How do you set up the budget for cash payments, like for maids or tips or babysitters?

I typically don't carry cash as it is harder to track, but some people like to be paid in cash. What is the best way to account for the cash withdrawals from the checking account and then the cash payment for services?

37replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • I have a cash account and treat it like any other account in my budget. Since 2014 I've never been off by more than $0.07 when reconciling. I always take the discrepancy out of my Eating Out category when reconciling with "Lost Money" as the Payee.

    Reply Like 4
      • Annieland
      • YNABbing every day since 2009!
      • Annieland
      • 1 mth ago
      • Reported - view

      jenmas Haha I've always done the exact same thing.  Usually it's more than 7 cents though.  If I have $30 sitting in my cash account and somehow that money ain't around anymore, I just figured someone ate something and it comes out of restaurants :).

      Reply Like
  • Jennifer Cathey Add a cash account to YNAB. Then, when you enter a transaction and select the account from which the spending is coming - checking or savings, a credit card, or cash - choose cash. Paying in cash should be treated like paying with any other method, meaning you should enter in the transaction right away so that you don't forget. This is even more important with cash because there's no way to link your wallet with your YNAB like you do with a credit card. Depending on the transaction, I typically round up to the nearest quarter or dollar so that I'm not trying to figure out why my wallet is missing a few cents from what my budget says.

    Reply Like 1
    • Slate Blue Pilot  So I set up a Cash account with $200. YNAB wants me to budget it immediately. Do I park it somewhere in the budget? I'm not sure at this point exactly how much will be used for various cash payments. And then when I do parcel it out, I move the money from one category to another?

      Reply Like
      • jenmas
      • jenmas
      • 1 mth ago
      • 2
      • Reported - view

      Jennifer Cathey it's like any other account. Budget it to any category that you like. When you take cash from an ATM, it is a transfer from your checking account to your cash account and has 0 impact on your budget. When you first add the cash account it is new money to the budget so you do the exact same thing you did when you added your checking account to the budget. Purpose (category) and location (account) are two separate things as far as YNAB is concerned. Read this.

      Reply Like 2
    • jenmas I so appreciate your responses. I think I have it somewhat sorted out in my head (and in YNAB) - this is all new to me... I created the account (Jen's Cash) and had to go back and change my previous transaction in my checking account to reflect a TRANSFER from checking to cash. Is that right?

      Reply Like 2
      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      Jennifer Cathey enh, when did you get the cash out? If you are reflecting it as a transfer, I would set the starting balance date for the cash account for the same day you pulled the cash.

      Reply Like
    • jenmas I made a cash withdrawal earlier today at the bank.  I had initially entered the transaction from the checking account and divided it up in the budget where I thought it would eventually get spent. But that didn't seem right, plus the cash might no longer be in my pocket when I needed it! LOL So I then went back and added the Cash account and changed the original transaction to reflect a transfer from checking to cash.  

      Reply Like
  • Serious question here:  why do you need a cash account? I have people I pay in cash, they have a category, e.g. "Extra Lawn Work" and when I make the withdrawal from the bank, the payee "Cash Withdrawal" and the category is "Extra Lawn Work."   This seems to work well.  It would seem the Cash Account would complicate things.  

    Reply Like
      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 3
      • Reported - view

      Agent99 Short answer is so I don't have to run to the bank every time I need to use cash.

      I almost never know on what or when cash I withdraw will be spent. Using an account defers the choice of category and transaction date until I do know (often months later).

      It also GREATLY simplifies immediate reimbursements (you pick up a joint lunch on your rewards CC and pick up your friend's cash). Handling this scenario with a cash-as-category is non-intuitive, to say the least.

      Reply Like 3
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • 1
      • Reported - view

      dakinemaui Exactly. I have a bunch of cash sitting somewhere in my house. I know some will be used for allowances, but those are paid out on a schedule. I might need some of it for anything else that might come up in the meantime. Tips, school activity, cash-only cover charge, cash-only mini golf. Could go on. I just never know when I'll need cash, so I always have some.

      Reply Like 1
      • jenmas
      • jenmas
      • 1 mth ago
      • 3
      • Reported - view

      Agent99 I rarely use cash which is why I find it easier to use a cash account. About once every 10-12 weeks I get $200 from the ATM (conveniently the bank that I've been with since the mid-'90s has a branch in my office building0. I usually use it for tipping - I get my eyebrows done and put the charge on my card but the tip is cash. But I also use it for when my office mate does a CVS run and I happen to be in desperate need of gummy bears. Or we're all throwing $5 in to get X a going away present. It's just so intermittent that I have no idea what that $200 is for when I get it from the bank.

