it anymore. The budget tells me everything I need to know! -Hannah 🌻

[@Breeoxd]

same. All of my sinking funds go into HYSA, and I don't even think about them. I'm not great with money, so it's best for that to just not be in my line of vision.

[@catherinefoley7914]

Congratulations on your wedding Hannah! Wishing you every happiness x

[@YNABofficial]

Thank you Catherine!! -Hannah 🌻

[@Cclaudia228]

Congrats on getting married Hannah!!!

[@YNABofficial]

Thank you, Claudia!! -Hannah 🌻

[@vincentapa1376]

Oscar for the scene "What in the ..."; Looking forward to the sequel, "700 dolla, no problema"

[@YNABofficial]

😂 Thank you, thank you. I'd like to start by thanking my family, thanking my dog Julep for inspiring me every day... 🏆 -Hannah 🌻

[@quepasajohn]

My budget category with Doctor, Medicine, Auto Maintenance etc was named "Intermittent Spending", and I just changed the same to "Sinking Funds". Thanks for the tip.

[@Apollo885]

I've been picturing my life with that mug you've got now... and it's looking alot better than the life I'm in. Help?

[@Tesla-Cannon]

I have 10 sinking funds and used to have a savings account for each one. It’s really helped me reach my goals, but I am trying to consolidate for simplicity. Ally’s savings account let’s me visually break out the money into “10” buckets. That way the money is in one place, but I can still see all my goals. Plus, it’s easier to track in YNAB.

[@Tracy_F]

I did this also. Went from multiple savings accounts to Ally and buckets. But then I needed more than 10 buckets. I found YNAB and I love it! I have a budget for everyday expenses and one for savings. I really like that you can set up multiple budgets. I also track my retirement accounts. All in one app. 👍🏼

[@srconrad]

If you really want to simplify, get rid of your buckets. You don’t need them with YNAB. Your categories do that job. You’re just giving yourself more work by having to keep them in sync.

[@Tracy_F]

@@srconrad yes! I don’t use the buckets anymore. 👍🏼

[@Tesla-Cannon]

@@srconrad I think it will make me too anxious to just see a pile of money in one place in my account. I've always had "categories" for goals, but I wasn't able to actually reach them until I started separating things out.

[@srconrad]

@@Tesla-Cannon You should really get in the habit of looking at your YNAB category balances rather than your account balances but whatever works for you.

[@educatedwanderer9293]

Sinking funds that I use: Automotive, House(Misc./Roof), Property Tax/Misc. Tax , Vacation/Travel , and Christmas/Birthday

[@bcase5328]

I have estimated that the total of all my sinking funds is about equal to one year's worth of my net income. What have others found their total of each fund added to each other is in total?

[@BethAnnesBest]

I changed these in ynab to "Annual Bills" I think this also helps from having a blind "savings" category. What I do is I fund all these categories in a few months so i don't have to worry about it.

[@YNABofficial]

Yes! This is honestly my first year where I start saving for annual subscriptions the DAY after I pay them and it feels GOOD. I can't wait until they come around again so I can sock em in the face. 🥊 -Hannah 🌻

[@msmariasolis1]

Enjoying all the YNAB merch 😂

[@nosirrahm]

I have car registration, car ins, car mtc, subscriptions, vet, vacation. I’m paying off debt so I also have various accounts that I put small amounts into that have no allocation. I can use this for my dog’s daycare when I go on vacation or catch some things I may have missed or splurge. So, it’s like an emergency sinking fund so I don’t tap into my small emergency fund.

[@sharlarivera2796]

I've been using YNAB for 7 years (!) and have used sinking funds all along but never knew it! One big one that we do is our medical insurance deductible (this is obviously US-centric). It took us a while (again, we've been YNABing for years), but we saved up a "medical" category that would cover all/almost all of our family's deductibles if we ever needed it all at once.

[@YNABofficial]

😯 Now, THAT'S smart and actually a strategy I've never heard of before. You never know when life could hit you hard (perhaps literally?!) and having that full deductible ready to go is as financially responsible and prepared as you could be! I love that. Thanks for sharing, Sharla! 🌻 Hannah

[@janimaterful]

Indeed, this is a really smart idea! "Emergency fund" is the way I've thought of it, but this is a nice way to set it aside very purpose specific, love it.

