Can somebody explain to me the advantage of double-entry bookkeeping? Is it basically just a "checksum" so it's easier to notice when something is off?
I found this document[0] very insightful. It's quite a long read, but gradually introduces the concepts needed for double-entry bookkeeping.
I think the main advantage is that you can granularly keep track of the movement of money, stocks, commodities, etc., and their conversions. As a day-to-day example, it gives you the ability to follow, for example, invoices received (Liabilities or Accounts Payable), transactions on a bank account (Assets), and what you are going to spend (or at some point, have spent) (Expenses).
This separation allows you to, for example, enter an invoice you've received on January 1 in Accounts Payable, with a corresponding value in Expenses. At this moment, nothing happened yet, it's simply an administrative transfer of some amount from an asset account to an expenses account (the sum of these transfers must be zero, so one amount is negative whereas the other amount is positive. See [0] for more details).
As a result, this gives you insight in what still needs to be paid. Once a transaction for that invoice enters your bank account on, for example, January 10, it gets "paid" to Accounts Payable, thus giving you a link between an invoice, its payment, and finally the amount spent. (This concept also works the other way around, see this sibling comment[1], where it's also extended into working with multiple accounts.)
I get that people on here don't like subscriptions, and I understand why, but I've been using You Need a Budget for well over a decade, and it is probably the last subscription I'd ever give up.
The automatic import of expenses is so valuable for my family and keeping track of how much we've spent and how much we have left for the month.
We used the fixed-cost version for years beyond when it was officially supported, and it didn't have the automated import, and I don't think I could ever go back to a system that didn't. There were always a few days a month, at least, when I wasn't exactly sure where we were in our expenses.
What does Ynab do that I would get for free with gnu cash? Just downloading bank statements which I’m not ok with and against my banks t&c.
Other wise all non envelope budget systems are horrible for me because I want the budget to be self adjusting so if I spend more on household items 1 month it needs to ensure I have less to spend over the next set of periods till I’ve gone back into positive . Rollover basically
I really enjoyed reading this, and it is inspirational as it is something I have wanted to do for a long time. And as a software developer, it really appeals to me.
How do you think it compares time-wise to using existing accounting software? Was the time investment worth it to get the control and visibility you now have?
This is neat, but I'm not really convinced this level of granularity makes sense for personal finances? Or at least it does not for me personally. I find that simply entering all my accounts into one big excel once a month more than suffices to keep track of everything. Maybe I make a typo here and there but it doesn't really matter in the grand scheme of things cuz I'm gonna type a new number next month anyway.
I like having an archive of PDF statements but the downside is that it’s usually a tedious manual process to download them. There’s so many to track - bank accounts, credit cards, investments, utilities, doctor bills… Every website is different, and they are rarely batch-downloadable. So I tend to be a few months behind at any given moment until I get around to it.
Anyone found a better way to keep on top of downloading statements?
> The key insight is that bank statement PDFs are almost always columnar. Of course, this relies on the PDF having a proper text layer; if your bank sends you scanned images, you’re out of luck (though I’ve yet to encounter one that does). When you convert them to text while preserving the layout, you get something that looks like this:
So I decided to try this out with my bank who's export options are (one of the mentioned slightly silly multi-line format) XLSX or PDF only, and it appears they've done some "encryption" (really a simple substitution cipher and an embedded font with the characters jumbled up so it renders correctly) to the PDF to prevent this. All the marketing text and headers are in the pdftotext output fine but the actual data is all accented and non-printable characters (also if you copy/paste out).
The substitution cipher does seem stable across a few statements, but still seems like less work to work off the XLSX
I used to do this during my first real job and was tracking every sandwich I bought, then one of the senior engineers told me to stop wasting time with it and make more money, and then I was enlightened.
I have looked at beancount and a few other double entry systems several times over the years. None of the applications I've found except for Microsoft My Money (Sunset Deluxe) has felt intuitive and not wasted my time. One of my accounts can't be imported via csv but other than that it is painless. I recommend it to people who just want a quick, free program for simple reporting.
You don't need accounting or double-entry bookkeeping to compute net worth.
Net worth is easy: assets - liabilities
You get the figures from your financial institutions and counting up your cash on hand.
The purpose of double-entry bookkeeping is to track the flow of money and to make sure nothing was missed.
But for net worth, you only need the end result, which you don't need any computation for.
The only thing that this solves is tracking money in flight, because during a transfer it disappears from your view of the accounts. There are simpler solutions to this problem than tracking absolutely everything.
