Converting from on-budget Cash accounts to Cash category
I've been using nYNAB for a few years now. When we started, we created 3 on-budget Cash accounts (one for me, one for my wife, one for our child). Now I would like to move those off-budget, replacing them with a Cash category. Any suggestions for the best way to do that without messing everything up?
I'm wondering whether the best thing to do would be to just zero out the balances on those Cash accounts, then close them, then create a Cash category. Would that be work with a minimum of disruption?
Cash is considered spent from the budget's point of view when it turns into cash. Convert by:
- Create three Cash Categories (assuming you're still going to account for each person's bulk spending)
- Budget the amount of a given cash account to the respective Cash category
- Enter a transaction in each Cash Account for the balance, categorized to the Cash category
Thereafter, when you get cash, you must record an outflow against a category. This can be very unintuitive -- e.g., you return a shirt and they give you cash. (The store merely acted as an ATM when comparing the "before" and "after" state of your money.)
If you don't want to track what the cash is spent on but still have a way to categorize the transaction when someone in the family withdraws cash, it might make more sense to call the category, e.g., "Purple Foal's Allowance." That way you won't be tempted to assume that the Available amount in the category should match the amount of cash in your possession.
I account for what I have in cash and spend using a Bruce's Wallet account and the regular spending categories. (With occasional adjustments when I forget having spent cash. 😁)
My wife doesn't want to account for what she spends cash on, so when she withdraws money from her ATM account, it is categorized as spent as fun money, and I don't keep track of it any further.
Purple Foal said:
Here's what happens
I strongly urge you to continue using a cash account then. Using a cash category in this scenario would be AWFUL.
As with the example I gave earlier for the category approach, you will have to incur a $20 OUTFLOW when your friend gives you cash. Your friend is basically an ATM -- you have a $40 outflow in checking, $20 of pizza in your belly and $20 cash in your pocket. Receipt of cash means a hit to your cash/allowance category, that's just how the category approach works. Moreover, you have to budget for that as well! Or else you misrepresent reality and chalk up the entire $40 to Pizza, not a great plan in my book.
In contrast, a cash account handles this intuitively: the $40 outflow is split between $20 pizza and $20 transfer to the cash account. Done.
I get you don't use much cash. I'm the same way, preferring to get those 2-5% CC rewards. I suggest you just deposit the cash when you get a chance and record a transfer.