[@Danny-xi2hb]

glad these videos exists. Keep it up YNAB

[@rssave1101]

My kids are high schoolers. They both have jobs and are required to put at least half in savings. We want to teach them that even if you don’t have “bills”, you can be intentional with their money. They are using YNAB, and like it, but wondering if there are any videos to help encourage them. Give them some fresh ideas maybe more driven for their age. We want them to learn discipline but also when you make good choices you can really afford to have fun and enjoy the tool (money). They are just getting tired of their parents perspective………

[@peterdavis9403]

Used to do it it in an actual checkbook register with side notation of sum of parts making it up. The amount was taken out of my Balance so I could see what was left to "play" with.. Never knew it was called a sinking fund. In your example you could have said you have either a sinking fund or a sinking feeling when the bill came due. This also makes it safer if you're close to zero in your balance and need a temporary float as long as the next bill isn't due too soon. No one wants an overdraft charge especially on a tiny amount.

[@LJSinWA]

LOL Rather than “sinking” (think I’ll watch Titanic tonight), I call ours a “reserve fund.” Every month an auto tsfr goes into it. Works like a charm!

[@SmallSpoonBrigade]

That's a fine way of thinking about it. As an accounting student, the reason it's referred to as a "sinking" fund is that it's a sunk cost. As in you can't easily get the money back to use on other things. Normally, the money would be held in trust by a 3rd party to ensure that the part that's owed the money gets it at the end of the term of the relevant bond. But, in this case, it's basically the same idea, just far less formally so.

[@mimharries4349]

Ooh I've been doing this but I didn't know the name for it! Savings goals + recurring expenses in YNAB have been a power combo for me - I LOVE that YNAB will automatically help me put a little aside for upcoming expenses. And if something does catch me by surprise, I know to add it to my budget right away! It's great for non-emergency/not technically essential expenses too, like I was always getting caught off guard by how much plane tickets cost to visit my parents, even though I visit pretty regularly. Now I have a sinking fund sent up so by the time I need to get the tickets, I already have most of the cost put aside! I set it all up fairly recently, but it's already made a HUGE difference in how stressed (or not stressed!) I am about money.

[@YNABofficial]

Yes! One of the things I love the most about YNAB is when annual subscriptions DO catch me off guard (this past March it was my music licensing subscription) I added it to the budget RIGHT away with a target and next year I know I'll be totally prepared by the time it comes. -Hannah 🌻

[@k1ng401]

In my YNAB day they were called “Rainy Day Funds” you whippersnappers!

[@YNABofficial]

Yes! You were a true OG! Save for a rainy day!! -Hannah 🌻

@@YNABofficial so, wasn’t this True Expenses? Are we now calling it Sinking Funds? 😳

[@YNABofficial]

Yes Raul, you're exactly right! "True Expenses" is a YNAB-specific term, so hoping to catch a wider audience by explaining true expenses with a more universal term. You're on it! -Hannah 🌻

[@marylpn1]

@@YNABofficial That was my thought too!! Was a bit confused by this additional term :) I thought it was something new we should fund for! Phew!

[@macronencer]

I put a limit on each of my sinking funds, so that when they reach a level I consider "good for 99% of eventualities" I stop paying into them. On the rare occasions when an expense is larger than the limit, I either "borrow" from other sinking funds or use my emergency budget. Since I lease an EV and have maintenance cover included, my car repairs fund limit is very low. If I owned an old car it would be a lot higher.

[@YNABofficial]

That makes a lot of sense! My husband and I have added SO many savings goals that it's slowed down our overall "aheadness" of our budget. Maybe if we add some logical "limits" or "caps", it can help us keep moving forward on other, more pertinent goals, which will being prepared for the unexpected. Love it, thanks for sharing!! 🌻Hannah

[@TheGoodMidlifeCrisis]

Hi Hannah, I'm Becky 👋 I'm just ending my first year with YNAB and am sooo excited that my annual expenses coming up in September are ready to go!

[@YNABofficial]

HA! Isn't that the weirdest feeling?!?! The first time I was prepared for my $199 music licensing subscription to renew I felt like I was getting it for free 😎😂 🌻 Hannah

[@jamesapt66]

I saw a book on Amazon titled you need a budget and figured it was from you guys. I think I ought to buy it if it’ll explain in depth all that she’s said here!

[@palomawhite6210]

I LOVE YNAB videos!

[@amytaylor9268]

Same!!

[@benc3726]

I "calculate" my Car Repair Sinking Fund Budget by using what YNAB tells me I've spent in that category on average in the past. Seems like a pretty safe expectation that's what I'll be spending in the future.

