# Support

## How Money Flows from Accounts through the Budget

### How does money flow from accounts through the budget?

Let’s say you enter \$1000 in Account A as Income for August.  Since that money was categorized as Income for August, it is sent to the August header and appears in the income line and as Available to Budget.

This money is in the bank, but has not been assigned a specific job yet.

\$1000 available to budget + \$0 category balance (since nothing been assigned a job yet) + \$0 Income for next month (since nothing has been assigned to next month yet).  The formula works - the sum of my accounts (just one so far) is \$1000.

Now let’s say you add Account B with a starting balance of \$500.  This too is categorized as Income for August and is added to budget screen in the income line and in Available to Budget.

The same math applies and the formula still works.

It’s as if you took the money from these two accounts and poured it out in front of you on the kitchen table.  This is what you have to work with.

Now you can start deciding what to do with the money.

You assign \$750 to rent, \$250 to groceries and \$100 to gas.

\$1100 has been assigned to Categories in the budget, but \$400 has not and is still Available to Budget.  Notice that the \$1100 appears in the Category balance column.

If you add the \$1100 that’s been assigned to a job to the \$400 that has not been assigned, that equals \$1500, which is the amount of money that’s in the bank.

Going back to our analogy:  It’s as if you put \$1100 dollars in separate envelopes.  So \$1100 is spread across three envelopes and the remaining \$400 is still on the kitchen table in front of you.

Again, this money is still in the bank - you haven’t spent anything yet - you are just setting up a plan to spend it.

Now you pay the rent (\$750) from Account A and buy \$100 dollars in groceries from Account B.

This money has been removed from the budget and from the accounts.  Notice that the total Category balance has now gone down.

The formula still works.  The total amount of money I have in the two accounts is \$650.  If I add the total Category balance to the Available to Budget number, they both equal \$650. No money has been assigned to next month, so there's nothing to add there.

Now what happens if you overspend?  Let’s say you overspent on gas by \$25.

The formula still works.  There is a total of \$525 in both accounts, and if I add the Available to Budget number to the Category balance, it equals \$525.

What if you forget to categorize some spending?  Let’s say you bought \$30 in groceries, but forgot to assign a Category.

No problem!  YNAB takes care of this by adding an Uncategorized Transactions row to the budget to hold the transaction you forgot to categorize.  Therefore, the formula still works.

The only way to break this if you have a red error.  This means you have categorized when you shouldn’t have, or didn’t categorize when you needed to.  You can learn more about Errors here.

The bottom line:  As long as your file is free from errors and your account balances are reconciled with your bank, there is no way for your accounts to get out of line with your budget.

If you have any income entered in the current month and categorized for the next month, you’ll want to look at the next month to check the formula.