How to Handle Refunds and Returns in YNAB
Make sure your spending plan reflects money that’s coming back—without confusion or frustration.
Why Tracking Refunds and Returns Matters
Returns and refunds are part of life. Whether it’s a pair of shoes that didn’t fit, a subscription you canceled, or a double charge at the grocery store, the way you record that money in YNAB impacts the accuracy of your spending plan.
Many users new to YNAB struggle to reflect those changes clearly. If you simply ignore the refund or treat it as new income, your categories and reports can quickly fall out of sync with reality.
Fortunately, YNAB gives you simple tools to handle refunds cleanly—whether they’re credited back to your card, given as store credit, or still pending.
The Most Important Principle: Mirror Reality
YNAB isn’t about perfection. It’s about clarity. Your job as a YNAB user is to represent what’s actually happening with your money. That means if you return something and receive a refund, your spending plan should reflect the correction.
You’re not getting new money—you’re getting money back. That distinction helps you record the refund correctly and make informed decisions with your updated category balances.
Scenario 1: You Return Something and Get a Refund Back to the Card
Let’s say you buy a $100 coat from a clothing store, categorize the purchase as “Clothing,” and then decide to return it. The store refunds the amount directly to your credit card.
In YNAB, here’s what you do:
- Enter a transaction in your credit card account for -$100 (a negative outflow).
- Categorize it to “Clothing”—the same category as the original purchase.
- That refund will raise the balance in your Clothing category, giving you the ability to reuse those dollars or leave them as a cushion.
This method ensures that your spending report is accurate and that the original purchase is essentially reversed.
Scenario 2: You Return Something, But It Was Already Paid Off
This one confuses many users.
Let’s say you paid off your credit card in full, and now you get a refund. If you follow the same steps above, YNAB will still credit the refund to the spending category—but your credit card account now has a positive balance.
That’s okay.
You have two choices:
- Leave the positive balance until your next card payment
- Transfer the extra amount back to your checking account (and record the inflow with no category)
The key is to make sure your categories reflect the corrected purchase—and to trust that the dollars are still accounted for in your overall plan.
Scenario 3: You Receive Cash or a Gift Card Instead of a Card Refund
If a store gives you a cash refund, record the transaction in the account where the money actually went. For example, if they hand you $25 cash:
- Record an inflow of $25 in your “Cash” account.
- Categorize it to the original spending category.
If you receive store credit or a gift card, things get more nuanced. Technically, the money is no longer part of your YNAB plan—it’s stuck in a gift card.
Some users create a separate tracking account for gift cards. Others treat it as “money spent” and don’t worry about the return value unless they use it. Either way, the goal is consistency. Decide how you’ll treat gift cards in your plan and stick with it.
Scenario 4: You Return Something But Don’t Get Refunded Yet
If you’ve initiated a return but haven’t received the refund yet, don’t record anything in YNAB. Wait until the refund hits your account.
You can add a memo to the original transaction noting that a return is in progress, but you don’t want to inflate your plan with dollars that haven’t actually arrived.
YNAB’s philosophy is to only budget money that you physically have—not money that might be coming.
How Refunds Affect Your Spending Reports
When handled properly, refunds reduce the total amount spent in the category. So if you spent $400 on “Clothing” this month but returned a $100 coat, your report will show $300 of actual spending.
This makes your monthly reflections much more meaningful and helps you avoid thinking you overspent when you didn’t.
You can double-check your totals in the “Spending by Category” section of YNAB’s Reports tab.
What Not to Do with Refunds in YNAB
- Don’t categorize refunds as “Inflow: Ready to Assign.” This makes it look like new income and inflates your Ready to Assign balance incorrectly.
- Don’t skip recording the refund. You’ll forget where the money came from and lose track of what happened in the category.
- Don’t recategorize the original expense. Let it stand. Add the refund as a separate transaction to maintain an accurate history.
As YNAB emphasizes, your goal is not perfection—it’s awareness.
Real-Life Coaching Example: The Grocery Refund
A client named Lisa recently messaged in a panic. Her grocery store charged her twice for the same $120 purchase. She caught the error two days later, and the store issued a refund.
Lisa had already categorized the first transaction to “Groceries” and wasn’t sure what to do with the second.
We walked her through the process:
- Enter the second $120 transaction as a negative outflow in the credit card account.
- Assign it to the same “Groceries” category.
- Confirm that her Groceries category now showed the correct amount.
She replied, “That was way easier than I expected. I feel like I actually understand how this works now.”
The takeaway? Refunds aren’t setbacks—they’re part of real-life planning.
When to Use Notes or Flags
Sometimes it’s helpful to add a note or flag to the original purchase when a refund is in progress, especially if:
- The refund will take a while to process
- You’re tracking multiple returned items
- You want to explain discrepancies in the category
You can add a note like “Refund requested on 4/10 – pending” and remove it once the money hits your account.
This kind of self-documentation helps you stay organized and confident as you navigate category adjustments.
Don’t Let Returns Undermine Your Confidence
It’s easy to feel like you’re doing something “wrong” when you have to edit or correct transactions. But in YNAB, flexibility is the whole point.
Spending plans should reflect reality. That means:
- Tracking refunds just like expenses
- Adjusting categories without shame
- Embracing updates as part of the process
You’re not backsliding when you edit your plan. You’re getting better at aligning it with your life.
About the Author
Trent Ladle is the founder of Master Budget Coaching and a YNAB Certified Coach with degrees in Business Management and an MBA. With nearly 40 years of budgeting experience, he helps clients build values-based spending plans—guided by the belief that when you master your spending, you master your life.
Need Help Fixing Refunds and Cleaning Up Your Categories?
Whether you’re unsure how to record a return or want a cleaner, more confident approach to tracking your finances, Master Budget Coaching can help.
