An ATM withdrawal tells you that money left a bank account. It does not tell you what happened to the cash afterward. Treating the withdrawal as spending makes cash purchases impossible to analyze without counting them twice.
The simplest solution is to treat physical cash as another account within your financial boundary. The wallet is a location for money, not a spending category.
Follow the cash into and out of the wallet
Imagine starting with 40 in cash and withdrawing 200. You then spend 65 on groceries, 18 on transport and 22 on lunch. Later, you deposit 50 back into the bank.
The expected wallet balance is 85. Actual spending was 105. The 200 withdrawal and 50 deposit were transfers between your own locations of cash.
If you classify the withdrawal as an expense and also record the purchases, spending becomes 305 even though only 105 was consumed. If you record only the withdrawal, you lose the categories and timing of the purchases.
Separate ATM charges
Suppose the bank debit is 203 and the machine gives you 200. With evidence that the remaining 3 is a fee, record a 200 transfer to cash and a 3 cost.
For foreign-currency withdrawals, preserve the amount of local cash received, the actual debit in the funding account and any separately identified charges. Do not replace those amounts with an attractive exchange rate found elsewhere.
The receipt and statement together are more informative than either one alone.
Use a level of detail you can maintain
A cash system fails when it demands more effort than the household can sustain. Keep a small set of useful categories and a practical habit for receipts or notes.
A daily total may be sufficient for a low-value recurring category when the underlying evidence is adequate for your purpose. Higher-value purchases, business-related items and shared expenses deserve clearer individual records.
The CFPB's spending tools encourage understanding where money goes. The useful level of detail is the one that supports decisions and can be maintained consistently. Consumer Financial Protection Bureau
Count the physical cash occasionally
In the example, the records predict 85. If the wallet contains 80, there is a difference of 5. Check for an omitted purchase, a mistaken opening count, cash handed to someone else or an entry error.
Do not automatically hide the difference inside groceries. Record an unresolved discrepancy honestly until you can explain it. Small unexplained amounts can be handled proportionately, but repeated differences usually signal that the routine needs improvement.
Cash given to a household member also needs a reporting-boundary decision. Within a shared household record, it may be an internal movement until that person spends it. A gift to a separate household is a different event. Consistency matters more than the name on the envelope.