Forever it's been impressed upon us that we need a checking and savings account (at a minimum), and we need to stash money away into savings. We need to save. Are you putting enough into savings? How much are you saving? Don't touch your savings! WHAT ABOUT YOUR SAVINGS??
I think we're doing this all wrong.
We need to reframe our perspective on our money to be given explicit purpose, and from that we will see our money in a new light and view the concept of "savings" as merely the starting point that needs specificity to give us clarity.
We All Spend Our Savings
Consider this: All of your dollars are savings dollars. Some are saved for a long period of time, while others are saved for a short period of time, and everywhere in between. The money you received on the 15th that a portion of was spent on dinner on the 16th was saved...for one day. The money you diligently set aside to be able to buy a new guitar was saved over the course of several months or a year. The money you have socked away in case your home's hot water heater fails is still racking up the days it's been waiting to be used. Hopefully you never need to use it, but you probably will because those things wear out.
Also consider this, then: All of your dollars are spending dollars. Some are spent quickly after you receive it, and fairly predictably. Some you plan on spending eventually. Some you hope you never need to spend but you keep them there just in case.
So why do we fret over and insist on growing and maintaining our savings and why do we obsess over partitioning our money into a savings account? Why do some of us decide to go into credit card debt instead of touching our sacred savings, or why do we sometimes take a little from savings for something, and end up doing it so often that we find ourselves with nothing left when we actually need it? Because we haven't given our dollars purpose.
Saving For What?
Stop thinking of your money as spending & savings, expenses & leftover. We rob ourselves when we have no prior defined intention because we can't see what impacts our decision is costing us. And we are too afraid to use what we've successfully sequestered for fear of needing it for something else because we haven't thought about what it's supposed to be used for in the first place.
"Savings" is nebulous and unhelpful. Instead, start asking yourself, "For what am I saving?"
YNAB's very first rule is Give Every Dollar a Job. Giving your monthly transfer from Checking to Savings the job of "Savings" is too broad and misguided. Where the money is located is not it's job, and YNAB enables us to look specifically at what we want our money to do irrespective of where it is stored.
Maybe your savings are for emergencies. This is still pretty undefined. Which emergencies? What do you consider an emergency? Let's remove the financial stress from those stressful situations by explicitly considering, listing, and preparing for them.
Maybe your savings are for fun things you want to plan, or the long haul of retirement, or anything else. Ensure you are giving space for what you want by distinctly calling them out. Doing this and checking our budget before we spend will help us understand our priorities and guide our actions. If we've allocated $500 to a general pile of savings, it is easier to pull from that for whatever we like without much concern than if we've defined that $500 as being half for new tires (which is a great example of YNAB's Rule 2: Embrace Your True Expenses) and half for a plane ticket back home. How important to us is our potential impulse buy compared to the tires we'll need soon or our trip? We can change our mind, and we can reprioritize. We shouldn't prohibit ourselves from that (after all, that's essentially YNAB Rule 3: Roll With The Punches), but we should be clear as to what our decision means for the rest of our budget line items. Considering what our money is for will help give us permission to spend it when we're ready. We're taught to avoid dipping into our savings, because what if we need it later? The problem is not that this money gets spent; the problem is we haven't explicitly told ourselves what we need it for so we know what we're okay and not okay spending it on. Give your savings dollars jobs, too. They're still dollars, just like the ones in your checking account. Explore the underlying purpose you want for them.
Do I Need a Savings Account?
What about keeping savings in a savings account?
Why?
If you are afraid you'll spend the money because it's in your checking account, with YNAB you check your budget categories to make spending decisions. You've defined the purpose of your dollars in your budget, now continue to use it! No need to remember what the sum of all the money is for when you've already got it allocated in an envelope-style tool like YNAB.
If you want to receive interest while your savings waits to be used, that's a great strategy! Ensure you're getting a good rate by using a HYSA (High Yield Savings Account), and consider the separate question of how much you want to keep in each account based on when you'll need to use the money.
Some HYSAs even offer features around helping you divvy up your cash into specific purposes, such as SoFi Vaults or Ally Buckets, and these are great options. YNAB offers the same idea but helps on a broader scale because it's not dependent on a particular bank, but looks across all your accounts, cash and credit, to help you stay on top of what your money is doing and what you want it to do.
You Need a Budget, and I'm a Budget Coach!
Budgets involve more than just the money in our checking account when we are being intentional about our dollars. Giving our savings specific jobs allows us to understand more clearly what we're aiming for instead of continuing to abide by generalities that leave us confused about what we should or shouldn't do. Our budgets and our money are for our own defined purposes. Define them. YNAB is a fantastic method and toolset for getting us to be more in charge and aware of our own finances, and as a YNAB coach I can help you put it all together. Budget coaching is for anyone wanting guidance on developing new habits, support with using budgeting tools and strategies like YNAB, and new perspective on how to approach their personal finances. Make an appointment here for us to have an introductory conversation about what I can do for you!