      Reply Like 3
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • Reported - view

      And I actually have 3 cash accounts. The Cash stash at home, my wallet and Mrs. nolesrule's wallet. And I used to have a 4th used in the winter/spring for Girl Scout Cookie money. We haven't gotten the girls back into scouting yet since we moved, though the older daughter wants to join Scouts BSA.

      Reply Like
      • jenmas
      • jenmas
      • 1 mth ago
      • 2
      • Reported - view

      nolesrule oh yeah I actually have more than 1 - there's my Wallet. An Emergency Stash in an undisclosed location in my home (it also allows me to "make change" on an as needed basis). My Euro account - currently empty but I do have probably 100-150 euro lying around in the house and if I needed them I'd add them to the budget at whatever the exchange rate was that day. And I have my generic Foreign Currency account that I open and close when I travel for work because many of the places I go are pretty much all cash except for the hotel bill. That requires some additional spreadsheet work for conversion, but when you are all alone in your hotel room at night with crap internet, you have time to do some algebra.

      Reply Like 2
      • Annieland
      • YNABbing every day since 2009!
      • Annieland
      • 1 mth ago
      • Reported - view

      Agent99 And ugh, don't forget Bank of Mom, when my 9 year old gives me a handful of crumpled bills and quarters and asks me to put it on his Money Card.  Or one kid decides they're all going in on a $60 video game (that probably only the one with the idea is going to play) and he's using his card, but the other two gave him cash, and now I have to consolidate it all to put it on the oldest kid's card.  Of course, I scream when they make me do this stuff, but I need the Cash account as at least a pass-through otherwise it just looks like tons of money going out to my kids that I didn't budget for.

      A much more respectable reason is I have a small seasonal concessions business where I am paid 90% in cash, and come home with a heavy cash drawer.  I try to get it into the bank asap, but if there is any delay or I need the cash for something, I need to have the balance recorded.

      Reply Like
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 mth ago
      • Reported - view

      I have three cash accounts:

      • Wallet
      • Cash Stash 
      • Laundry Coin
      Reply Like
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 mth ago
      • Reported - view

      Agent99 I did it because I often spend cash on frivolous things but my frivolous things budget is small. If I want to have $40 in my wallet in case I find myself someplace where I need cash, that’s 20% of my dining out money for the month, or 100% of my fun money. If I mark it out of one or the other category, suddenly, in order to use all the money in the category, I have to spend the cash—I’ve effectively tied location and purpose. And then I have no cash in my wallet in case I find myself someplace I need it. 

      The cash account lets me spend all of dining out on credit, and start the next month still with some bills in my wallet. 

      When I lived in a bigger city with abundant ATMs, I didn’t have a cash account because if I needed cash someplace, I could usually walk no more than a block to find a place to withdraw it . 

      Reply Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 mth ago
      • Reported - view

      Agent99 The answer is "You don't." I'm living proof. I've been living cash account free for many, many YNAB years. I categorize the withdrawal once and then I'm done with it. Occasionally, it's a split transaction. I experimented with cash accounts in the early 2010s but quickly realized that they were an unnecessary complication for me. For full disclosure, I don't use much cash but I always like to have some on me just in case.

      Reply Like
      • MXMOM
      • MXMOM
      • 1 mth ago
      • Reported - view

      Jennifer Cathey This is what I do in YNAB.  In my actual wallet, I have 2 compartments. One is the cash for the above noted cash account. The other is my spending money. That is only tracked in YNAB when I get my "allowance".  In theory, the transactions would go transfer from bank to cash accounts in YNAB, record allowance as a transaction in the cash account categoriez as My Spending. In reality I just do the cash withdrawal as a split transaction My Spending/His Spending/Kids Allowance/Coffee Truck.  The YNAB cash account only gets used when we have a reason to have a bunch of cash around for a while like if we sell a major thing online and get cash I would record that as To Be Budgeted in the cash account and then as we spend it, record transactions to the correct categories. In the example I gave, if we sold something for $500 and then I gave him his spending money, I would record $500 into cash account, and transaction categorized as His Spending from the cash account. YNAB would show $400 balance in cash account.

      When we started and we used envelopes, I did a big withdrawal and categorized to each physical envelope as a single transaction. Then as I spent the cash I just spent it on what it was planned for. If I needed to keep track of something, I either wrote it on the envelope or stuffed the receipts in the envelope. Envelopes are actually the easiest accounting of them all.  One and you're done.

      Reply Like
    • Voracious Reader
    • YNAB broke is not the absence of money, but rather the judgment that it has something more important to do.
    • Orange_Cheetah.3
    • 1 mth ago
    • 2
    • Reported - view
    jenmas said:
    but when you are all alone in your hotel room at night with crap internet, you have time to do some algebra.

     LOL. I'm sure this is true when you're traveling through foreign places and need to calculate exchange rates, but as someone who was flooded out of her apartment and spent most of the summer "alone in a hotel room at night with crap internet" I have to say, not once did I consider algebra as a solution! 

