Paycheck Withholding

I'm looking for tips on entering income that is withheld from my paycheck, in this case for a YMCA (gym) membership. My work has an agreement where they withhold the membership from my pay, and the YMCA bills my work directly. I want to track that because it is actual income that I'm choosing to spend. But my paycheck deposit (that I want to reconcile with my bank statement) doesn't have that amount in it. How does anyone else handle that?

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  • You have 2 options

    1) Don't bother with it at all, since it never touches your budget.

    Or....

    2) You can do split transactions. this is how I keep it clear in my splits:

    Let's say your take-home is $1000.

    Top line: Inflow $1000

    split lines:

    1) Category Inflow: TBB $1000

    2) Category Inflow: TBB $20

    3) Category Outflow: Memberships $20

     

    Then on the Budget screen my TBB will be $1020 and I will also be $20 overspent in the memberships category. So before budgeting anything else I cover the Membership category overspending, leaving me with $1000 TBB.

     

    I actually do this with 401k contributions, HSA contributions and my wife's in-office gym membership, with separate Inflow: TBB line items for each expense so I don't mess up the math, since you are creating "phantom" income to cover a "phantom" expense.. I keep an eye on it for personal information purposes, however it's really not necessary and can be confusing if you don't do it right.

    Like 1
      • jerald
      • jerald
      • 2 yrs ago
      • Reported - view

      I used to do #2 with all the paycheck deductions (taxes, insurance, etc) when I used Microsoft Money & Quicken.  I can be a bit OCD on details.  When I switched to YNAB I decided it wasn't bringing me any value so switched to #1.  I haven't regretted it once I was able to let go of my "need" to see all the details in YNAB.  

      I do have a spreadsheet I review on an annual basis where I look at my gross income, pull in budgeted expenses from YNAB, then add in the different deductions so I can see %'s and trends compared to the gross number.  I do want to evaluate those expenses but doing it annually has been enough for me and saved all the hassle of split transactions throughout the year.  

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    • I appreciate the good discussion,e everyone. nolesrule Thanks for the helpful step by step on #2. I couldn't quite wrap my head around how to do it, but that's what I was looking for. Now at least I can make the decision about if it's worth it to me to track that each month. I lean towards tracking it, because like LarryinLA  pointed out, it is discretionary spending in this case.

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  • I do #1. My work deducts taxes, medical and life insurance and I know I pay those but I just enter what i get because 1) that is withheld and i cannot use it for anything else if i go over budget. I cannot access those funds.  2) it's just messy to record things that I don't actually get the money for and then reconciling might be an issue.

    Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
      • 1
      • Reported - view

      kayjenx Reconciling is not an issue for option 2 because the net equals the amount of income received. You are right though that the splits for phantom income/expenses can be a bit messy if you aren't careful.

      I actually would recommend option 1 to someone who is new and doesn't really understand everything they are doing with the option 2 split method.

      Like 1
  • I have a loan from my work that I'm paying off so in my case I have a tracking liability account with the loan total and then have two entries, one for the paycheck in the amount before the loan was removed and then the loan amount.  Both of these are scheduled on the exact same day so that way once the loan is paid off, I'll just delete that scheduled transaction and keep the regular paycheck as is.  

    While I get that it may be easier to just look at what you're getting in the bank, I prefer to know where all my money is going in all accounts so that I can make the best financial decisions.  You may want to consider something similar.

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  • It's Eerie  I don't bother at all. My work travel season ticket is deducted in the same way and I leave it out of Ynab completely. The money never enters my bank account so I don't need to budget it.

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  • There is one argument for tracking it, which is that in some cases these are discretionary amounts.  If you don't track it, you forget that this is money that you have chosen to spend or save in a particular way, and you do have the option to change that.  Early in your YNAB experience though, it is clearly better to ignore it.

    Like 2
      • Katejo
      • katejo
      • 2 yrs ago
      • Reported - view

      LarryinLA  yes a valid point but travel to work isn't optional unlike some other expenses.

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      • LarryinLA
      • Larryinla.1
      • 2 yrs ago
      • 1
      • Reported - view

      Katejo Yes, but it might or might not be the cheapest option to use the deduction.  That said, the original post was about a Gym membership, which is definitely something you could decide to stop doing, I was responding more to the general discussion than to your specific post.

      It might also be helpful to track in the event you are presented with a new job opportunity, and you might need to consider alternative travel costs, or the need to purchase the same pass.  It could be helpful to have that information together with all your other financial info.  Or it might not.

      Like 1
    • eloquentz
    • Numbers Wizard (Accountant), Acoustic Artist (Musician) and Jill of all Trades (Wife & Mother)
    • eloquentz
    • 2 yrs ago
    • Reported - view

    I just take my net pay as my TBB.  All the deductions, yes, are expenses, but for all intents and purposes, I only have the net pay to budget, so I keep it simple.

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  • I mostly do method #1 above.  However, for my 401k, HSA and DCSA, I also have off-budget accounts.  In each account I have recurring transactions that match my paycheck deduction.  I get the values I want without messing with splits.

    Like 1
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