Your banking app shows one screen for all of it. The same three fields, the same confirm button, the same push notification afterwards — whether the money went to your own savings account, to your landlord, or to a cousin who said he would return it next month. The bank does not care about the difference. Your ledger has to.
The question that settles it
Who owns the account at the other end? That is the whole test, and it resolves every case.
If the answer is me, it is a transfer, and it must not touch your spending. If the answer is somebody else, then the second question applies: do you expect it back?
Four destinations, four answers
| Where it went | What it is | How to record it |
|---|---|---|
| Your own account at another bank | Money moved | A linked transfer. Fee, if any, as a separate expense. |
| A shop, a landlord, a service | Money spent | An ordinary expense in the right category. |
| Someone who will repay you | A loan you made | Not spending, but not modelled either — see below. |
| A relative you support | Money spent | An expense. Give it a Family or Support category rather than hiding it in Other. |
The third row is the awkward one and it deserves a straight answer rather than a confident-sounding fudge. Money you lend is not an expense — your net worth has not fallen, it has simply changed shape from cash into a claim on someone. But almost no personal-finance app models a claim on someone, and Rakama does not either. There is no “owed to me” balance, no repayment tracking, and no way for the app to know that Rs 40,000 is coming back.
What works in practice: a category named Lent, used for nothing else. Your spending total is still slightly overstated, but you can read the category’s total in the breakdown at any time and know what is outstanding. When it comes back, record the repayment as income in the same category so the two net to zero.
Why instant transfers made this harder
Interbank transfers used to be slow, deliberate and comparatively rare. Now they are instant, free below a threshold, and used for everything from paying rent to splitting a Rs 400 lunch. Volume went up by an order of magnitude, and with it the number of lines on a statement that all look identical and mean completely different things.
The narration does not save you. A transfer to your own account might arrive described as your own name, an account number, a bank code, or nothing at all. Two transfers to the same person can carry different descriptions depending on which app initiated them. Any rule you write against the text will hold for a few months and then quietly stop.
The habit that removes the guesswork
Decide the answer while you are still in the banking app, not three weeks later while reconciling. It takes a second, because at that moment you know exactly who you were paying and why — knowledge that has completely evaporated by the time you are looking at a row that says IBFT 0324-8871.
The three-second version
Send the money. Before you close the banking app, open your ledger and record it as one of three things: a transfer, an expense with a category, or a Lent entry. Nothing else needs to be right at that moment — not the description, not the exact time. Just which of the three it was.
Everything else can be tidied later from a statement. That one classification cannot, because it is the only part of the transaction that lives in your head rather than in the bank’s records.
Frequently asked questions
Is a bank transfer an expense?
Only if the money went to someone else and you do not expect it back. A transfer between two accounts you own is not spending at all.
Is sending money to my own second bank an expense?
No. Both ends are yours, so your total is unchanged. Record it as a linked transfer so neither leg is mistaken for spending or income.
How should I record money I sent someone who will pay me back?
It is not spending, because you expect it back — but most apps, Rakama included, have no way to hold a debt owed to you. A dedicated Lent category is the practical workaround.
What about a transfer to a business account I own?
Still a transfer if it is genuinely your money on both sides. It stops being one the moment the business is a separate legal entity with its own books.
Make your money easier to understand.
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