Transactions involving money from the budget and money from elsewhere

Went to Target today (famous last words).  So in my family, the vast majority of our spending is handled from accounts that are in our YNAB budget, and tracked accordingly.  But every once in awhile one of us gets a cash gift from somewhere and stores it in a drawer —and sometimes, especially around the holidays, that cash comes into play to help offset big expenses.  Accounting for this is sort of interesting.

For example, let’s say that on today’s Target run we bought $100 worth of Halloween decorations.  At the register, we paid $40 in off-budget cash, and then the remaining $60 on our budget-linked debit card.

There are a few ways to notate this in YNAB, and the effects of each are subtly different.

Option 1: Only log the part of the transaction that came from the debit card.  That is, log a -$60 transaction, -$60 of which is categorized as “Halloween.”

Option 2: Log a -$60 transaction in the debit card account register, but set it up as a split.  Both splits are categorized “Halloween;” one is -$100 to account for what we actually spent, and the other is +$40 to account for the cash offset.

Option 3: Same as Option 2, but categorize the +$40 cash offset split as “Ready to Assign.”  In theory this should result in a $40 increase in the budget’s RTA number, which I can then move into “Halloween.”

All three options (if Option 3 works as I’ve described, which it sometimes doesn’t) produce the same overall result in the budget: -$60 on the debit card, and -$60 in the Halloween category.  The differences come into play in reporting.

Under Option 1, it looks like we only spent $60 when we actually spent $100 —this is fine if the extra $40 is really truly something we would never have done if we hadn’t had the extra cash available.  But if it’s reasonable to expect we would have spent it either way, then it’s not great to have the actual amount misrepresented.

Under Options 2 and 3, the spending report accurately reflects the full $100 spent in that category, but the cash offset is represented differently.  Option 2 treats it as a category-level offset, whereas Option 3 treats it as income.

Of course, that’s assuming that Option 3 works as expected.  In some cases (today, for example), I’ve found that marking the cash offset as “Ready to Assign” does not actually result in an increase to the budget’s RTA value.  I’m not really sure what happens to it —the net result seems to be the same as Option 1, which I don’t think is correct.

I was hoping for some feedback on all of this —best practices in general, but especially if anyone knows why I’m getting unexpected results for Option 3.  From a reporting perspective I can see both 2 and 3 having valid use cases in different circumstances, but only if they both work as expected.

Thanks for any help you can offer!

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  • Forest Green Viper Have you thought of adding the funds from the debit card as an inflow directly to the category Halloween as opposed to Ready to Assign?  You'll need to add it to an account, maybe Cash as it doesn't need to be reconciled.  This will make it invisible from a reporting point of view. 

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  • I'd make a gift card account, inflow the gift card (and any others) there as RTA. This is separate from the purchase.

    Then, split from the payment (checking/CC) account as follows:

    Line 1-negative $60 as it hit your account

    Line 2- negative $100 from category

    Line 3- positive $40 transfer from GC account

     

    I like this because I can see how much I actually spent in Halloween stuff, regardless of payment method.

    If, however, you don't want to have a GC account, go with your #3. The fact that your RTA didn't increase means you have other funky stuff going on elsewhere in your budget (SFTF, likely).

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      • Herman
      • herman
      • 2 mths ago
      • 1
      • Reported - view

      Move Light Sound Life It is likely that it is a credit card account that this split transaction is in and not sftf.

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  • Forest Green Viper said:
    Of course, that’s assuming that Option 3 works as expected.  In some cases (today, for example), I’ve found that marking the cash offset as “Ready to Assign” does not actually result in an increase to the budget’s RTA value.  

     Are you budgeted in a future month? Do you have unresolved cash overspending in this month? It could be the perennial SFTF issue.

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    • Move Light Sound Life I don’t have anything budgeted in future months at the moment.  But I’m wondering if this might actually be related to how credit card payment allocations work.

      I originally said I was spending from a debit card account in the budget, but it’s actually a credit card.  So here’s what’s happening:

      1. Currently the transaction is logged using Option 2, where the +$40 cash offset split is categorized “Halloween.”

      2. If I change that split to “Ready to Assign,” the “Halloween” category decreases by $40 and the credit card payment category increases by $40.

      So that’s where the money is going —if the overall transaction is in a credit card account, anything categorized RTA gets dumped into the credit card payment category.

      I’m not sure how I feel about that.  I think I’d prefer to be able to choose where the money gets assigned, but at least I see what’s going on now.  I could just pull it right back out of the CC category, but that feels like it shouldn’t be necessary.

      Like 1
      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 2 mths ago
      • 4
      • Reported - view

      Forest Green Viper Correct. An inflow on the card affects only the debt on the card. However, when you spend $100 from “Halloween,” $100 moves from Halloween to the card payment category. But you just offset the debt by $40. So now you’ll have $40 too much set aside. to pay the card. Move the extra wherever you wish. 

      And Option 3 is the best way to go because you are indeed introducing $40 of income to your budget. 

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  • For me this decision would come down to how often and how much $ this involves.  If this is a few hundred $ a year in a couple of categories,  I'm going with option 1.  If this is a regular, ongoing way I'm managing my money,  I'm setting up a cash account and tracking it accurately.   ETA,  I don't see as scenario where I'm trying to jump through the hoops of option 2 or 3.

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  • I have an on budget cash account where any cash inflow is recorded. Usually for things like used stuff I sold etc. For birthday money, that is not entered until I use it for something. So in your situation I would actually have handled it like this. 

    Take the physical cash (currently stuffed in a drawer) and put it in my wallet where I have on budget money (my wallet has 2 sections - one for budget cash and one for my cash). Record that as inflow to the cash account. I would probably categorize directly to the birthday gift category and then WAM to Halloween. That way the fact that I contributed my birthday money to something is not lost in the big picture (I want that in there for the record 😉). Buy the item 100% using the debit card. Record that in YNAB as normal. 

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    • nolesrule
    • Stealing From the Future fix is an improvement but is incomplete....
    • nolesrule
    • 2 mths ago
    • Reported - view

    Don't have off-budget cash. problem solved.

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