The main core of YNAB is in its budgeting capabilities, but you can definitely set it up to manage your entire financial life as well. YNAB is so customizable that it can track any of your accounts and calculate your net worth.
We’ve looked at the budgeting aspects of YNAB in the previous tutorials:
Now we’ll cover those other accounts that you don’t factor into your day-to-day budget such as your investment accounts, mortgages and other assets that you own.
SETTING UP TRACKING ACCOUNTS
In the budgeting process, YNAB combines all of your funds available and requires you to budget them down to the last penny available. There are certain accounts, though, that you may want to monitor, but do not want to include in your budget.
YNAB refers to these as “tracking accounts”. Some examples of tracking accounts include HSA’s or FSA’s, retirement or other investment accounts, mortgages, loans, and other assets.
To set up a tracking account with YNAB, you go through the same process as with a budget account, but select one of the tracking account options instead. The options include:
- Investment Account (brokerage, 401k, IRA, HSA, college savings accounts)
- Other Asset (homes, automobiles, artwork, etc.)
- Other Liability (personal loans, auto loans, etc.)
For example, I have a checking account for my personal spending money that I include as a tracking account instead of a budget account. To set it up, I selected “Other Asset” (even though it’s a checking account).
Tracking accounts can be linked to your bank, as with other budgeting accounts, so that transactions can be directly imported.
MONITORING & UPDATING TRACKING ACCOUNTS
In my own personal YNAB setup, I have included all of my investment accounts including 401k, IRA’s, Health Savings Account (HSA) and my taxable brokerage account. (You can see a list of all of my accounts here).
My HSA account is the only investment account where I need to regularly track deposits and expenses since I use it all the time (too often for my liking in fact!). I include the contributions to my HSA account as an expense in my regular budget. Then when I actually pay for the medical expenses out of my HSA account, I am simply tracking how much I’ve spent and what my remaining balance is.
I recommend recording your investment accounts on a quarterly basis. My personal method uses automatic transactions in YNAB, since the amount I contribute to these amounts is the same every single month. I record any fees paid and the gain (hooray!) or loss (boo!) at the end of March, June, September, and December for the previous 3 months.
Here’s an example of how you could set up your 401k:
My mortgage for my primary home and my rental property are both included as a mortgage tracking account. I often make extra payments, so I want to be able to make sure that my balance matches what the bank says I owe on the loan.
I use my loan amortization schedule to record the amount in YNAB of each payment going toward the principal of the loan. While I record this on a monthly basis, you could track this quarterly with investment accounts, or if you’re not a perfectionist once a year, or however often you calculate your net worth, would probably be sufficient.
In order to calculate your net worth, you will need to record all of your assets (and of course liabilities next) in YNAB. Take a look at the mini-class on how to calculate your net worth. You should include everything from this list that wasn’t included in budget accounts under other assets, including the value of your home, cars, artwork, furniture, etc.
These account values should be updated annually with accounts added or adjusted to zero if you buy or sell any of these main assets.
I don’t personally have any other liabilities (booyah!) but “other liabilities” is where you would record any other loans that you don’t have in your budget accounts, such as an automobile loan or another personal loan. This, of course, will help us to get to that net worth number so make sure anything you owe that’s not included in budget accounts is included here.
Follow the same method as your mortgage to record the loan balances.
CALCULATING NET WORTH
For years and years, I calculated my net worth using my handy dandy spreadsheet. I still like that spreadsheet and I still use it. However, it’s so much easier to get my numbers from the report in YNAB and simply enter them into that format.
Pre-YNAB, I had to try to figure out what my bank and credit card balances were on the very last day of the month, calculate what I owed on my mortgage and log into each of my accounts separately. Now it’s as easy as going through my regular financial budgeting process and then finding the information in YNAB.
If all of your budget and tracking accounts are set up, to calculate your net worth, you simply click on “Reports”, “Net Worth” and just like magic you can customize a report with your net worth balances from the start of using the YNAB software. Hopefully that’s an upward trend!
When you need a little more detail broken out, you can select which accounts you would like to see (such as bank accounts only, credit cards only or a combination of accounts).
Your net worth is a great measure of your financial progress and YNAB makes it simple to track that progress.
If you’ve followed through all four parts of YNAB, you have everything you need to succeed with your day-to-day finance tracking!
With a little bit of setup, you can monitor all of your financial accounts in YNAB. That’s like one-stop shopping but better. Shopping doesn’t save you money, but YNAB absolutely will!
I have one more part to the series where I’ll share some of the unique ways that I use YNAB (like tracking my credit card rewards balances!). In the meantime, I hope that you enjoy using YNAB as much as I do!