[@andrewdejuan4914]

i broke all the ynab rules this month and now next month is suffering greatly :( just stick to the rules man

[@saraleblanc2853]

LOL! Drove a Buick Century for years! First car my mom got new; then my sister drive it, then me.

[@YNABofficial]

HA! We literally bought mine off a grandma who had put like 9,000 miles on it in a DECADE. It's my favorite car to date and I hope it's immortal 😇 -Hannah 🌻

[@joliechabot7489]

I am a total YNAB nerd. The one and only thing I don't understand and it's driving me nuts: what is a wine hamburger? Is it a thing? A person? SOMEONE LET ME IN ON THIS. 😅

[@MatthewBuntyn]

Back when Jesse was uploading video of the podcast, KZbin autocaptioned "YNABers" as "wine hamburgers."

[@joliechabot7489]

Oh my gosh, thank you. 😂😂😂 That is so funny. Love his podcasts!

[@joannacarrington5777]

Another great episode Hannah and congrats on the wedding :) - but yes, whats different here to a true expense?

[@YNABofficial]

Hey Joanna! True expenses and sinking funds are absolutely one and the same! Just trying to speak in non-YNAB terms for those who don't know our self-created "true expenses" term. 😂 -Hannah 🌻

[@janetownley]

I’m on it !

[@madisonaradine2686]

Liking this video after just the intro scene because it's so accurate LOL

[@madisonaradine2686]

Well ... USED to be true. Not anymore with YNAB :D

[@marcb2120]

Except I keep stealing money from the sinking fund due to shiny stuff. 65 and I still haven't learned financial restraint.

[@YNABofficial]

You and me both, Marc. You and me both. But having the sinking fund there in the first place is the first step! -Hannah 🌻

[@cristelmariebuenafe]

Done.

[@williammena2702]

I'm handling these random emergencies with my emergency fund. All tapped out now so creating one of these sinking funds for the big one that took me out.

[@YNABofficial]

Yes, William! You don't have to add 192 sinking funds all at once (sometimes we're tempted to do that). Rather, just add a category line to your budget whenever you feel like you've been hit enough times by an expense (like taking the car to the shop) and don't feel like getting hit by it again. Maybe this year it's just adding a "Car Repair" category, but maybe next year you also add an "Appliance Replacement" to the list. Let it grow slowly over time! Adding too many at once can be just as stressful as not having any at all! -Hannah 🌻

[@LaToyaPlansLife]

@@YNABofficial THIS is the part that has gotten me!! I think I have too many funds and not enough money to fund them. 🤦🏾‍♀️😢💸 I'm trying to stick with YNAB, but it seems too overwhelming right now for me. 😢😢

[@JustJoia]

Yes I need to get back to them.

[@wadethomas1043]

I hadn't seen Hannah in a while. Was getting concerned. Lol

[@YNABofficial]

I was out moving and getting married for a few weeks! But I'm BACK, and with a vengeance at that! -Hannah 🌻

@@YNABofficial congratulations, Hannah! Best to you and your new family!

[@dan_zehner]

Thanks so much for making these videos fun and informative! Way to go!

[@YNABofficial]

It is truly MY pleasure, Dan! -Hannah 🌻

[@Naanofurbusiness]

OMG I love these videos!!!!

[@erincox8263]

I think I'm setting my YNAB up in a sustainable way this time because I'm actually using the target and goals feature! I have a sinking fund set up for Vet visits... but what happens when I actually spend money from that fund at the vet? Should I have a separate vet line item for spending, or just adjust my sinking fund balance when there's activity?

[@Ann-Marielivingonabudget]

When you spend from that sinking fund (true expense) category, you'll simply adjust the balance in your fund. If you are using the app, it will adjust automatically as you enter the transaction. Be sure you have set your target as "needed for spending" because you will be spending from it over time, and you want to continue to add to it each month.

[@jpgreen1803]

I have an Animal Care category with a monthly savings builder target of $120/month. I just contribute that amount every month “forever.” (Regular food and toy expenses come from another category). I just got a $2000 quote for necessary surgery for my dog. I can cover my portion of the surgery from my “Animal Care” sinking fund, so that will be my category for the transaction. In the meanwhile, I just keep contributing $120/month to the category.

[@lindsaythegreat]

Your husband? That was a short engagement! Congrats!

[@YNABofficial]

Ha! It was! Engaged end of April, married beginning of September! We lived an hour apart from each other and were ready to join forces and kick off our lives together! -Hannah 🌻

[@meastrau4772]

This was perfect 👍🙂

[@c7042]

The other way to do this is keep a portion of your portfolio liquid enough (3-5 days to cash) to take care of these things. No reason these funds can't make you money until they're needed. I use high interest MMF for this. I also have a VISA with a $12K credit limit that I pay to $0 at the 1st of every month. So covered here, I think.

