As members of the YNAB Support Team, we’ve noticed some…let’s say mistruths…about our good friend Reconciliation, who has a serious PR problem.
Here’s the thing—we know Reconciliation (both personally and professionally) and these allegations are undeserved. Does the word itself sound kind of boring or math-y? Sure. We can agree with that. But in reality, it’s just a big word for a little task that can keep you out of financial trouble down the road.
We want to clear up any misunderstandings about our buddy Reconciliation because we’ve noticed that those who reconcile regularly have fewer problems with their budget.
And as support team members, we want that for everyone.
Setting the Record Straight About YNAB Reconciliation
What is Reconciliation in YNAB?
Reconciliation involves comparing your cleared balance in YNAB to the current/cleared balance with the bank. Once you’ve successfully reconciled, your cleared balance in YNAB will match the cleared balance of your bank accounts—to the penny.
When you reconcile, the only uncleared transactions in YNAB should be those that are still pending with your bank, either because you manually entered them or they haven’t cleared your account yet. (It can take a day or two.)
The little green or gray “c” column will show you the status of each transaction. If it’s a gray “c”, it’s uncleared. If it’s a green “c”, it’s cleared. If it’s a green lock, it was cleared last time you reconciled and it was included in the reconciliation. (You can edit locked transactions if you need to, just be sure to re-reconcile after.)
We recommend that YNABers reconcile each Budget account weekly. The more regularly you reconcile your accounts, the easier it is because there will be fewer transactions to review if there’s a discrepancy.
If weekly feels too frequent, consider an every-other-week reconciliation routine. Or maybe reconciling your accounts every payday. You’ll find a rhythm that works for you!
Why Should I Reconcile My Accounts?
As YNABers, we check our budget to see if we have money available to spend, not our bank account. We have to be able to believe our budget is telling us the truth and reconciliation is how we build that trust. If your YNAB account balances are wrong, your budget cannot be trusted.
In other words: if your accounts aren’t reconciled, you might be budgeting Monopoly money. Which is fine if you’re saving up for that coveted Park Place property, but not all that useful when it comes to making sure you have enough money for your actual mortgage payment.
Maybe you think your budget or your accounts are an exception this rule – let’s dig in by debunking some common myths about our ol’ friend Reconciliation.
Debunking Eight Reconciling Myths
Like it does for going to the gym, your brain will come up with all sorts of excuses as to why it is a bad idea to reconcile. All of them are lies.
If you hear yourself making any of these excuses, reconcile anyway!
- Reconciling is Bad. Lies. In YNAB, reconciling is GOOD. Sometimes things already gloriously match. Other times you might need to double check your pending transactions. When things still don’t agree, making a balance adjustment can feel like failure, but it is not. You might be tempted to go back, line by line, since you started budgeting in 2016 to find the source of your problem. This is an unnecessary hurdle – pick your battles! A balance adjustment will represent those missing or incorrect transactions for you and you can get right back to budgeting today.
- I don’t need to reconcile if I use Direct Import/FBI/Manual Entry. Another lie. Everyone needs to reconcile regularly. Fun fact: direct import brings in transactions, not balances. YNAB is designed so you can use any combination of direct import, file-based import, and manual entry to add transactions to your budget. The reconcile feature is how you make sure everything matches up and that your account balances agree with the bank.
- I don’t want to reconcile right now because the balances already agree. Then it is quick and easy! Take 3 seconds to hit that reconcile button. It’s totally worth it because working through the reconciliation process does some work behind the scenes to make YNAB work more smoothly. It will reduce loading times in the register when users hide reconciled transactions, prevent duplicate transactions from importing and reduce the need to make adjustments. Wins all around.
- I don’t want to reconcile right now because I have pending transactions. You can still reconcile if you have transactions pending because pending transactions don’t affect the cleared balances either place. Mark those pending transactions as uncleared, and make sure your cleared balance in YNAB agrees with the cleared balance at the bank. 💥
- I don’t want to reconcile right now because I need to reconcile to my monthly statement. Gold star for reconciling ever, but this isn’t your Grandma’s checkbook. With YNAB, you’ll want to make sure your cleared balance matches the bank at this moment. Statements are out of date as soon as they are sent. Instead, use the current cleared balance at the bank and ignore your statement.
- I don’t need to reconcile my credit card. All of your budget accounts should be reconciled regularly. If you owe money on your credit card, it should have a negative balance in YNAB. The automatic credit card handling will only work if the working balance on the credit card is zero or negative. An incorrect balance on your credit card can cause the amount in your Credit Card Payment category and your budget to be wrong. It’s ok though–reconcile the account (be sure to put a minus sign in front of that Current Balance), let YNAB enter an adjustment transaction, adjust the money in your Credit Card Payment category and move on with your life.
- I don’t need to reconcile my closed accounts. As long as the balances on those closed accounts are zero, you’re right on this one! But if you have a closed account with a positive or negative balance, clear all the transactions and reconcile it so the working balance is $0.
- I don’t need to reconcile my tracking accounts and loans. You caught us—there is an exception to every rule, and this is it. There isn’t a need to adjust these balances more than quarterly; they don’t affect your budget.
The good news is that reconciling is way easier than going to the gym. When you reconcile on a regular basis using your cleared balance, the reconciliation process is quick and easy. And then you get to do the reconciliation dance.
(Side note: There’s no established reconciliation dance yet, so you can make up your own. Now that we’re thinking about it though, our TikTok crew should get on that.)
If you reconcile regularly and always have to enter an adjustment – that’s a warning sign
While you may need to do a balance adjustment the first time you reconcile or if it’s been awhile, if you find that your balance is off every time you reconcile, there may be a flaw in your process. Review the Reconciliation help docs (web and mobile) and if your relationship with reconciling is still rocky, reach out to us. We want to help make reconciling an easy part of your budgeting routine.
Thanks to Kat Hickey for collaborating on this post!
Looking for more tips and tricks to achieve budgeting greatness? Check out the Weekly Roundup.