How to Categorize ATM Withdrawals in YNAB (3 Simple Options)

Cash is no longer king, but sometimes you still need to hit the ATM. When you withdraw cash, how should you categorize an ATM withdrawal in YNAB?

There’s no one right way to do it, but here are a few solid options:

Create an “ATM Withdrawal” (or “Cash”) Category

You could just have an ATM withdrawal (or cash) category. You get the cash, categorize it to that category and then spend it without categorizing the spending. That’s probably the easiest solution–but it’s also the one that provides the least information in your reports.

Categorize the Withdrawal to the Category You’ll Spend From

You could think about what you’ll be using the cash for and categorize the ATM withdrawal accordingly.

For example, I live in an apartment building and give tips to building staff at holiday time. I have an “end of the year gratuities” category in my plan that builds up throughout the year. In December I make one big cash withdrawal that I categorize to end of the year gratuities.

One of my clients pays her housekeeper in cash, so she categorizes those cash withdrawals in her housekeeper category.

If I get cash for a trip, I categorize it in travel. If I just want a little cash in my wallet (an increasingly rare occurrence), I’ll typically categorize it to dining out because that’s probably where it’s going to go. You get the idea.

Use a Cash Account (Not a Category)

You could have a cash account, rather than a cash category. If you have a cash account, an ATM withdrawal is a transfer between your checking account and your cash account in YNAB (here’s more on entering transfers in YNAB). When you spend the cash, you can enter all the transactions in the cash account in YNAB. (To reconcile your cash account, you count the cash in your wallet. If you want a refresher, here’s why it’s important to reconcile.) If a lot of your spending is in cash, a cash account might be worthwhile for optimal tracking. You’ll obviously have to manually enter those transactions.

Which option should you choose?

If you’re not sure which approach to use, it really comes down to how much detail you want in your tracking and reports.

• Want the simplest option? Create an ATM Withdrawal/Cash category, categorize the withdrawal there, and don’t worry about categorizing the individual cash purchases.
• Withdrawing cash for something specific? Categorize the withdrawal to the category you’ll be spending from (like travel, tips/gratuities, or housekeeping). This keeps your reports meaningful without extra work.
• Use cash a lot and want accurate reports? Consider setting up a Cash account in YNAB and manually entering your cash spending so it shows up in the right categories.

Bottom line: If you’re looking to track your spending carefully, minimizing your use of cash is usually helpful. If you’re getting cash for a specific expense, categorizing the withdrawal to that category is easy and gives you better reporting. If you don’t care much about tracking, a simple ATM withdrawal/spending money category might do the trick. If cash really is king for you and you want to track it closely, a cash account (with manual transaction entry) is the most accurate option.