Why Doesn't My Account Balance Match My Budget?

You’re looking at your YNAB budget. Checking account balance: $1,029. But then you look at your bank, and you see your actual checking account balance: $972. Your account balances don’t match your budget! WHY? WHY?!!! Cue: despair, anger, frustration, gray hair (and that’s hair—plural).

After poring over your transactions line by line, you can’t figure out why the account balances don’t match. Instead of a happy reconciliation dance, you’re stomping around with a scowl. At this point, you might be tempted (or MORE than tempted) to just give up on budgeting. Before you throw up your hands to quit, hear me out.

There’s a difference (a big difference) between Bank Time and My Time.

In Bank Time, transactions move along the bank’s timeline, and there’s a lag. They’re always a little behind. That’s because they’re running on Bank Time, not My Time.

I went to the store and bought the groceries on the 3rd, but by the time the bank finished dealing with that transaction and subtracted it, it’s now the 7th.

That lag can get you into trouble because you don’t have up-to-date information. There are certain categories, like groceries, where you need the most recent info, pronto. And this is especially true if you’re budgeting with a partner.

That’s why—for certain categories—we recommend entering things on your timeline—AKA My Time. This protects from Bank Time surprises. You have your own timeline with the most up-to-date information.

YNAB will automatically match these transactions together when Bank Time catches up, so no need to worry about duplicates. And when you reconcile, you’re checking both timelines for agreement. That’s it.

So Where Am I Going Wrong?

Most of the problems we see with account balances are in those early days of learning how to budget. Maybe you had a few pending transactions that get imported (surprise!) on day three. You forgot about them, and now you’re overspent. Or maybe there are some not-even-pending-yet transactions or paper checks out there just waiting to drop a bomb on your budget.

To add to the headache, connecting the bank immediately takes control out of your hands. Things seem to be “happening” to your accounts and your budget before you’ve had a chance to learn how things work.

So, let’s get to the bottom of these headaches and solve them once and for all. I’ve got a simple, easy plan tp turn around this crazy-making reconciliation problem.

If you follow my plan, here’s what’ll happen. You will:

• Wrestle those bank balances to the ground once and for all.
• Understand the timeline between Budget and Bank time, giving yourself (and your budget) a bit of grace.
• Learn how to manage your accounts and the budget much better.
• See the cause and effect of your actions in the app more clearly.
• Have more awareness and be closer to your finances.

Follow my plan for a winning strategy. Here we go:

The 7-Day Plan to Reconciliation Bliss

We’re going to slow things down and go old school here for one week. We’re going to learn to drive a regular car before we get in the self-driving car. You’re going to enter everything yourself for the next seven days. If your bank is available to connect, we’ll eventually connect it near the end of the week—don’t you worry. But we’re gonna ease in.

Day 1: Start Fresh

1. Give your budget a Fresh Start.
2. Grab your account balances.
3. Don’t add your mortgage, car loan, etc. Let’s keep things simple. Just add the accounts you spend from.
4. Turn off Direct Import.
5. Budget whatever money you have down to zero.
6. Add a little extra to the “Stuff I forgot to budget for” category, in case of surprises.
7. Log into your bank online and look for pending transactions. Enter them in YNAB and leave them uncleared. Did you budget for them? Make sure you did!

Your checking account might look something like this:

The Amazon charge and the Gas Station charge—I can see they are marked pending at my bank. They will eventually be processed, but I left them uncleared (the gray c) until that happens.

I need to know about them right now to make sure I have up-to-date information. So I entered them and naturally, budgeted money for them.

At the top of that screenshot, you’ll notice a green Cleared Balance. That shoul d match your bank.

Final Step Today: If you spend any money today, enter those transactions yourself when you spend. This will be easier if you keep your spending to one or two accounts.

Day 2: Starting Your Routine

Good morning! It’s a new day. Now we start our routine. Open YNAB and login to your bank’s website or app.

1. Did anything clear? Mark it cleared.
2. Did you miss one that cleared the bank? It’s okay. Go ahead and enter it and mark it cleared.
3. Reconcile every account by opening YNAB on your computer and clicking on the “Reconcile Account” button at the top of the register. For some accounts, this will be super simple. You may not have had any spending at all in the last 24 hours. Great, you’ll hit that button, it’ll match the bank, and you’re done.
4. Check the budget. Is there overspending? Fix it.

This routine will get faster as you do it each day. You’ll get this down to just a few minutes very soon.

Go on with your day—I hope it’s a nice one. If you spend any money, enter those transactions yourself as they happen.

Day 3: Pin Categories to Make Things Easier

You made it to day three. Excellent. It’s time for our daily routine.

