Beginning Balance Reconciliation: Way Cooler and More Critical Than You Think!
It a fussy word, and almost sounds archaic nowadays, like "balancing your checkbook." But reconciliation is critical to ensuring that your bank account actually lines up with the jobs you assigned to your dollars in Rule One!
Basically, reconciliation is a process in which you compare your actual bank balance to your balance in YNAB. This serves two purposes. First, it ensures that you are entering expenses in YNAB correctly; mistakes happen, direct import occasionally throws an error, or you manually enter a transaction twice by mistake. By reconciling your accounts regularly, you can catch these errors and discrepancies quickly. If you reconcile infrequently, it can be very frustrating and time-consuming to track down the source of the error.
Secondly, reconciling ensures that your YNAB account matches reality. In order to give your dollars a job and assign them to handle future expenses, you have to know that the dollars are actually there in your bank account. It's the reality check. Reconciliation is a simple process, but if you neglect it for long periods of time you can end up with very different balances in your YNAB account (or whichever budgeting system you use) and your bank accounts. And at the end of the day, what really matters is that you have the cash in your bank account!
Mark Butler CFO
You Need a Budget
https://www.youneedabudget.com