Reconciliation is the process of making sure the transactions in your YNAB account register match those in your bank account. During this process, we make sure the records match and we resolve any differences between the two.
Some people are used to reconciling their paper checkbook register with their bank statement once a month. With online banking and YNAB, that’s no longer necessary. You don’t have to wait for your bank to send you a statement, and can reconcile YNAB with your bank balance anytime you want.
It’s important to make sure there are no discrepancies between the information you entered in YNAB and the information the bank has.
1. It helps catch mistakes. Let’s say you go grocery shopping and forget to enter that in YNAB. That money will have left the bank, but YNAB won’t know. This will give you the impression you have more money in your budget than you do. You won’t catch it unless you check the two balances against each other.
Or... what if you buy gas for $42.58 and enter it in mobile app accidentally as $48.25? Reconciliation can help you find those types of mistakes.
2. It narrows the search for mistakes. Once a transaction is reconciled, you know things were fine up until that point. So if there is a problem the next time you reconcile, you’ll know where to look. It’s far easier to search through 10 transactions for a mistake than 100.
Let’s say you reconcile on Wednesday night and everything is fine. You reconcile again on Saturday morning and things are off by $35. The mistake has to be something that happened after Wednesday night, since you know things were fine up until that point. Finding the mistake will be much easier since you only need to look through the transactions that happened after Wednesday.
1. Reconcile frequently. You can reconcile any time by checking your bank balance online. Some YNABers reconcile daily. If you reconcile more often, there will be less transactions to sort through, it will be easy to find mistakes and it will be very quick.
2. Reconcile immediately after importing. At this point, you are probably logged into your bank anyway and it’s a natural final step to take after importing.
3. Some folks find it helpful to clear transactions first, and then hit the reconciliation button. It will go much faster for you this way since hopefully there will not be much to do.