Allowances best way to manage in YNAB
I have 2 savings accounts for my kids at BOA (under my name but nicknamed for them). Every week I automatically xfer their allowance. I set this up in YNAB as an auto transfer and have allocated the right amount as a monthly budget for YNAB. So far so good. I have not set up these accounts in YNAB (the banking accounts). So now when a kid wants to buy something I charge it on my (linked in YNAB) credit card and then move the money from on my BOA app. How best to reconcile all this in YNAB. Do I just go ahead and set up kids bank account in YNAB and then what about the txn on the credit card. SIGH it seems rather complicated to manage a single $10 purchase (baseball cards for my son).
I have spending categories for each kid in the budget. I use that to run all transactions through that are paid by us for their personal purchases. If it goes negative, then they pay me back, either from their own bank account or in cash from allowance. All inflows and outflows go through that category. The goal of the category is to generally keep at zero at all times. At times it does go positive, for example if they get a gift card as a gift and we "buy" it off them.
When it is positive, I keep them apprised of their "Bank of Mom and Dad" balance.
Personally, we don't let them spend from the money we put in their savings accounts. They get their allowance in cash (and have their own YNAB budgets). The money we put in their savings account is for the long-term.
Also you need to keep in mind that savings accounts can only have 6 outgoing transfers max per month.
I find that until the kids are teens, it's better to give them cash and let them navigate spending with that so it's a tangible concept. Once that's mastered/understood, then the virtual money can be used. We haven't had them document their budgets yet (ages 9, 7, 3), but rather they have jars they count regularly to see how much they have, especially when considering a big purchase.
Fairly new to YNAB ourselves, but I really value it as a way to introduce and effectively manage money with our girls (11,7,4). We created a YNAB budget for each of our girls. They each have student savings accounts that garner 2%+ interest at our local credit union. The 11 and 7 year olds get an allowance equal to their age weekly. So, for example, my 7-yo gets $7. 10% is allocated to their giving category. Then of what remains, 25% goes to future education, 25% goes to future retirement, and 50% (or $3.15) is TBB. Every 1 or 2 weeks they'll budget their spending money into categories.
I find it so much easier than trying to manage cash, and since so much of what we do is cashless, I think it's appropriate, even given their age, to teach them how to think about money in a cashless economy. And when we used to operate in cash, most of the time they didn't have it on them when they wanted to spend it or were apt to spend it on a vending machine. Now that they have a view of their financial worlds in YNAB, they are making pretty decent decisions about their money. I encourage them to keep money in their snacks or fun money categories, so if a friend invites them, say, to go ice skating, they have the money to go already saved. My 7 yo recently saved up $15 over about a month and a half, and sought out ways to earn an extra dollar here or there, to buy herself Instax camera film. She was motivated by seeing the available balance go up in her YNAB category.
We are almost always with them when they want to spend their money, so it's very easy to whip out the phone and show them their budget. If I make a purchase on their behalf, I apply the transaction to my Kids' REIM category. When I transfer the money from their savings accounts, I assign that inflow to the same category, netting to zero. And in their budgets, the outflow from their savings account to mine gets assigned to the relevant spending category. They aren't buying things so often that it is very burdensome.
I personally give my kid the cash (log it as an expense paid) and then have him manage his cash on his own. I find that he forgets and doesn't care as much because he can't see the money. I do have to buy things for him from time to time, but he would give me the cash, I buy and pay the card back. Also, I don't let him "borrow" and pay me back. He has to have all the cash upfront to avoid him thinking of creating debt as an option.