Reimbursable expenses can easily complicate personal budgeting. Whether it’s covering a friend’s meal, paying for work-related expenses that will eventually be reimbursed, or fronting the money for a family outing, these scenarios can throw off your budget. YNAB (You Need A Budget) is great at keeping track of your expenses, but handling reimbursements requires a creative approach. Today, I’m sharing two simple and effective methods to keep everything organized and ensure nothing falls through the cracks.
The Problem with Reimbursable Expenses
By default, YNAB doesn’t carry over negative category balances, which can make it difficult to remember who owes you what over time. The expense might be covered now, but the money hasn’t left your pocket—you’re expecting it back, after all. Without a solution, it’s easy to lose track, and that means missed reimbursements and potential confusion down the line.
Luckily, there are two creative approaches to make this work, allowing you to account for the money that’s owed to you and keep your budget intact.
Option 1: The Easy Way – Using an “Accounts Receivable” Category
Step 1: Create an “Accounts Receivable” Category
(If you’re unfamiliar with the term “Accounts Receivable,” it simply means money that is owed to you. Think of it as a placeholder for any expenses that you expect to be paid back by someone else.)
Use the “Accounts Receivable” category to track any reimbursable expenses. For expenses that you expect to be reimbursed within the same month, this is often all you need. When you get reimbursed, you categorize the inflow against “Accounts Receivable,” and it will zero out. This method is straightforward and works well if you don’t need to track the reimbursement for a long time or worry about it getting lost.
Option 2: The Advanced Way – Using a “Money Owed to Us” Account
For expenses that may take weeks or months to be reimbursed, or if you need more detailed tracking, you can use this more advanced option in addition to the easy method. This approach ensures full visibility into both short-term and long-term reimbursements.
Step 1: Create an “Accounts Receivable” Category
Start by creating an “Accounts Receivable” category to mark the expense as out-of-pocket. This is the same process as the easy Option 1 mentioned earlier. For short-term reimbursements, this category will suffice, as it will zero out when reimbursed within the same month.
Step 2: Create a Fake Account for Tracking (For Longer-Term Reimbursements)
Since YNAB’s categories don’t allow negative balances to carry over month-to-month, the key to making sure that you remember these pending longer-term reimbursements is to create a fake account, named “Money Owed to Us.” This account acts as a placeholder, tracking the outstanding amounts until they are reimbursed.
Step 3: Enter the Expense Twice
When you pay for something that you will eventually get reimbursed for, enter the transaction as usual, categorizing it under “Accounts Receivable” to mark it as an out-of-pocket expense. Then, here comes the trick: duplicate the original transaction.
- In the duplicated transaction, change the account to “Money Owed to Us.”
- Change the payee to a “Transfer” that matches the account with the expense.
This will create a corresponding third transaction that shows the money coming into the card that was used for the expense. The result? Your credit card or bank account reflects the actual situation—as if you’ve been reimbursed internally—while the “Money Owed to Us” account now holds the outstanding balance.
Step 4: Monitor and Settle Up When Paid
Now, your budget is intact. The outflow shows up in your real account, and the reimbursement is tracked in your “Money Owed to Us” account. When you receive the reimbursement, create a transfer to “Money Owed to Us” to pay off the balance. This ensures that the “Money Owed to Us” account is brought back to zero, reflecting that the reimbursement has been fully received and accounted for. This step is crucial for keeping your budget accurate and ensuring that all outstanding amounts are cleared.
By doing this, you keep your real accounts balanced, your budget stays up to date, and you have a clear record of what’s still owed to you. Remember, this advanced method is used in combination with the easy option, so anything expected to be reimbursed within the same month can simply be tracked in the “Accounts Receivable” category without needing the fake account. You’ll never lose sight of pending reimbursements, and you’ll avoid the common pitfall of wondering why your budget feels out of sync.
Why These Methods Work
The main advantage of both of these approaches is that they ensure nothing falls through the cracks. YNAB isn’t necessarily built with reimbursable expenses as a core feature, but by using either the simple “Accounts Receivable” category or the combination of categories and a fake account, you’re able to maintain a true picture of your finances. The negative balance in “Money Owed to Us” will carry over until it’s reconciled, meaning you’ll always be reminded of what’s still outstanding.
These solutions prevent reimbursable expenses from disappearing into the ether, and you maintain full visibility into your spending and the money that’s still coming your way.
