Financier Forums

Do you have a cash account and track all spending within the software?

Or do you consider the cash spent as soon as it leaves your bank account?

I'm curious what others are doing. Personally, I have a hybrid system between me and my wife. I have a cash account for myself that I make sure the balance is up-to-date as a used to have spend cash frequently for work travel. I try to keep between $80-100 in my wallet at all times as you never know when you may need cash. We try to use credit cards for as many purchases as possible. We do not have a cash account for my wife's wallet though. As soon as she withdraws money, we consider it spent. Cash in her wallet gets blown and it's hard enough to get her to enter her transactions on credit cards, so we've both agreed it doesn't make sense for her to have a cash account.

What about everyone else?

Quote from: Joel on December 02, 2016, 01:09:23 PM
I have a hybrid system between me and my wife.

We handle cash in the same way as you and your wife. I track my cash spending and my wife's cash is considered spent when she withdraws the money.

We handle cash like any other account. Having the YNAB mobile app was the only way for me to get proper cash tracking. I got my wife on board with YNAB and we have individual categories and individual wallet accounts. We still account for all spending when it leaves our hands, not our accounts because there are a lot of things we still pay cash only for: groceries at the fruit store, drinks at a bar, snacks from a vending machine, coffee whilst at work. All these fall under different categories (https://discuss.financier.io/index.php?topic=26.msg1116#msg1116).

Bottom line, if you can show your partner the benefits of tracking everything to the cent, you'll truly be able to budget well. My wife didn't like the idea of having to enter EVERYTHING because it was cumbersome but after 2 weeks of working at it, she could see how we could track every category and make ends meet. We could review how much we spend at the end of the month and make a joint decision whether a new 'average' should be shifted or were we frugal/lavish just for this month. Once we tweaked the budget it became set and forget for most categories. It was just a matter of squeezing other categories to balance the budget if we overspent, or allowing the RaR to kick in. I explained to her about RaR and she agrees that's a totally acceptable approach - as long as you keep the others in check. The argument of not being true with your money by using RaR only applies if you constantly blowout that category and NOT punish yourself my squeezing funds elsewhere. I don't like having to squeeze on that very month if I don't have to, I may want to let RaR do its thing and roll with the punches to let it grow back. It gives us discipline to be careful with that particular category and be frugal. Only for the disciplined.

My cash is considered "spending money" as soon as I withdraw it from my checking account. In the beginning I used a cash account in my budget, but I quickly realized I just don't use cash that often. I typically have around $100 on me all the time and replenish it by $50-$100 per month at most. Therefore for me it was just easier to budget $100 extra for spending money and let it go. 

I have a cash account. I don't use cash that often and for the sake of convenience I usually take out at least $200 at a time. I wouldn't want to consider that spent immediately because that might last me over a month. Plus who knows what I'll use it on? Putting a $20 in the bag of Christmas cookies I give to the homeless man I say hi to every morning? That's Special Giving. Cash-only dry cleaner? That's Clothing & Accessories. Too embarrassed to use my credit card for the $1.15 international stamp at the post office? That's Administration. Also, I don't have a spending money category because I am the only one who uses my budget so spending money is too general. I've never been off in my reconciliation by more than $0.04, so it doesn't seem like a burden to do an account.

Well, right now it is slightly cumbersome. I'm in another country. Vast majority of places are cash only. When I arrived I converted $200 USD into 680,000 local currency units. On Friday I used an ATM to get another 400,000 LCUs but Barclay's also charged a fee of 2,750 but I think Fidelity might reimburse me for that plus transaction is still pending so I don't know exactly how much USD I took out quite yet. And if I don't get reimbursed for the ATM fee, I'll have to do slightly more algebra to figure out the exchange rate on $X = 400,000 LCUs plus 2,750 ATM fee. Most of my spending is going under Reimbursables because I'm on flat rate per diem. But I still need to track what I'm spending, because while I will be reimbursed $90/day, there is no way I'm spending $90/day so I need to know exactly what is "extra" so I can reassign to other categories. So for now I'm recording the amount I spend in cash Evernote in local currency (lunch 34,000, tip 10,000) and once the total hits 680K I'll convert those costs and enter them into my budget. That leaves a strong possibility that I may end up saying that for the 170,000 I spend on an excursion next weekend, 22,000 will be converted at the 3,400 rate and the rest will be converted at whatever rate I ultimately got from the ATM. But it gives me something to do in the hotel at night. . .

No cash account. If we receive cash, it never makes into the budget unless we deposit it into our checking. If we withdraw cash from checking, it gets assigned to a category and is considered gone. We've tried to track cash with an account and it gets messy fast, so we stick to using cards as much as possible.

Have always kept a separate "wallet" account, transferred cash into it from chequing, and spent to categories as usual. I need to track cash not only because it can then be routed to categories that give better data about spending over the long term, but because I don't like to have a money 'black hole'. I understand that there are those who like to have some wiggle room--a play space where you just fire some money into and use it as you see fit without worrying, and I totally get that. As long as it isn't overspent as a category, you're good. For me though it goes against my philosophy of mindful spending. I like to think about where the cash goes all the time. I find that it's a slippery slope if I stop doing that.

Another consideration is that I find I use cash a *lot*. It's still King were spending is concerned. I do a great deal of shopping at small, locally owned shops and farmer's market vendors, some of whom still don't deal in anything else. Those who are well equipped for transactions will often give a discount if you pay cash, as they have no overhead and pass the savings along (especially if you're a good customer). And if I want to be tinfoil-hatty about it, there's no paper trail. No one but me and the vendor know where I spend my cash or how much, and that sorta feels less invasive to me.

So, for me, it's cash accounts and tracking all the way. It's one of the reasons why a mobile app is so essential for my workflow--dealing with cash 'after the fact' by noting what I spent or keeping receipts to enter into the register later just never worked for me. But if I can enter information at point of sale, I'm all set. :)

Edited to add: There's also a visceral reaction to spending when using cash that isn't there otherwise. I felt this for the first time years ago when I was still renting and I was out of cheques one month and I had to pay rent. So, I paid in cash. Let me tell you, handing over a wad of cold, hard cash is far different from handing over a slip of paper with a number written on it. It really lends gravitas to the idea of spending. I was far more aware of just how much cash I was handing over, and that made it seem somehow more significant. YMMV.  ;)

We do not track cash as we use credit cards for about 99% of our spending. We are comfortable with the fact that less 1% of our income is not recorded and not a key factor in any major spending we do so to us its an unnecessary process.

If we spent more cash than we do each month (<$50) I would probably try to track it, but I doubt I'd get my wife on board with that level of required entry.

When I withdraw cash from the bank, the withdrawal transaction gets categorized appropriately - I usually know why I'm getting cash.  I don't bother tracking cash received unless it's a large amount (greater than $50.00). And if it is a large amount, I usually deposit it in the bank - I don't carry a lot of cash as a rule.

It really does depend on the country you're in. I've found most USA residents rely on their cards and the smaller European & Asian Oceanic countries, although having a majority use of cards, still use a lot of cash for smaller vendors.