Stop Playing the “Matchy Matchy” Game in YNAB
This week I’m back with a more technical YNAB post. If you’re not familiar with YNAB, it is an amazing budgeting app and method that I encourage you to check it out.
So I was listening to one of my favorite podcasts the other day (shoutout to the Budget Nerds - love those guys!). Ben and Ernie were answering questions from listeners and in response to a question from a listener they started talking about the “Matchy Matchy” game in YNAB and how it’s really not necessary (most of the time). This month, I’ve started working with a few new clients and as they are setting up their budgets in YNAB we have also been talking a lot about the “matchy matchy” game.
What the heck is the “matchy matchy” game? It’s more than just an annoying catch phrase. Simply put, it is when you have a bank account tied to a specific financial goal and in YNAB you also have a category tied to the same goal. Then, you play a game in YNAB of constantly trying to make the amount of money available in a category the same as the amount of money in the bank account.
In this post, I’ll explain a bit more about the “matchy matchy” game, why it’s really not necessary, and how you can stop playing it.
Why You Really Don’t Need to Play the Matchy Matchy Game
As I mentioned above, the “matchy matchy” game is when you have a specific bank account with a goal and a YNAB category with the same goal and you are constantly trying to make the amount in the category match the amount in the bank account by moving money in or out of the category or bank account. It involves transfers, reconciliation adjustments, and the movement of small amounts of money around in your budget. It gets annoying and complicated really fast.
This is a very common scenario when people just start using YNAB or any other zero-based budgeting program. You might have a bank account dedicated to your emergency fund, another bank account for travel, and another one for the bathroom renovation you are saving for. When I discovered YNAB I had multiple bank accounts too.
But the problem is, and let me shout it from the treetops, is that YNAB doesn’t care where the money in your budget is stored in real life. YNAB is, as the Budget Nerds like to say, “account agnostic”. YNAB takes the total sum of the money in all of the accounts that you’ve added and this is the money in your budget. To explain in a totally unsophisticated way, it’s all just dumped into one big pot. When money comes into one of your accounts, it’ll go into the big pot in “Ready to Assign” and then you assign it to your categories, including those categories with longer term goals.
Steps to Take to if You Want to Stop Playing
If you’ve decided that you’re finished pulling your hair out trying to play the “matchy matchy” game, here are the steps to take to get out of it.
Step 1: Stop looking at your bank account balances to make spending decisions.
Stop paying attention to your bank balances? That sounds really strange, doesn’t it? But in YNAB, you should be looking at your categories to make spending decisions. Using the analogy of the old fashioned cash envelope method of budgeting, your categories are the envelopes stuffed with cash. You want to start looking at how much is available in those envelopes before spending and stop looking at the balances in your bank accounts.
Step 2: Consolidate your accounts
This means closing all of those no fee e-savings accounts and whatever else you might have set up and moving your money to one bank account. Make those calls to your bank and simplify! Then, go ahead and close the account in YNAB.
There are a few caveats to this advice. First, perhaps you are self employed and want to keep your business expenses separate in the real world. This is a good idea and my advice would be to also have a separate budget set up for your business. Second, perhaps you and your partner share some expenses but also have separate personal bank accounts. The same advice applies here: set up three separate budgets, one that is shared and two individual budgets. This is what my husband and I do and it works really well. You’ll need a category for any money that leaves your personal budget to go to the shared budget and vice versa. Finally, you might be wanting to take advantage of the relatively high interest rate of a savings account. Enjoy the extra income from interest and try not to pay attention to the balance of the savings account to make spending decisions - look at your categories in YNAB.
Step 3: Add scheduled transactions and turn on the running balance
If you have decided to keep a savings account in order to take advantage of a higher interest rate, there are a couple of things you can do to keep things going smoothly in YNAB. As the balance of your checking account grows (and if you’re using YNAB and setting aside money for future expenses, it will!), you can transfer the “extra” cash that isn’t needed within the next month or so to your savings account. If your checking account balance gets a bit low, you’ll want to transfer some money back into it from your savings account. Because YNAB treats the money in both accounts as one big pot, the amount of these transfers doesn’t really matter as long as you don’t put yourself in a situation where you overdraw your checking account.
To avoid overdrawing your account, I recommend adding any repeating withdrawals from your checking account as scheduled transactions and turning on the running balance so that you can be sure that you have will have enough cash in your checking account.
I have both a checking account and a high interest savings account so as part of my end of the month routine in YNAB I’ll either transfer money into or out of my savings account depending on the checking account’s cash flow situation.
Conclusion
Playing the “matchy matchy” game in YNAB is really not necessary but it takes a mindset shift to fully understand and appreciate why. It also takes a bit of a leap of faith to stop playing it. These mindset shifts make all of the difference when it comes to using YNAB and zero-based budgeting and it might take you a little bit of time to fully get there. That’s ok! And when this one does suddenly “click” you’ll be well on your way to reducing stress about money and reaching your financial goals.
Please reach out if you would like more personalized support. I offer a program focused solely on getting you up and over the YNAB learning curve called “Dig In!”. There is more information on my website, check it out!
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