As being discussed in another thread about plain-text accounting[1], what I've found most difficult about these tools is the learning curve between "Assets = Liabilities + Equity" and the realities of modeling a household economy.
I appreciate the level of detail in this post. I think there's often confusion that plaintext == easy/simple. The real takeaway is: "if you're going to go through all of the trouble of managing your economy, you may as well make sure you control your data and own your system."
I used Ledger for a while, then some other tools. Now I'm on Actual Budget, a nice FOSS envelope budget app that can import transactions from my bank.
I find value in tracking everything, tracking it by hand, and tracking it with precision (our household budget has 68 categories).
When I've tried easing up in the past (e.g., with Mint's lightweight approach) I was left with a budgetary black box where I felt like I never had enough information to make big purchasing decisions. I knew what I had in the bank account, but I didn't know if it was earmarked for anything, or whether the next surprise expense was going to wreck my plans. I felt afraid and paralyzed.
Earning more didn't make the problem go away. Like the financial equivalent of Parkinson's Law, more income just meant more spending. I couldn't out-earn unrestrained consumption. I had to monitor & manage it.
For peace of mind, I found YNAB's philosophy helpful: one-off expenses often repeat predictably on a long-enough time horizon, and can be amortized accordingly. If I itemize all predictable expenses and save a little each month, I know everything is taken care of, and what I really have left over. I never get blindsided because several big expenses hit at once.
I know not everyone has these problems. But I like to talk about my experiences because people don't all need the same things from their finances. It's okay and normal to want control and visibility. Budget apps exist because people find them useful, not because the whole userbase has failed to reach enlightenment and transcend budgeting.
I can identify with this a lot. I don’t budget as religiously as I used to, but there was a time where I was writing little console apps to process all my recurring stuff and adding one-offs in from a separate file to help project future money. I turned the idea into a website, but really nobody ever used it but me. Shut it down probably a decade ago, and then found YNAB myself, but for the time period it reduced my anxiety by a lot.
I agree with an earlier post that asserted "net worth = assets - liabilities" but I'd like to do better at understanding what that really means.
Some are easy like the size of your bank balance. Others are much harder.
For example, one asset we have is our home and there are many websites out there that tell you how much it's worth but they each vary an awful lot and change dramatically - so much so sometimes that any savings you've made in the same period are eclipsed.
Similarly, the 401k I've been building up for years seems like a decent amount but trying to calculate what it's worth after taxes and therefore how much you'll have to spend each month seems unknowable.
I think the same is true of investment accounts. If we seeded one with $500 and it's now worth $250, it's easy to think your net worth has risen by $250 but it really hasn't when taxes, fees and who knows what else is taken into account.
> asset we have is our home and there are many websites out there that tell you how much it's worth but they each vary an awful lot and change dramatically - so much so sometimes that any savings you've made in the same period are eclipsed
I honestly completely ignore my purchased home value. It is not a regular asset because you have to make use of it, you can’t really liquidate it without a substantial change in your life (renting, marrying, going homeless, etc). If you trade it, you’d have to use that money to get some other housing. My strategy in my personal finances is to threat the house as if I’m renting. The money is gone from the balance, the equity isn’t tracked anywhere.
will resolve the weirdness that occurs when trying to access localhost vs 127.0.0.1 (as there is an OS-native *:5000 listener that the fava :5000 binding overlaps) and fix the bison build errors (once you've brew install'd bison).
I didn’t think negative amounts were a real thing in double-entry accounting? Instead some things are debits and others are credits, and whether each of those reduces or increases an account balance depends on the type of account it’s against. Like, you could pay an expense out of a debt account, which would increase the debt, or out of a cash account, which would decrease the cash. Debits and credits should still be equal, though.
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[ 3.2 ms ] story [ 59.2 ms ] threadI think the main advantage is that you can granularly keep track of the movement of money, stocks, commodities, etc., and their conversions. As a day-to-day example, it gives you the ability to follow, for example, invoices received (Liabilities or Accounts Payable), transactions on a bank account (Assets), and what you are going to spend (or at some point, have spent) (Expenses).
This separation allows you to, for example, enter an invoice you've received on January 1 in Accounts Payable, with a corresponding value in Expenses. At this moment, nothing happened yet, it's simply an administrative transfer of some amount from an asset account to an expenses account (the sum of these transfers must be zero, so one amount is negative whereas the other amount is positive. See [0] for more details).
