Dealing with Point/Cash rewards
Hi, I read this page and I'm not clear on the best way to handle this.
https://classic.youneedabudget.com/support/article/credit-card-points-and-rewards
I'm using YNAB Classic.
We have PC Points... we collect points and then when there are enough I can tell the cashier at my grocery store to use them... my total payment will be reduced by $30 or whatever dollars.
Should I ignore the 'income' as in the flyer miles? This way the amount in the transactions I import as a QFX file will match what I input that I spent.
Should I record it as income? And record the expense before they've reduced my bill? This way the amount that shows up in the transaction I download will not match the amount of the total bill... I'll have to override the downloaded transaction's amount.
Is it more important to see the actual cost of what we are spending on groceries? Is it more important to see the additional income from these points? Or does it not matter so much?
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You want your account transactions to match reality, otherwise you'll run into issues reconciling accounts. How you categorize the credits is up to you. You can either record it as income or as an inflow into a specific spending category.
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nolesrule Yes, I agree. But if I have a grocery bill of 200, and then I use my $30 worth of points, the real life transaction will only be 170... so I can't go and record that $30 of income, as I haven't spent it, in any way that can be tracked. Unless I log a $170 expense to my bank, and then a $30 income to my wallet account, and then a $30 expense categorized also as groceries. Is that what I should be doing?
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Violet Device You can record this example as a split transaction for $170 (which will match the import): $200 grocery spend (outflow) and $30 inflow, all in one transaction that will total $170 :)
(@HappyDance came in with an example as I was typing this!!) :)
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Hi, Violet Device
I agree 100% with what nolesrule says about having your budget reflect reality. I actually collect and use President's Choice points at my grocery store and PetroCan points at the gas station. Some people just use the points and don't enter them in the budget at all, like free spending. I don't like that because it affects my averages.
As I see it, there are two ways to enter them in the budget. Either you enter it in such a way as it reduces the amount spent, or you enter it as income. Both methods are correct, but they appear differently in your reports, so you can choose which one you prefer. I have done both. Right now, I'm implementing some health-related food changes, so I really want to see exactly how much I spend on food without reducing that in the reports, so I've been entering the PC points as income.
Here is a split that reduces the amount spent on the transaction and reduces the amount I spent in this category in the reports. This method will result in my gas spending dipping in the month in question and affect the average over all.
Here is a split that adds the redemption to income and doesn't falsely reduce the amount of groceries I needed to buy. The points show up as a $30 income, which I can budget to a category of my own choosing.
edited to add: the only difference is in which category you add the inflow. Add it to Inflow:tobebudgeted if you want to treat it as income, add it directly to the same category as you are spending from if you want to subtract the amount spent from the single category.
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This method will work in both YNAB4 and the web version of YNAB. I still use both in tandem.
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HappyDance Is "Inflow: To be Budgeted" a new thing in the new YNAB? I think in Classic I'll have to categorize it as Income: Month...
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Violet Device
Yes. In YNAB4, use the income for <month of choice>. Sorry, I should have noted that.
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For me that's too far into the weeds. For things like grocery points that can only be used at the grocery store, I just record the $170 expense. I wouldn't track coupon savings, so I consider the reward points like that.
For CC point redemptions, I have those sent to my checking account so I record that as income and budget it accordingly.
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Cadet Blue Cartridge
Certainly, if that is sufficient for you, no one would dispute it or say you must do it any other way.
I have made a game out of tracking absolutely everything -- coins I find on the street, courtesy gift cards for filling out surveys, loyalty points when redeemed as cash on purchases, credit cards points when redeemed, gift cards from people thanking me for a special effort at work, rebates on retail purchases -- and since I started tracking all this stuff, I've discovered that it is adding up to hundreds over the course of a year.
I know that I never noticed those hundreds coming or going before. I think that by deliberately tracking it and budgeting it to my higher priorities, that attention to detail is helping to keep me focused on some very important-to-me financial goals. My income is a little below the median Canadian income. I am very aware of and grateful for all the little bits that continually turn up in my life, and I don't want any of them to go to waste any more.
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