Purchase gift cards for spending

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We like buying gift cards at the grocery store to use toward purchases we know we are going to make.  Buying gift cards for Amazon, Dicks Sporting Goods, restaurants, etc earns us fuel points.  We then use those gift cards to buy what we need at that store.  What I'm trying to figure out is how I would track that purchase?  Say for example I go to King Soopers and buy $30 in groceries and a $100 Gift card to a restaurant.  What's the best way to enter that transaction?  I understand the splitting of transactions but that only allows for you enter an expense from existing envelopes (i.e. Groceries) and only from one account (Credit Card, or Checking Account).  I initially thought to treat it as an Account transfer from my checking to a cash account but I can't figure out how to cleanly account for the actual $130 purchase at the grocery store. Any ideas would be greatly appreciated.  Thanks!
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Omar Z

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Posted 4 months ago

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Tiffany Kucifer

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This is just my opinion, but I can see two thought processes here depending on your budgeting goals.  The first, which mirrors our experience, is based on the idea that the budget is to monitor our spending moreso than to actually follow our actual cash-on-hand (by that I mean we have a decent-sized buffer beyond our budgeted dollars).  In that case, we buy the gift card (to our favorite coffee shop in our case) but don't enter it as a charge at all, and instead just enter each charge as we spend off the gift card. This means we have less cash in our account than it would appear, but we also don't blow our entire Dining Out budget all at once when the spend may ultimately take place over a couple of months.
The second situation would be more applicable if you want to know exactly where all your dollars are all the time.  In that case I would set up a second, Annual/Irregular envelope for Gift Cards. When you make your initial purchase, charge $130 to your Grocery account, or even split the charge between Grocery and Restaurant if you choose. THEN, add a credit transaction to the Gift Card envelope for the balance of the gift card (not a transfer). As you use the card, spend the money from the Gift Card category. Since it's not in your monthly budget, it won't show up the same way in your remaining funds but it will account for the dollars spent. Your "Monthly Envelopes" should reflect your accurate balance although your "All Envelopes" will be overestimated. It's not perfect because it counts the gift card balance as cash-on-hand AND it may "break the bank" for your Restaurant budget that month, but it seems as though it would allow you to see exactly where your money is vs. your card balance.
I hope this helps!
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Alex Park, Official Rep

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Hi Omar,

It sounds like you're wondering the best way to record purchases of gift cards where money leaves a different account to buy the gift card. Tiffany has above provided a number of ways you can record this in Goodbudget, and noted that which method you ultimately choose depends on how Goodbudget reflects your real-life finances. I'll add that perhaps the best way to record these gift card purchases is connected to how you understand the money on them in the context of your overall finances. Let me elaborate.

If you think of the initial purchase of the gift card as the time you spent the money, then it's best to record the Envelope draw the moment you buy the gift card. To use your example, if you make a grocery purchase of $130, where $100 is a restaurant gift card, you would split that across your Groceries ($30) and Eating Out / Restaurants ($100) Envelopes right at the time of purchase. Then, when you eventually use the gift card at the restaurant(s), you'll just not record any extra expenses in Goodbudget (unless you go over the gift card amount of course).

If you think of the gift card as holding value until it is actually used up, then a different method is preferable. You can do the second method Tiffany mentions, or, as you mention, you can also create a Gift Cards Account and do an Account Transfer. In either of those two methods, you won't actually see money leave your household until the gift card is used, and so your initial grocery purchase will just be the $30.

Hope that helps!
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The way I account for gift cards is by having a gift card account. If I get one as a gift, I record it as income to that account and if I purchase one, I enter that with an account transfer.
Anyone who had ever gotten cash back at the store has encountered issue that only one account can be used per transaction. So you have to be careful when reconciling since a purchase of $100 card with $30 groceries from your checking would be transaction 1: account transfer $100 2: grocery envelope transaction. All this while your looking for the $130 from the store. Hope this helps!
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John Vander Stel

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The way I do this is to establish a gift card envelope to hold the amounts that are available on the gift card.  Purchasing the gift card, one would simply do a transfer of amounts from the appropriate regular envelopes to the gift card envelope.  Since you would still have the value of the gift card to spend, it's purchase would not lower the total amount of funds in your account + the gift card.  One could then register purchases directly from the gift card envelope to lower the value of funds one has to spend yet.  When the gift card envelope is empty, all of those funds are gone.

One could easily group one's envelopes in GoodBudget to separate the totals of one's checking account and the total left in the gift card envelope.

I use this same method in reverse to register amounts that I loan to household members.  They each have an envelope in my GoodBudget app that is named after them.  When I loan money to them, it comes from that envelope, leaving a negative figure in that envelope showing how much is owed back to me.  Whenever they pay back some of what they owe me, it is deposited directly into that envelope.  When it hits zero, that person has paid me back in full. :-)  Cheers!