[@Junkyarddog5850]

You can do both. Sink funds and invest in HY savings acct

[@radharcanna]

I don’t quite get the distinction between sinking funds and most other expenses. I need a certain amount each month for groceries or for electricity, so I budget for that. The same for car maintenance, although I don’t know how much that will be. Bearing in mind banking charges I keep all my money in one current (checking) account, except for my holiday money which is in a savings account.

[@YNABofficial]

You totally just described it!! We always know how much normal bills will cost us (like our mortgage payment) and when it will be due, so it's super easy to set aside just the right amount in time for the bill to hit our mailbox. BUT, with those less predictable expenses you were walking about, like fixing the car or the leaky fridge, we have nooooo idea when they'll happen or how much they'll cost. Which is exactly why it's so important we start building up sinking funds for these exact scenarios! YNAB makes it really easy to create a separate category for each sinking fund, and set "targets" on each of the categories to help you put in the desired amount every month to build that sinking fund. For instance, my husband and I put $50 in a "Vet" category every month, $150 in a "Car Repair" category every month, and $200 in a "Travel" category every month. After following these targets for a while, we have over $1,000 ready for the vet, and over $2,400 in each of our travel and car repair categories! Of course, we still don't know how much our next auto shop bill will be and we haven't started booking our next vacation yet, but when we finally do, we'll be READY. And P.S. I also keep the bulk of my money in a checking account, with the exception of some in a savings account. The banking accounts alone don't give me much clarity on how far my money can take me, but my YNAB budget categories split all my dollars up for me and tell me EXACTLY how much I have for every possible expense in my life-dining out, make-up, fun outings, new home decor... you name it! 🌻 Hannah

[@radharcanna]

@@YNABofficial Thank you so much Hannah for the detailed reply. I’m slowly learning! I love your videos, both for the practical advice but also for your humour. Keep it going.

[@YNABofficial]

You got it! Keep it up! Feel free to browse our help docs and blogs too on our website if you ever have other questions you need help answering! www.youneedabudget.com/help-center/ 🌻 Hannah

[@marlanatriggs1728]

Great information. Thank you ♥️

[@Cary_Shultz]

Good morning, Hannah! My name is Cary and I am a YNAB-aholic! Ha!~ Ha!~ Love your videos, your sense of humor, and your content! Keep it coming! There! Now you know one person's name. Only seven billion more to go!

[@YNABofficial]

Well, HELLO Cary! Maybe I'll start next weeks video: "Hey world, and Cary." -Hannah 🌻

[@Cary_Shultz]

@@YNABofficial go for it, Hannah! My two teeneged boys would DIE!!!!!!! LOL

[@JG-no4qr]

What’s the relationship between sinking funds, true expenses and emergency fund?

[@YNABofficial]

Awesome question! True expenses and sinking funds are essentially one in the same-sinking funds is the universally recognized term, whereas YNAB invented the synonym "true expenses" to remind us that what we often think of as our expenses typically leaves a ton of blanks and spurs us on to question what we might be missing. Of course we know rent and groceries and gas are our expenses-duh-but what about all those expenses we know are coming in the back of our minds (car repairs, home repairs, vet visits, even Christmas or vacations) but never recognize as a routine expense? These are often the expenses that trip us up and throw us off in our financial flow, so we like to refer to them as TRUE expenses (because, truly, they are!) and encourage you to build *sinking funds* for them, so when they DO come around you can give 'em the old 1-2 right quick. So, all that said, you build sinking funds for your true expenses. An emergency fund, on the other hand, is a more specific sinking fund-it's another true expense all on it's own! The car breaking down isn't really an emergency-we know the car's gonna need new tires or a tune-up one day, so we should build a specific sinking fund for that true expense so we're prepared when it happens. Same with vacations: sinking fund. Holiday gifts: sinking fund. The vet: sinking fund. But emergencies deserve their own sinking fund because they are expenses we truly did not see coming. It's the back-up for when our plan wasn't sufficient, when we are totally caught off guard. Ideally, if we recognize all of our true expenses and build up sinking funds for them, the emergency fund is lightly (if ever) touched! -Hannah 🌻

[@JG-no4qr]

@@YNABofficial wow, thanks for your response!

