Did that money leave, or did it just move?

One line around your household

Picture a line drawn around your household. Inside it: every account that belongs to you and the people you share money with — your everyday account, your savings, your cards, your partner's account, the cash in your wallet. Outside it: everyone else. Your employer, the supermarket, your landlord, your friends, your brother.

Any money that moves can only do one of three things. It moves from one account inside the line to another — that is a move, and it changes nothing. It comes in from outside — usually income. It goes out — usually an expense.

That is the rule from Chapter 5, and it is right most of the time. This chapter is about the word usually: the money that crosses the line and is still neither income nor an expense.

Inside the line: money that only moves

You move $1,000 from your savings into your everyday account. Your everyday account looks $1,000 better. Your savings look $1,000 worse. Together, nothing happened — you are not one cent richer.

The same is true of things that feel like spending:

• Paying your credit card bill. The spending happened weeks ago, at the shop, when you tapped the card. The bill only settles it. Count both and you have paid for your groceries twice — on paper.
• Taking cash out of an ATM. Your wallet is an account too. The money is spent later, when you hand it over at the market.
• Sending money to your partner.If you share your money, your partner's account is inside the same line. Nothing left the household.

Get these wrong and a month looks far worse than it was. A $2,000 card bill counted as spending can turn an ordinary month into a disaster that never happened.

Why this is harder than it sounds

You would think the bank would simply say “this is a transfer”. It almost never does. A statement prints whatever it was handed, and the two most common moves look like this:

Many money apps leave this to you: a “transfer” label you pick by hand, or rules you write yourself. Some even suggest deleting those lines so they stop getting in the way. That works — until you miss one, or until the same money shows up twice: once leaving your bank account, and once arriving on your card.

How Aurora spots a move

Aurora reads your statements, card messages and receipts — and before it decides whether a line is income or spending, it asks whether the money simply moved.

• It recognises your own name. A line that is just you is treated as money moving between your own accounts, and Aurora asks which account it went to — instead of guessing a category.
• It recognises your card bill. A payment to your card company on your bank statement is the bill being paid, not new spending.
• It joins the two sides into one. When your bank statement shows $1,000 leaving and your card statement shows the same $1,000 arriving, Aurora keeps them as one move, so the money is never counted twice.
• It notices what you already typed in. If you entered the transfer yourself and the statement brings the same money later, Aurora shows the line as a duplicate before anything is saved.
• It remembers.Tell Aurora once that a line is a move to your savings, and next month's line is filed the same way.

You always keep the last word. Any row can be changed into a move, or back again.

Crossing the line — when “usually” isn’t enough

Money crossing the line is normally income or an expense. But look again at the drawing at the top: of the six arrows crossing the line, only two are. The other four are everyday things that cross the line and are neither.

A friend pays you back

You pay $60 for dinner with a friend. The next day they send you $30.

Count that $30 as income and two numbers go wrong at once: your dinner still shows $60 of spending, and your income looks $30 higher than anything you earned. The honest picture is that you spent $30 on dinner.

So in Aurora, money back for something you paid for is a Refund. It goes back into the category the spending came from — Dining out drops from $60 to $30, and your income does not move. The same goes for a shop refund, a work trip your employer pays back, or your share of a holiday house coming back from a friend.

Money you lend or borrow

Your brother needs $500 until payday. The money leaves your household. But it isn't an expense — you expect it back. And when he repays you, that isn't income either. You just got your own money back.

In Aurora you record it as a transfer to “another ledger, or an account not in Aurora”, with his name beside it. Your bank balance goes down by $500, because it really did. Your budget is untouched, because nothing was bought.

Borrowing works the same way in reverse: money you receive from someone is not income, and paying it back is not spending. And to see what is still owed, search for the name — every transfer to and from that person comes up in one list.

When a loan becomes a gift

Sometimes the money never comes back, and that is fine — it becomes a present. At that point it really is spending, and it should show up as spending.

On the Aurora web app you can change the original transfer into an expense — in Gifts, for example. Your budget then shows exactly what you gave away, and every balance stays exactly as it was. Nothing is entered twice; one row simply changes its meaning.

A ledger for each country

If you live between countries, you keep a separate ledger for each currency (more on that in Chapter 9). Sending money from your account in Hong Kong to your account in Korea is still your own money — but it crosses from one ledger to another.

Aurora records it the same way as a loan: a transfer to another ledger. Neither country's budget counts it as spending or income, each balance stays right, and the two currencies are never quietly added together.

What comes next

Today, money you lend or borrow is a transfer with a name on it. We are designing a proper record for it — one place per person that shows what is still owed. It is not built yet, and we will say so here when it is.

Your journey so far