1. Did anything clear? Mark it cleared.
2. Did you miss any transactions? Enter it. There will be fewer of these as we move forward.
3. Reconcile every account.
4. Check the budget. Is there overspending? Fix it.
5. Continue entering transactions yourself.

But let’s make entering transactions a bit easier today. There are some categories we spend from multiple times a month—the “Out and About” categories. For example:

• Groceries
• Eating Out
• Gas
• Clothing
• Entertainment

You may have a few that are specific to you. (For me, it’s quilting supplies.) Did you know you can pin those categories to the top of the mobile app for easy access? Try it!

Select the category you want to pin, and tap “details”. Then tap the pin icon in the top right corner. Boom. That category is now at the top of the mobile app. You’re welcome.

Day 4: Stay the Course.

Hopefully this is getting a little boring. We’ll do something exciting tomorrow, I promise.

1. Did anything clear? Mark it cleared.
2. Did you miss a transaction? Enter it.
3. Reconcile every account.
4. Check the budget. Is there overspending? Fix it.
5. Enter transactions yourself.

Are you noticing a pattern? It’s getting easier now.

Here’s a fun game to play: today if you’re shopping, try to enter the transaction on your phone before the cashier hands you your receipt.

Still having account balance problems? You can enable Running Balance on your computer to make your transaction history easier to see. Make sure you’re looking at the right balance on your bank’s website and that you understand how they are arriving at that number. Some banks subtract pending transactions, some don’t. Every bank is different!

Day 5: Connect One Bank Account

Alrighty. At this point, you’re probably past any surprise pending transactions. (Except maybe for that check you wrote your nephew for his birthday. He may not cash that for months. Note to self: next time, Amazon gift card.)

Anyhoo. Let’s connect your main spending account today. This should be the account you use most often.

YNAB will start importing cleared transactions. But remember—and this is important—Direct Import is running on Bank Time. Direct Import can only enter what the bank reports—and bank time lags. So you still need to enter on My Time.

I do have an exception to this rule, for the sake of practicality. Think about it. Your cable bill gets paid automatically on the 17th. It’s $89 every month. As long as you’ve budgeted the $89 before the 17th, you don’t really care what day it’s imported. So if you want, you can let the bank import those types of transactions.

However, for those “Out and About” categories, we recommend still entering those on your mobile device when they happen. Keep operating on My Time. This is how you stay ahead of Bank Time.

The routine is almost the same.

1. Did anything clear? Mark it cleared.
2. Was anything imported? Categorize and approve!
3. Did you miss one? Enter it. Or you know what, YNAB may catch it for you on the import. Sweet.
4. Reconcile every account.
5. Check the budget. Is there overspending? Fix it.
6. Enter transactions yourself in your “Out and About” categories.

Day 6: Nailing the Routine

1. Did anything clear? Mark it cleared.
2. Was anything imported? Categorize and approve!
3. Did you miss one? Enter it.
4. Reconcile every account.
5. Check the budget. Is there overspending? Fix it.
6. Enter transactions yourself in your “Out and About” categories.

It should be getting easier now.

Pro tip: Did you know a paycheck is just another transaction? When you get paid, enter it and categorize it as To Be Budgeted. Then head to the budget and give those dollars jobs.

Day 7: Keep Doing All The Things!

1. Did anything clear? Mark it cleared.
2. Was anything imported? Categorize and approve!
3. Did you miss a transaction? Enter it.
4. Reconcile every account.
5. Check the budget. Is there overspending? Fix it.
6. Enter transactions yourself in your “Out and About” categories.

You should be feeling pretty good by the end of day seven. Connect another spending account if you have one. I’m honestly hoping you don’t have too many. But every few days, connect one until they are all connected.

You Made It!

That’s it! Seven days are complete! What you’ve just done is learned to drive a regular car before you drive a self-driving car. Now you know how to handle everything—Bank Time and beyond—and can always take back the wheel if things are getting out of control.

Now, do you have to reconcile every single account every single day? Probably not. Your savings account probably doesn’t have a lot of activity. I reconcile mine once a week. In fact, you could do this routine on a schedule that works for you. But we do strongly recommend reconciling all your accounts at least once a week.  

Why? Because if something is off, you’ll have fewer transactions to sort through to find the problem. During this exercise, if something was off, we only had one day of transactions to sort through. Imagine if things were off and you had to sort through a month of transactions. In other words, if you’re looking for a needle in a haystack, you want the haystack to be as small as possible.

Thanks for sticking with me. I’m wishing you endless reconciliation dances for the future. Happy budgeting!