[@chrislagarde]

@@YNABofficial Coming from a non-Finance background, I like (and use) "True Expenses". I think it was smart of YNAB to create their own synonym. Made it easier for me to wrap my head around the 4 Rules.

[@Snwhite67]

I love watching these videos. You’re hilarious. I don’t have YNAB but I learn something every time I watch. Thanks

[@YNABofficial]

Ha! WHAT?! That's amazing!! I hope to be producing lots more content that's useful to ANYONE, not just YNABers, so hang around and hopefully there's more to come for EVERYONE in the future! Appreciate your encouragement so much! -Hannah 🌻

[@chriswallbruch9523]

This was the first time I really got the concept of sinking funds - thank you!

[@YNABofficial]

Woohoo! So glad to hear it! Makes all the difference. 🌻 Hannah

[@jenniferspisak]

We just drained our auto sinking fund and it sux

[@joshuageinert8018]

Same. But damn was I glad I had it!

[@jprowland]

I'm just here for the blooper reel

[@frankntekim3730]

I just subbed! Wonderful content HannaH

[@YNABofficial]

Thanks Frank!! Woo hooooo!! -Hannah 🌻

[@RandomFandomDragon]

I think I went a little happy with making categories, so just making a "Sinking Funds" category let me consolidate 🙂

[@emilyemond1550]

I'm a noob here, hello 👋 a lot of my fixed payments I pay through my credit card on one go. How can I separate the big payment for budgeting into my separate categories?

[@deecupine]

You would track the individual purchases in YNAB and then pay off the balance in one go. I highly recommend watching more videos about it until it clicks.

[@SherriMcGurnaghan]

Hi! How come we should have a 'sinking' fund category and not just have those expenses in our day to day expenses?

[@YNABofficial]

Hey Sherri! You'll want to build up sinking funds (or what we call here at YNAB "true expenses") for any kind of expense you KNOW is coming down the road but might not know when or how much it will cost. Example from my life, every month I set aside a little for the vet, for car repairs, for home improvement, and gifts for loved ones, because I'm not quite sure when those expenses will hit but I want to be prepared when they do! I add money to those categories every month just like I do with my regular day-to-day categories like groceries and gasoline. -Hannah 🌻

[@StudioStarkid]

I'm getting used to YNAB and this is not on-topic for the video but y'all are so good at answering questions so I'm gonna ask here! What is the best way to go about splitting the check with friends in your budget? I recently went to dinner with some friends and ending up paying for the whole thing, and they venmo'd me their share. When I enter the outgoing transaction, it looks like I've blown my entire Eating Out category. But when the venmo clears in 2 days I'll actually be fine. Should I just add extra to my Eating Out category this month?

[@thed0nz]

I would simply delete the transaction that gets automatically added to your YNAB account, and manually add a transaction that is only your share of the meal. It's a bit clunky, but it keeps everything tidy!

[@StudioStarkid]

@@thed0nz thanks! I actually don't have it linked so that I have to enter it manually (i think it keeps me more accountable). I debated only entering my share but ended up adding the whole cost. I think its probably gonna be clunky no matter what way i do it 😅 just wondering how other YNABers deal with it!

[@YNABofficial]

Oooh, that's a good question. Been there. I personally always want my YNAB budget to match my bank accounts to a TEE, so I will always enter the full transaction charged at the restaurant and depending on where we are in the month I'll just leave that category overspent for a few days until the venmo transactions transfer and clear. It KILLS me to have red in my budget-I always want to knock it out-but at the same time, it's a good reminder for me to keep an eye out for those reimbursements from friends (it's easy to forget they owe you back and let it slip). Now, if your age of money is pretty low and you don't feel comfortable having any overspent categories for a few days, I would cover the overspending from somewhere in the meantime, and when those venmo inflows clear the bank I would usually put them in "Ready to Assign" and send them where needed (aka: the categories I borrowed money from). Reimbursements can be clunky and awkward, so I think the real key is marking each of those transactions with the same memo. Like "10/25 Panera Dinner with Kate and Kyle" so you can search "panera dinner" or "kate and kyle" and find ALL transactions associated with that night easily. -Hannah 🌻

[@meskobe]

I have a "Reimbursements" category in my budget, and I split everything off to that category that's not my portion. I also use it for work-reimbursed expenses. Then when my friend or employer pays me back, I put the income directly to the reimbursements category. This way I don't have to worry about my regular categories getting messed up. There's only that _one_ category that I can let go negative and I'm not worried about it. Plus, if it stays negative for a longer time, then I know to check the activity and see who still owes me 💰.

