It is common to move money between accounts, such as transferring money from checking to savings or vice versa. Anytime a transfer takes place, there are two transactions that must occur: a withdrawal from one account and a deposit to the other. In this guide, we will explain some options that are available to help you handle account transfers.
Key Takeaway: Always make sure the transfer transactions are of the same amount (but opposite signs) and categorize them both to the same envelope. This will keep your account balances correct without throwing off your envelope balances.
There are 2 options: to create a transfer envelope or to create an envelope for each account.
When moving money between accounts, one option is to create a transfer envelope. When a transfer takes place, there are two transactions that must occur—a withdrawal from one account and a deposit to the other. These transactions offset one another and must be properly accounted for to avoid disrupting any of your other envelope balances.
The simplest solution is to create a single “Transfer” envelope, which will store all the transactions that are transfers between your accounts. This option allows you to see easily if your transfers are being handled properly because anything other than a $0 balance in this envelope would indicate that you are missing or have miscategorized a transfer transaction.
Creating a Manual Account Transfer
When you have manual accounts, you may want to transfer money between them. For instance, if you have checking and savings manual accounts, you will need to record a transfer anytime you move money from checking to savings and vice versa. Here's how:
- Create an envelope named “Transfer.”
- Create a transaction in the account you are transferring money FROM as an “Expense” and select the “Transfer” envelope.
- Create a transaction in the account you are transferring money TO as “Income” and select the “Transfer” envelope.
Please note the amounts of the FROM and TO transactions must be exactly the same.
Transfer Money from a Connected Account to a Manual Account (Pro Only)
There may be instances in which you withdraw cash from your checking or other account, or you may be tracking a specific account manually while other accounts are connected. In either instance, you need to be able to account for transfers that are taking place between your manual and connected accounts. This is what you can do:
- Assign the connected account's transfer transaction to the “Transfer” envelope.
- Create a manual transaction in the manual account assigned to the “Transfer” envelope for the same amount as the transaction in the connected account, but with the opposite sign (i.e., if it's a withdrawal from the connected account, then you will create an “Income” transaction in the manual account and vice versa).