    😉

    I also have a cash account, creatively titled "My Wallet". For simplicity's sake, I round up every transaction to the nearest dollar and dump the change in the bottom of my purse. When I start risking a hernia by lifting my purse, I take it to the bank and have them count it and do a little cash inflow

    Reply Like 2
  • jenmas said:
    Or we're all throwing $5 in to get X a going away present.

    This is an annoying problem in my office.  Most of the younger crowd have gone completely cash-less, or to be more accurate they think they can and have tried to -- and they certainly wax on enthusiastically about how they don't need to carry cash -- but I would argue that the niceties of society still require a person to pitch in with some money on occasions and random fundraisers. People still sell chocolates and cookies and raffle tickets to raise funds for their kids activities. We have numerous other fundraising and charitable events that require cash to participate.

    Even if one is unwilling to donate to the fundraising endeavours of colleagues, there are still times when there is a social obligation or an expectation that everyone will participate.  We send around a collection envelope to gather funds for various observances: sending flowers or making a donation at the passing of a colleague, assembling a gratuity for our custodian staff at Christmas, buying a gift for a co-worker's retirement. Most of our modern cashless crew have to "<nervous giggle>  go hit a bank machine" in order to donate $5.  They try to avoid going to the bank machine by dumping the change out of the bottom of their bags.  As one who tallies up the contributions to the envelope at the end and has to deal with the nickels, dimes, and linty buttons, I am frequently appalled by the resulting stinginess.

    Sorry....didn't mean to rant.....this triggered me this morning.

    Reply Like
      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      HappyDance I hear you. I often run out of cash just because I use it so rarely that I don't always think to go to get cash. At least with the ATM being in the first floor of the building (though I do have to exit the building and go into the bank from the street), I can go real quick. Plus this bank is usually pretty good about giving you at least 2 $5s and a $10 rather than all $20s. I get annoyed when foreign currency sneaks into my possession. I currently have a handful of Canadian nickels in my possession - when I find them mixed in with my change, usually a few days after getting them I pull them "out of circulation" as it were rather than pass them on to some other unsuspecting innocent. Luckily I am friends with a Canadian diplomat who goes home often enough that I just hand them over.

      Reply Like
      • FreshStart
      • Sky_Blue_Inspector
      • 1 mth ago
      • 1
      • Reported - view

      HappyDance I'll be the young cashless contrarian. 100% chance they all have either Venmo or Cashapp, or both plus some other ones I didn't mention. It's the responsibility of the organizer of something like this to embrace (very simple) technology to get things done. I don't think I've touched paper money in 10 years. There's no legitimate need to do so, unless you find some on the ground. And even then, what would I do with it? There's no room in my phone case for paper and coins. I'd probably just spend it on some hand sanitizer and call the whole thing a wash

      Reply Like 1
    • FreshStart Out of curiosity, where do you live? Here in New York City, it would be pretty inconvenient to not carry any cash at all. The number of shops and restaurants that are cash-only is surprisingly high for 2019. I am also assuming you may be living in a country where tipping is not expected. I have a couple of friends working in the service industry - bartender, restaurant server - and I know that they really appreciate being tipped in cash rather than on a credit card. Don't mean to single you out, but your comment about not touching money in ten years piqued my interest!

      Reply Like 1
      • FreshStart
      • Sky_Blue_Inspector
      • 1 mth ago
      • Reported - view

      Slate Blue Pilot Mississippi, sometimes Louisiana. I do a decent bit of traveling for work within the US but only been to NYC once years ago. I didn't know cash only was a thing there. I can't think of the last time I came across a cash-only place! I mean even food trucks, vendors at festivals, all have credit card ability. Honestly, if someone takes only cash that would seem shady to me, you can get a reader on Amazon for like $15. 

      As for tips, I just write them in on the CC receipt, I know they like cash but I'm a generous enough tipper (lived on tips for a long time) to more than compensate for the income tax on my tip.

      Reply Like
      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      FreshStart How do you do a cashless tip for hotel housekeeping?

      Reply Like
      • FreshStart
      • Sky_Blue_Inspector
      • 1 mth ago
      • Reported - view

      jenmas Via the front desk/concierge

      Reply Like
      • MXMOM
      • MXMOM
      • 1 mth ago
      • 1
      • Reported - view

      HappyDance There was recently a British study that talked about this problem.  Essentially on average people are owed about $125 from people and it is for things like "forgot my wallet at lunch" or "contribute to the gift".

      https://www.independent.co.uk/money/spend-save/friendly-debt-borrow-cash-friends-family-difficult-conversation-social-a9142461.html

      Reply Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 mth ago
      • Reported - view

      MXMOM 

      Interesting to see this other aspect of the friends/money dynamic.