[@EddieKM]

I have a BMW, and I do all the repairs. lot of money saved. Just order parts from Amazon & ebay :P But Yeah the insurance premium is not fun so I lose money there

[@kellypainter7625]

The best way to budget for a BMW is to sell it. When the W falls off, you are just left with a BM

[@Oneofakind123]

00:20 One ofa Kind. Nice to see you. :)

[@YNABofficial]

Pleasure to meet you 😂 🌻 Hannah

[@deannas2417]

How do you incorporate a savings account (I transfer the money I allocate to sinking funds to a savings account because it's a higher interest rate and the money sits for so long)? I have trouble transferring the money into the checking account, then eventually, when I transfer it back, allocating the category seems to be an issue. It sounds simple in theory, but when I try to do this, it gets muddled up.

[@skylerhecker33]

Yeah this is a good question I'd like to know the answer to as well... I put all my "bills" money into a seperate savings account as soon as I get my paycheck, and it's sort of confusing with ynab and "assigning" amounts to things

[@dpayne1943]

It sounds as if you are transferring money back and forth between two accounts, your checking and your savings. That is a simple matter as long as you set up both as Budget accounts and not as a Tracking account. If they are both budget accounts, then you do a transaction in your checking account and when you drop down for Payee, you chose "To/From: Savings Account (whatever you named it) and do an outflow to that Payee (which is the Account and requires no category). If you then go to the Savings Account, you will see the transaction already entered and an inflow to your Payee To/From: Checking Account. You should only do this transaction once you have completed the physical transaction with your banking institution. This transaction does not affect your budgeted sinking fund categories at all. Once you want to actually spend the funds, you do the same transaction in reverse, an inflow to Checking and from an outflow to Savings. You can contact YNAB help and they should be able to assist.

[@benc3726]

What's the difference between sinking funds and true expenses?

[@cl0udbear]

Sinking funds get you an extra 12 minute video for that sweet sweet ad revenue.

[@victoriam8951]

If I understand it correctly, sinking funds are a method for dealing with irregularly scheduled true expenses. Sinking funds are an action, and true expenses are what they are acting upon. If you have been taking care of all your true expenses before now, it’s likely you naturally created sinking funds already and simply never called it that.

[@benc3726]

@@victoriam8951 alright, cool. Thanks.

[@YNABofficial]

True expenses and sinking funds are one and the same, you're spot on!! "True Expenses" is a YNAB-created term, so doing a video on sinking funds is more universally understood! -Hannah 🌻

[@benc3726]

@@YNABofficial Good clarification. Thanks, Hannah.

[@ejn1011]

Hannah is a much safer driver than I am.

[@YNABofficial]

😂 😂 -Hannah 🌻

[@kristamatheson4013]

Hello, I have a question. I have a money back reward credit card that I use for almost all purchases, and pay it off every few days. Do not carry any credit card debt. Not sure if this would work with ynab, since pretty much the only activity in my bank account is paying off this card, along with a few bill payments. Thoughts? I am thinking you might tell me that the money I would save by using ynab would more than offset the money I get from using my card. ? Thank you

[@YNABofficial]

Oh, YNAB is totally built for this exact scenario! You can link your credit card to your budget as well, and anytime you go to the grocery store and buy groceries on your credit card, it takes the money you budgeted into your grocery category and moves it into your credit card payment category, so whenever it's time to pay off the credit card you have all the money sitting there ready to go! I definitely milk my credit card to get all the rewards cash, and YNAB just makes sure I always have every single dollar I need for each payment. Definitely give it a go! 🌻 Hannah

[@ToThePowerOfFour]

If Bingo eats your airpods you better hope you have an Electronics sinking fund

[@YNABofficial]

Oh wow, good point. I was only thinking about Bingo. Dang. -Hannah 🌻

[@SpaZn509]

Bring back the big mugs!

[@The1AndOnlyTinaa]

What do I do if ynab doesn't offer a target for monthly savings builder? I just started using the free trial and I can't seem to find this. Also, once I get paid and transfer over those sinking funds into my savings account, there is no option to choose which categories I sent over into savings and how much I transferred over. It just says (categories not available).

[@YNABofficial]

Hi there! Instead of a using a monthly savings builder, you can use a "set aside another" target type on a monthly cadence. I use this target type for saving up for car repairs and home repairs and our new car! I hardly ever spend from these categories, and the "set aside another" target type makes sure I'm dropping the same amount in there every month no matter what until I ultimately decide to disable the target. 🌻 Hannah

[@emc425]

So im a bit confused. Does my ynab budget serve as my sinking fund because the money im allocating in say renter's insurance im not spending until that bill comes or do i need to create separate savings accounts outside of my main one and move the money there?