As a result, this gives you insight in what still needs to be paid. Once a transaction for that invoice enters your bank account on, for example, January 10, it gets "paid" to Accounts Payable, thus giving you a link between an invoice, its payment, and finally the amount spent. (This concept also works the other way around, see this sibling comment[1], where it's also extended into working with multiple accounts.)
[0] https://beancount.github.io/docs/the_double_entry_counting_m...
[1] https://news.ycombinator.com/item?id=46464893
The automatic import of expenses is so valuable for my family and keeping track of how much we've spent and how much we have left for the month.
We used the fixed-cost version for years beyond when it was officially supported, and it didn't have the automated import, and I don't think I could ever go back to a system that didn't. There were always a few days a month, at least, when I wasn't exactly sure where we were in our expenses.
Other wise all non envelope budget systems are horrible for me because I want the budget to be self adjusting so if I spend more on household items 1 month it needs to ensure I have less to spend over the next set of periods till I’ve gone back into positive . Rollover basically
How do you think it compares time-wise to using existing accounting software? Was the time investment worth it to get the control and visibility you now have?
Anyone found a better way to keep on top of downloading statements?
So I decided to try this out with my bank who's export options are (one of the mentioned slightly silly multi-line format) XLSX or PDF only, and it appears they've done some "encryption" (really a simple substitution cipher and an embedded font with the characters jumbled up so it renders correctly) to the PDF to prevent this. All the marketing text and headers are in the pdftotext output fine but the actual data is all accented and non-printable characters (also if you copy/paste out).
The substitution cipher does seem stable across a few statements, but still seems like less work to work off the XLSX
This was the cheapest and easiest way to account for stuff for me
Net worth is easy: assets - liabilities
You get the figures from your financial institutions and counting up your cash on hand.
The purpose of double-entry bookkeeping is to track the flow of money and to make sure nothing was missed.
But for net worth, you only need the end result, which you don't need any computation for.
The only thing that this solves is tracking money in flight, because during a transfer it disappears from your view of the accounts. There are simpler solutions to this problem than tracking absolutely everything.
If you transfer 50k from one account to another and want to check your networth before the money comes back in, summing your balances won't help you.
I think this is besides the point though, I suspect OP wants to track networth over time.
I appreciate the level of detail in this post. I think there's often confusion that plaintext == easy/simple. The real takeaway is: "if you're going to go through all of the trouble of managing your economy, you may as well make sure you control your data and own your system."
[1]: https://news.ycombinator.com/item?id=46463644
I find value in tracking everything, tracking it by hand, and tracking it with precision (our household budget has 68 categories).
When I've tried easing up in the past (e.g., with Mint's lightweight approach) I was left with a budgetary black box where I felt like I never had enough information to make big purchasing decisions. I knew what I had in the bank account, but I didn't know if it was earmarked for anything, or whether the next surprise expense was going to wreck my plans. I felt afraid and paralyzed.
Earning more didn't make the problem go away. Like the financial equivalent of Parkinson's Law, more income just meant more spending. I couldn't out-earn unrestrained consumption. I had to monitor & manage it.
For peace of mind, I found YNAB's philosophy helpful: one-off expenses often repeat predictably on a long-enough time horizon, and can be amortized accordingly. If I itemize all predictable expenses and save a little each month, I know everything is taken care of, and what I really have left over. I never get blindsided because several big expenses hit at once.
I know not everyone has these problems. But I like to talk about my experiences because people don't all need the same things from their finances. It's okay and normal to want control and visibility. Budget apps exist because people find them useful, not because the whole userbase has failed to reach enlightenment and transcend budgeting.
Some are easy like the size of your bank balance. Others are much harder.
For example, one asset we have is our home and there are many websites out there that tell you how much it's worth but they each vary an awful lot and change dramatically - so much so sometimes that any savings you've made in the same period are eclipsed.
Similarly, the 401k I've been building up for years seems like a decent amount but trying to calculate what it's worth after taxes and therefore how much you'll have to spend each month seems unknowable.
I think the same is true of investment accounts. If we seeded one with $500 and it's now worth $250, it's easy to think your net worth has risen by $250 but it really hasn't when taxes, fees and who knows what else is taken into account.
I honestly completely ignore my purchased home value. It is not a regular asset because you have to make use of it, you can’t really liquidate it without a substantial change in your life (renting, marrying, going homeless, etc). If you trade it, you’d have to use that money to get some other housing. My strategy in my personal finances is to threat the house as if I’m renting. The money is gone from the balance, the equity isn’t tracked anywhere.