Buying Cash From My Kid: Tricky Split Transactions On- and Off-Budget YNAB Accounts

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Reader Asks

I encountered a tricky cash transaction I do not know how to enter into YNAB: My son had a wallet full of cash and rather than have him deposit cash into his savings account—which is an off-budget account that I also maintain and track in YNAB—I “bought” the cash. I made a transfer between accounts at my bank (he’s a minor, so it’s technically my account also), but when it came to entering it in YNAB I got totally confused. My on-budget bank account paid $150, my on-budget cash account gained $150 and his off-budget-but-tracked savings account gained $150. How do I enter this?

The Solution

Account transfers can be confusing. Split transactions, as any YNAB user knows, can be super tricky. This reader’s question represents the perfect storm of trickiness. I love it!

This transaction could be entered into the register of any of the three accounts involved. In this quick tutorial I’m going to walk through two options:

1. entering the transaction in the wallet since the cash being “purchased” is going into the wallet
2. entering the transaction in the on-budget checking account (money is being transferred out of this account into the child’s off-budget savings account)

Technically, this transaction could also be entered in the off-budget savings account but I’m not including that scenario here. If you want to challenge yourself, give it a try!

Because there are three accounts involved, the transaction will have a total of four (4) lines: one line each for each account plus the “net” or “header” line that all split transactions have.

As entered in the Wallet/Cash Account

First line (net or header line):

Enter the date and a good general note of the situation in the memo field. This transaction has a net “inflow” effect of 150.00 on the wallet account so enter $150.00 as inflow on the first line.

Second line (1st split):

transfer: your checking account
memo: sent money to kid’s bank account from my bank account and kept cash for my wallet
inflow: $150 (yes, it seems counter-intuitive to inflow it but an inflow here translates into an outflow in your checking account)

Third line (2nd split):

transfer: kid’s off-budget account
category: income for July / To Be Budgeted (this cancels out the category in Line 3) – because you’re transferring to an off-budget account, a category is needed
memo: kid “sold” cash to me
outflow: $150 (again, counter-intuitive but that’s how it works)

Fourth line (3rd split):

category: income for July / To Be Budgeted (I know it’s not new income but you need to categorize this; it washes out the “outflowing income” entry in Line 2)
memo: kid’s cash; not really new income but new money balanced by outgoing xfer from my checking to his off-budget checking
inflow: $150

As entered in the On-Budget Checking Account

First line (net or header line):

Enter the date and a good general note of the situation in the memo field. This transaction has a net “outflow” effect of 150.00 in the checking account so enter $150.00 as outflow on the first line.

Second line (1st split):

transfer: transfer – wallet
memo: kept cash for my wallet
outflow: $150 (counter-intuitive but an outflow here is an inflow the Wallet/Cash account)

Third line (2nd split):

transfer: kid’s off-budget bank account
category: income for July / To Be Budgeted
memo: kid “sold” cash to me
outflow: $150

Fourth line (3rd split):

category: income for July / To Be Budgeted
memo: kid’s cash; not really new income but new money balanced by outgoing transfer from my checking to his off-budget checking
inflow: $150

And there you have it — two different ways to enter the same crazy three-way transaction including both on- and off-budget accounts. As you can see in the screenshots, the transactions are entered exactly the same way whether you’re using the older YNAB4 software or the new web-based version of You Need a Budget.

Do you have a complex transaction that has you pulling your hair out? Or, as my reader put it, a situation that has you ready to “rage quit” YNAB? Maybe I can help. Contact me.