[@TaniaMukai]

You can do as you want. Most folks have multiple accounts, but you can perfectly budget using only 1 account. I recommend you to watch Nick True's videos. His explanation are way better and easier to understand!

[@YNABofficial]

Tania's right! YNAB sorts all your money out for all your various expenses and savings goals, so you could really just use one bank account paired with YNAB and you'd have allllllll the information you need. You don't need a "Saving for a House" bank account if you have a "Saving for a House" category in YNAB-you'd just be repeating the same information in two different places! I have a checking and savings and that's it! And honestly, I don't need the savings account, I just like to keep the bulk of my money there so that if I ever lost my debit card and some sneaky person found it, I wouldn't be out alllllll my money. Hope this helped!! 🌻 Hannah

[@PamJernigan]

Not to nit-pick you, Hannah (love your videos) but just as a general rant... "High Interest Savings Accounts" have been pretty pitiful since the 'Rona hit and the Fed dropped the interest rates. I had one making 1.80%, but now the same account is offering 0.04% Here's hoping they come back, but at the moment that cash would not keep up with inflation and would end up being worth less. Of course, that's not a budgeting problem, per se. And it's not a bad sort of problem to have :)

[@lyndzeydare5520]

Me too! That drives me nuts! Each month is less and less

[@amyelynch1]

That’s not a good rate. I’m currently getting .5% and I think that’s pretty standard. And while it won’t keep up with inflation, I do get about 25 dollars in interest each month.

[@PamJernigan]

@@amyelynch1 Yeah, which is why I pulled my cash from that account. I'm actually getting .6% with my credit union checking and money market accounts, so that's where my money is. And I think I mis-stated, it's .4%, not .04% Which is still not great, but better than my credit union savings account, which is 0.1%

[@YNABofficial]

Yes Pam, I know the HYSA reality is certainly a little poopy right now :/ Yet another reason why I would personally recommend sorting your sinking funds by YNAB and *not* with savings accounts. But to each their own!! -Hannah 🌻

[@JeffWurst]

Because of this, I recently moved a bunch of savings from a money market account (earning 0.2%) to a low risk mutual fund. I at least want to match inflation! It's doing much better there so far, but can also do worse.

[@ebonieprater2883]

Question? I have all my sinking funds on a debit card separate from my bank account. How would I link that account and my sinking funds balances through only that account in YNAB? I’m looking to start YNAB soon but I have all these questions that I’ve been trying to figure out through YT.

[@PatrikKron]

In YNAB you don't have too keep the money on a separate account (but you might still want to). You 1) add the account where you have your sinking fund. 2) the money now appears in too be budgeted 3) you assign the newly added money to sinking fund categories. For example if you have $600, you can assign $400 to car repair and $200 to home maintenance. You can always move money between categories in case the emergency is more costly than you have had time to budget for.

[@PatrikKron]

I would recommend you to either read up a bit on the website or watch some of the videos there (the same videos are here on KZbin, but they have put them in nice ordered lists on the website). You may also attend the online courses where you can ask questions. Although probably most importantly, try it! No need to wait for a new month to roll over.

[@ebonieprater2883]

Thanks. I think I understand. I wanted to start at the beginning of a month to see if I liked it throughout a full month from beginning of month to end. Moreso at the beginning of a paycheck.

[@LukeofAllTrades.]

Someone's dreaming about Costa Rica!

[@Sara-qb8zg]

oh my god you are hilarious 😆

[@kristenmichelleharri]

Is this Nick True's Hannah?! Cuz awwwwww

[@YNABofficial]

Haha, no different Hannah, but they are both precious! 💖 ~BenB

[@cristelmariebuenafe]

Watching!

[@kyleryxn]

I need a new air conditioner. How would I categorize this expense since it's really a one time purchase?

[@YNABofficial]

Great question! If you're going out and buying it tomorrow, I'd categorize it to some category like "Home Repairs/Improvement", could be a "Miscellaneous" category, or even your "Emergency Fund" category if you have one of those and feel it was totally unexpected. BUT if it's more of a "the air conditioner is running down and I need to start saving up for a new one" type situation, a lot of people like to create a separate category JUST for the air conditioner, research the price they'll pay for it, set a savings target for that amount, and start chipping away at the savings target! Then when it's time to buy the air conditioner, you can move the saved up money to whatever category feels most appropriate (like "Home Repairs/Improvement"), categorize the purchase to that category, and either hide or delete the "Air Conditioner" category. Hope this helps! And hope you get your new AC unit SOON!! It's heatin' up out there!

