Separate budgets for the kids allowance

OK.  I haven't been keeping up on the forum as much as I did when I initially started, but I'm doing pretty well on YNAB, and just had a couple questions.  I've been pulling out my kids' allowance in cash, and just handing it to them, and they've been putting the money in different envelopes for save, spend, and giving.  However, I just recently opened a Capital One MONEY account for them, and am wanting to put their money in there.  

My question is how do I categorize the transfer to their accounts?  I have created a "B Budget" and "M Budget" for each of them, with some stripped down categories, and will hook each of their budgets up to each of their MONEY accounts.  But I'm wondering, how do I show the transfer from my budget to theirs?  Do I put an off budget tracking account?  Or just categorize it to "Allowance B" and "Allowance M" like I did before, and instead of pulling out in cash, it becomes a transfer to nowhere?  

And then on their side, how do I show the incoming transfer?  I'm not sure I'll have their budgets automatically download transactions.  I'll probably have them start by doing everything manually.  So in that case, do you just create a transaction with income, and payee of "Allowance" or something, and have that go into To Be Budgeted?

Thanks for any advice, it's probably obvious, but I haven't done much with off budget accounts, so am not completely sure what I'm doing.

Also, (and I'm sure it's different for everybody) but any suggestions about categories?  Probably depends on what they're saving for, I guess, right?  We recently got them flip phones so they can get in touch with us when they need to, and I was thinking about giving them that little bit extra in their allowance, and letting them pay their portion of the cell phone bill.  Just to get them used to having monthly payments, as well as setting up a couple true expenses, like Christmas, and miscellaneous friend's birthdays, or something.

Anyway, thanks again, I know you're a bunch of helpful geniuses here on this forum, so I eagerly await your suggestions.

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  • Hi Bruce !

    You're definitely on the right track with how to handle those transactions! :)

    If you don't plan to track their allowances in your personal budget, there's no need to create accounts for them. Instead, what you see as a transfer will be entered like any other expense in your budget. You're "spending" that money on their allowances. Enter a transaction and categorize it to the Allowance B and Allowance M categories and don't enter it as a transfer.

    In their budgets, you'll enter the inflow and categorize it as Inflow: To Be Budgeted - just like if they had received a paycheck and not a transfer from your account. ;)

    As for categories, I'd detail the categories you were already having them use - Save, Spend and Giving.  Maybe they could choose 3 categories for each - three things they want to save for, three things they plan to spend on (maybe the phone bill?) and three causes they can donate to.

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    How old are the children? If they have their own jobs or will in year, this sounds good. If they are younger than that, my choice would be to stick with the cash system. It's very concrete and easy to understand (aka envelope is empty when look inside is very real vs category is zero  on screen is abstract). Just my 2 cents. 

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