      I think if they were studied, you would find Canadians are equally reluctant to ask friends for the money they are owed as well. I've gotten over my discomfort on the subject.

      Reply Like
    • HappyDance I also hate asking for money I am owed, but I have found it to be much less uncomfortable in the Venmo-world my friends and I live in now. Sending venmo requests are not considered offensive or rude and are often expected (ie: "I'll venmo you" or "send me a venmo request so I don't forget") and are usually done on the spot or soon after. If I waited for my friends to give me cash to pay me back for something I paid for digitally, I would never get it back.

       

      That being said, I do carry some cash in my wallet, un-tracked after initial transaction, and try to avoid using it at all costs because there are definitely times and places we run into that are cash only and I want it available for that. 

      Reply Like 1
  • Even though I do the great majority of my transactions with a credit card, I usually take out about $100 in cash each month, and seem to go through it. Not only do I like to tip in cash - for example: my barber, bartenders, and cafes where the bill tends to be small - but there are a surprising number of establishments in New York City that continue to be cash-only. Also, many bodegas/corner stores will allow credit card purchases only if you charge $10 or more. Before YNAB, I used to "get around" this by just buying more... and not always things I needed! But now I always keep cash on hand. When I get down to just $20 in my wallet, I hit the ATM.

    Contrast this to, for example, travel in Iceland, where one can buy a pack of gum for the equivalent of $1... with a credit card! It is surprising how pervasive cash-free society has gotten there, for better or for worse. Mostly for better, but I hear HappyDance example, and I agree that cashless transactions have made people a bit less generous. My group of friends is pretty good with splitting bills evenly, or saying "you get the tip," or saying "I treat this time, you treat next," but I have seen some really stingy behavior with the rise of Venmo/instant cash transfer apps. True life examples:

    -Friend's roommate deducted $0.75 from her share of the rent because my friend ate one of roommate's bananas.

    -Acquaintance sent a Venmo request for an Uber ride, my friend paid right away, but the next day the friend sent another request for $1 because she had given a $2 tip after the ride ended and wanted my friend to pay her back for "her portion" of the tip.

    -Witnessing a couple (not sure if friends, dating, or what) getting out their phone calculators to add up what they ordered to the penny: "you ordered this, I ordered that, now I'll send you $13.91?"

    I understand that I am relatively fortunate to not have to worry about pennies and small dollar amounts in these situations, but I do think that the ease of splitting costs instantaneously has caused a decline in social generosity.

    Reply Like
      • FreshStart
      • Sky_Blue_Inspector
      • 1 mth ago
      • 1
      • Reported - view

      Slate Blue Pilot I don't know what's wrong with those people but the whole advantage of Venmo is not having to worry so much. Oh it's $28.74, ok here's 15 bucks. If you're breaking out a calculator anyway you might as well just fill your pockets with the arbitrarily valued bacteria paper and be done with it

      Reply Like 1
    • FreshStart Agree, I have heard of these instances but my friends group uses venmo regularly to split things and we just do it the easiest way possible, rounding up usually. And if the person who paid gets an extra $1 or 2 at the end, it's fine. That's what they earn for having to round up everyone's money haha.

       

      I think it depends what stage of life you are in with your finances as well. 

      Reply Like
  • This has been educational for me and something I need to think about - if it would work for me.  If I take cash out it usually is for a specific category as I've noted above.  If I take cash out for myself; I track the transaction in YNAB against my checking and I have a Cash category in my budget.  But I don't have a cash account.  Once I log to the cash category, any further transactions are out of the budget.   Thank you, everyone, for the use cases.  I can see if you are dealing a lot with cash that the cash account helps you keep track.  

    Reply Like 1
  • FreshStart said:
    It's the responsibility of the organizer of something like this to embrace (very simple) technology to get things done

    Nope. Disagree. Cash is a whole lot simpler for me than the technology I would have to embrace in order to play banker for those who don't want to carry it. 

    What would be really great actually, is if one of those cashless wunderkinds who uses such simple technology would occasionally volunteer to co-ordinate some of these social requirements of messy human interaction and see how simple it is. That ain't happening either. 

    Reply Like 1
      • jenmas
      • jenmas
      • 1 mth ago
      • 2
      • Reported - view

      HappyDance it is always one person who gets stuck doing this type of thing at all offices ever. And if that person puts their foot down and says not this time, no one jumps into the breach but everyone sure does whine about why didn’t we have the quarterly birthday cake or whatever. 

      Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 mth ago
      • 3
      • Reported - view

      jenmas Now Milton, don't be greedy. Let's pass it along and make sure everyone gets a piece.

      Reply Like 3
Like Follow
  • Status Answered
  • 1 mth agoLast active
  • 37Replies
  • 262Views
  • 13 Following