[@KVerstegen]

"Oh fart" 😆" Bet vill" 🤣

[@TheEroticDonkey]

You're giving me major millenial-era KZbin vibes!

[@YNABofficial]

... thank you, I think, I don't know 🤣 🌻 Hannah

[@justaskin8523]

LOL, if you're driving a Jeep Wrangler OR ANY OTHER CHRYSLER product, the "girl" is gonna need some help sooner, not later. Probably last week, even! 🤣😋 Sorry, was that "brandist" of me? 😁

[@sadboiiz]

Idk i forgot my password 🤷

[@SkyChopper]

Isn’t it called an emergency fund?

[@trinity123]

I think for the most part, emergency fund is for unexpected expenses, while sinking funds are for expected known expenses.

[@jackiesteele]

Yup. Needing new tires is important but probably isn't an emergency in most cases. And we've known for approximately 2021 years that Christmas will happen on December 25th. An emergency fund is more likely apt for something like a major out-of-the-blue medical expense for an otherwise healthy person. They're both the same idea... cash now to guard against future debt. But the idea is to anticipate as much as possible ahead of time with sinking funds so you're not depending on your $1,000 emergency fund to cover tires, a roof, your annual insurance premium, and new school clothes for the kids all at the same time.

[@PamJernigan]

Yeah, I've got one of those (called my Debt Defense fund) but I also like breaking it out more - I think it makes it more tangible, especially on known expenses (Hello, Amazon Prime!). It's easier to keep track of exactly what you're saving for. And personally, I like the comfort of looking at my budget and seeing that my annual subscription that's gonna renew next week is fully funded, and all the other ones (AAA, Office 365, Disney Plus, etc) are building up their balances, too, so when they come due, the cash is waiting for them. Then there's the more indefinite ones, like new tires or new appliances. When I needed a new dishwasher last summer, I knew exactly how much I could spend, without jeopardizing any of my other savings categories. So breaking it out just helps you quantify it. But I can definitely see the appeal in looking at one huge amount of savings just sitting there, ready to go for anything that comes up. It's really up to you :)

[@markwalter4881]

I use sinking funds for "known known" big expenses >$100, i.e., insurance premiums, annual vacation, or computer replacement. You are right in that emergency funds are a different animal; they are for "known unknowns." The baby emergency fund is about $4000 for insurance co-pays, major appliance replacement, and expensive car repairs. The big emergency fund is 6 months "four-corners" living expenses for job-loss or short-term disability or the next pandemic unemployment. Consider placing this in short-term US i-bonds or a money market checking acct for better interest rates.

[@erinmcaleer1189]

Sinking funds/True Expenses= insurance premiums, holiday spending, medical savings, etc. You know they're going to happen, but not monthly. Emergency funds= savings for things you can't imagine, like the $12,000 needed to rebuild my washed away driveway without warning!

[@lefthandpath1587]

This is a terrible idea targeted for lazy budgeters. The entire point of YNAB is precision - "give every dollar a job". Calling a pot of unallocated money a "sinking fund' doesn't change the fact that those dollars DON'T have specific jobs. You may as well just put the money in an untracked savings account. So, end of day - a sinking fund is basically a slush fund. It relieves you from the responsibility of looking at stuff like "annual subscriptions' "vacations" and understand where EXACTLY the money goes.

[@Not_Lewis]

You're totally missing the point. A sinking fund is not unallocated dollars. It's a fund of earmarked dollars for a future expense that has an unknown total. A vacation and annual subscription is not unknown. You should know how much, reasonably, the vacation will be and how much subscription costs. What you DON'T know is how much that roof repair will be in 14 months when a bad hailstorm rips up a quarter of the shingles. What you DON'T know is how much it'll cost to replace the tire and rim on your car after you hit that errant pothole on your way to work.

[@Ann-Marielivingonabudget]

I think you misunderstood. A "sinking fund" is merely another term for true expenses. You are giving every dollar a job, you just may not always know exactly how much the bill is going to be or when it hits (you know the auto insurance $ every 6 months but not how much you'll need to pay the plumber to fix the burst pipe in your wall). It's the opposite of lazy, and each dollar does have a specific job.

[@cornellcornell1]

A sinking fund is a true expense. Damn you’re slow.

[@QuixoticAri]

it’s accruing in preparation for a later known expense