FAQ: How do I record cashback?

Q. I often use cashback when I go shopping. How can I record that in EEBA?

Getting “cashback” is like mixing an atm withdrawal with a purchase. When you make a purchase with your debit card, let the cashier know you’d like to receive cashback and for how much. The amount will be added to the transaction cost and given to you as cash. How you record these transactions in EEBA depends on whether you’re using the Accounts feature in EEBA, available on the Plus and Premium paid plans.

If you are not using the Accounts feature in EEBA

If you are on the free version of EEBA, or using a paid plan without Accounts, it’s best just to record the purchase portion of your transactions. For example, say you go to the grocery store and buy $30 worth of groceries and take $20 in cashback. Later, you spend the $20 in cash buying gas for your car. You would record this in EEBA by doing the following.

  • When you go to the grocery store, record the $30 you spent on groceries as a $30 expense to your Groceries Envelope.
  • Do not record the $20 you received in cashback. Because you did not spend any money, only transferred it from your bank account to cash in your hand, there is no need to record anything in EEBA.
  • Later, when you spend the $20 in cash on gas, record that as an expense of $20 to your Gas Envelope.

If you are using the Accounts feature in EEBA

Using the Accounts feature in EEBA, you can keep track of where your money actually is. As you enter transactions, you’ll choose which Envelope the expense should be deducted from, and which Account you used to pay for it. If you haven’t already, create a Cash Account along with your other bank Accounts in EEBA. This will let you keep track of cash transactions, such as ATM withdrawals, cashback transactions, and purchases you pay for in cash.

In this situation, recording a cashback transaction takes two steps. One step to record the overall purchase. The second step to record the cashback. For example, say you go to the grocery store and buy $30 worth of groceries and take $20 in cashback. Later, you spend the $20 in cash buying gas for your car. You would record this in EEBA by doing the following.

  • When you go to the grocery store, record the entire purchase as a $50 expense to your Groceries Envelope and to the appropriate Account, most likely your Checking Account.
  • Then, record the cashback as an expense of negative $20 to your Groceries Envelope and the Cash Account. This will put $20 back into your Groceries Envelope, and add $20 to your Cash Account.
  • Later, when you spend the $20 in cash buying gas, record that as an expense of $20 to your Gas Envelope, and the Cash Account.

Thanks to Shannon and Barb for the question! Updated 10/17/2012.

3 Comments

  1. It would seem to be a lot easier if EEBA added accounts to the “Which Envelope?” drop-down menu. It was easy with my former money software to just allocate where the money went to which included a list of all the accounts I had.

  2. Wait, what? Am I using a Cash *account* or a Cash envelope? A credit BOTH to grocery AND to Cash account? From my checking? Which already has a debit for the grocery withdrawal? Not clear.

  3. Hi Mike & Sue, sorry for the confusion. “Accounts” refers to an additional feature in EEBA Plus and higher, where you can create Accounts in EEBA in addition to Envelopes.

    Mike – With Accounts on you would see a dropdown menu as you expect.

    Sue – You would be using a Cash Account. The credit would be a single transaction, recorded to the Grocery Envelope and the Cash Account. It would not further affect your Checking Account.

    I’ve updated the blog post to be more clear about how to record cashback transactions, and what “Accounts” refers to. Thanks for your comments!

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