Borrowing from yourself

One interesting consequence of having saved money is that you can give yourself a 0% loan when needed. I won't go into the details whether you should really borrow money rather than wait, for the sake of this post let's assume you are adamant about borrowing from yourself. I am curious about possible upsides and downsides of borrowing from yourself, as well as how to best work with such a loan in YNAB to ensure it's paid off.

What I did to track the paying back was:

  1. Created a new category in my budget called "Loan for X from Y", where Y is the category I had taken the money from initially.
  2. Set the goal on the new category equal to the amount I borrowed. In my case I set a weekly goal.
  3. Once the goal is funded I'll move the money to Y and delete the category I had created for the purpose of the loan.

Upsides that I see are:

  1. You can actually have a 0% loan.
  2. If for some reason you want to delay the payments, take a month or more of break from paying off, reduce/increase the monthly rate you can do it without additional costs.


  1. You actually remove the money from your wealth - if it happened you needed the money you loaned, it does not exist.
  2. There are no real consequences for not paying off on time/at all, you are your only motivation.


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    • nolesrule
    • Stealing From the Future fix is an improvement but is incomplete....
    • nolesrule
    • 2 yrs ago
    • 6
    • Reported - view

    There is no borrowing money from yourself. You are changing the spending and savings plan for your money. It's Rule 3.

    The complex part of your description is just a plan to track putting the money back into the category you took it from originally.

    Like 6
    • nolesrule Technically you're right. I'd argue though that the plan to put back the money is exactly what makes it different from just shuffling money around. Or maybe it makes sense for me to look at it that way, because the category I borrowed from has the same amount budgeted monthly and, ultimately, is meant to be money for my kid when he reaches adulthood, which in my mind feels less like my own money.

      Or maybe I just find it a useful abstraction - from my POV I am not moving the money around, because I am not modifying the saving schedule for that category and I plan to put back the money I borrowed to, in the long run, stick to that schedule.

      Like 1
      • Khaki Storm
      • YNAB book topics online:
      • Khaki_Storm.1
      • 2 yrs ago
      • Reported - view

      Maurycy Zarzycki if it makes sense to you, go with it. I can see it, you're borrowing money from a future need (car replacement) for a need now (food for neighbors pet ox), and you'll fill car replacement up when you can. 

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

    The longer I’ve used YNAB, the more I have come to just face that my plan for my money is my plan for my money. I don’t budget to pay myself back for thing X; I acknowledge that I changed the plan. Whether I choose to change the plan afterward  to “aggressively save in the category I took from” is up to me. 

    Like 4
  • It seems an easier way would be to add the goal to category Y directly. 

    If you already have a goal in this category, update it. If you don't have a goal, create a new one. 

    I don't see what information saving separately for the bit you used for X  will give you. What you want to know is when you will have enough for Y or make sure you will have enough for Y by the date you need it.

    It doesn't matter whether you need to save $100 per month because you diverted a bit to pay for X or because you started saving for this goal 3 months later than you think you should have or anything. What matters is you have to save $100 per month to reach your goal and whether that's sustainable for you or not. If you can't, you need to change something else in your budget or revisit this goal. 

    I guess that's a con in your method: you loose the visibility of how much per month you need to save for your goal and if you are on track because now it is the sum of the budget (or goal) in 2 categories instead of one.

  • As has been said here, there is no real borrowing from yourself (very zen, I know). However, I have had times where I pay for something that will be shared by many users (vacation home rental between brothers and such). In this case, if I paid outright, I record the transaction in full (from the relevant category - vacation) and cover that from my "slush fund" category. when I get paid back, that money goes into the slush fund. 

    In order to avoid miscalculating my actual expenses, the original transaction is split between "vacation" and "slush fund" 

    Like 1
  • Just to provide another perspective, I have done what you suggest when moving money from my allowance account to my husband's allowance account to help him pay for a thing, where he's going to pay me back.  I create a $0 transaction where $X is removed from mine and $X is added to his.  That way he can see it, and then I do the opposite when his allowance is filled back up and he's ready to "pay me back." 

    The one problem I have with YNAB is not being able to clearly see when I've moved money from one category to another, so looking back (or when my husband looks at it) sometimes it looks like I spent more on my Dining Out category than budgeted for so I could have lunch with a friend, but really I took the money out of my Shopping account.  It's not super transparent, although it is possible to find the info if you look deeper.

    Like 1
    • QC
    • HaplessFinanceProfessional
    • Queenofcoin
    • 2 yrs ago
    • 2
    • Reported - view

    You would lose the interest that would otherwise be earned when you spend the money so it’s not really 0% interest loan. 

    Like 2
    • QC Good point! But you won't lose the interest if you don't have the money on an account that earns interest in the first place ;) 

      Like 1
  • Personally, I'm working hard to get out of debt and therefore get away from the mindset that "borrowing" money is OK. If my goals or needs change (which WILL happen) then I will re-align my money to reflect those changes.

  • I get what you're saying, and I totally support it.  If there's a way to make Rule 3, or whichever, more salient to you in your head, go for it.  I come up with all sorts of mental tricks to help me give purpose to my budgeting decisions.  I know for others it's a more straightforward down the line we spend this much and sweep the leftovers to savings or wishlist.  I just don't do it that way.  I play all sorts of head games and they don't break the rules and my 10 yr old budget is pretty sound.  What helps me is to frequently write notes to myself in the categories so I remember exactly which head game I was playing at a given moment in time :). 

    Like 2
  • Thanks for the suggestion on how to track borrowing from savings.  I am using this method for my husband to pay back his recent phone purchase (individual) to our shared savings for a car replacement.  This allows us to continue to jointly save towards the car replacement and he has the separate category for him to move pocket money over each month as "payments" for the phone.  Ideally, we would have had enough saved in our technology fund to cover the phone, but we don't just yet and there were extra store perks for purchasing the phone outright ($200 in store credits) that offset any lost interest from the money sitting in our savings account.

  • That works well for me right now. That should be the main focus for all of us and that will be easy to do at this point. Still, you will need to get it done on a regular basis if you want to keep at it as well. That should do the trick  in the long run as well

  • nolesrule said:
    There is no borrowing money from yourself.

     True, but in a relationship an individual may borrow money from the joint funds. In that sense it can be useful to find ways to track such things in YNAB.

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