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These accounting apps never worked for me. I think I'm missing something, but how do you actually use them? Do you really put every cent you spend into it?

• db48x 10y ago
  You can easily summarize transactions with ledger. Just put a transaction where you move $X to cash when you make a withdrawal. Then at the end of the week add another where you report that your cash balance is $Y. Since transactions always balance to $0, it knows how much you must have spent. All you lose is the ability to later find out what you spent your cash on, but that's a trade-off most people are willing to make; rent and utilities and groceries are both easier and more important to track.
  • kovrik 10y ago
    Yeah, I get it. Ok, so I put all my transactions (or group them) into the app. In N months I have a huge list of transactions (actually, I'll just spend time and energy on duplicating bank statements which I can get for free). How to use that data?
    • ams6110 10y ago
      One thing you can do is reconcile your transactions with the bank's. They are not infallible. But I'm mostly in your camp. I don't use accounting software for my personal finances. I don't know anyone who does. I think it's more useful for businesses or other organizations that have to be able to report where the money goes.
    • db48x 10y ago
      Most likely you would import most of your transactions from your bank, then enter cash transactions by hand, and edit transactions that just show check numbers and wire transfers. Data entry can and should be automated. Once you have the data in a bookkeeping system (ledger or otherwise), you use it to answer specific questions. Use it to find out where your money has gone (I spent how much on coffee?!), how much more or less you spent this month vs last, or vs this month last year, how much your liabilities are (debts, like credit cards), how much you've earned but not yet received (from your consulting clients, for example), etc, etc. Ledger can print out simple text reports, or CSV that you can graph (most people will just paste that into a spreadsheet, but perhaps you prefer gnuplot or whatever).
    • mikekchar 10y ago
      It's double entry accounting, so when you spend money, you have to give an "account" that you spent from and an "account" that you spent to. For example, if you wanted to track somethings but not others, you can keep your ATM slips. When you withdraw money you simple add a transaction from your "bank account" to your "cash account". Then let's say you wanted to keep track of your spending at restaurants, but didn't care about anything else. In that case you keep your restaurant receipts. You make a transaction from your "cash account" to your "restaurant expense account". At the end of the week, you look at how much money you have left in your pocket. You can enter a transaction saying you have that much left and (with ledger anyway) can tell it to put the difference in your "miscellaneous spending account". Later your can run a report which shows how much money you spent. It will tell you how much you spent on restaurants and how much you spent on "miscellaneous spending". If you think that you want to explore what you are spending on "miscellaneous", then you can keep receipts for those things and start an account for it. Remember the point is simply to let you measure things. It's up to you to decide what's important to measure. If you don't think it is important to measure anything, then the accounting package is very accommodating. You just don't use it ;-)
    • VLM 10y ago
      No one gave you a specific analysis oriented answer. Assuming conditions are mostly static which they are for most people you now have an engineering theory or model with some predictive ability. Capable of answering simple questions about the future. I'd like to go to the HOPE conference in NYC this weekend. (I can't for familial scheduling reasons but for the sake of the argument...) Given historical entertainment budget how many months ahead do I have to start saving up to pay for transport and hotel? A month? A year? Is is even in the cards for petty cash at all or am I going to have to save up to attend? At our current rate of savings when does my wife get a new car, this year, next year, later? If you don't have questions like that there's no point gathering the data. Much like I ignore my fitbit and my mint data, I'd ignore this data in general. Its also an old people filter. 20 years ago you got one checking statement per month mailed to you in physical mail. You'd have a whole month's financial transactions uncleared just hanging out there and then you'd balance your checkbook by whatever method so you could keep a running guess of your current balance. Now a days I have live bank account access and at most only a handful of online payments outstanding at any given moment so I don't keep a paper register or the equivalent anymore. So old people tend to have a "thing" for elaborate home accounting. It took me 30 or so seconds to determine that right now I could write a check for $2356.50 if I wanted to and it would clear, but not a penny more. In the old days it would have required some elaborate accounting OR I'd have to guess I probably have over $2K in checking and hope for the best.
• c22 10y ago
  I track every cent. I used to just carry a small notebook with me and write in it every time I bought something. Now I share a budget with my girlfriend though so we keep a notebook at the house to track things. I just keep receipts in my wallet then every few days I take them out, record the amounts, and throw them away.
  • deleted 10y ago
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  • gbajson 10y ago
    1. What's the point of it? 2. How much hours/week does it cost?
    • infinite8s 10y ago
      The main point of accounting is planning for the future. If you know how much money flow you have over given time periods then you can plan ahead for large upcoming purchases, or possibly paying yourself if you wish to bootstrap a business, etc.
    • c22 10y ago
      I honestly don't do much with the data, in fact I rarely look at it. I do use it to determine sane budgets for various categories of my life, and I sum the entries every few days so I can tell at a glance how close I am to exhausting those budgets. I also find that there's a psychological benefit--when I have to track every purchase I spend less money. I spend considerably less than an hour a week making these entries, perhaps around 15 minutes. If I was interested in having a more nuanced view of my finances with graphs, &c I'd probably leverage software to save me time.
• basicplus2 10y ago
  I use "aAccounting plus" app by iSchule.ch double entry system. I enter everything as it happens. it is not perfect but it is the best app I have found so far that aligns with my various philosophy's. it can generate XL spreadsheet and PDF reports. easy way to see where one spends one's money
• vincecima 10y ago
  I do enter everything manually right now. The hledger add command mentioned in the article speeds up entry. Also, there are ways of importing CSVs from your bank data: http://hledger.org/how-to-read-csv-files.html http://hledger.org/how-to-read-csv-files.html
• jldugger 10y ago
  > Do you really put every cent you spend into it? Yes. > How is it possible? How do you remember all that. I don't, but my bank does. As much goes on cards as possible. > for example, during a weekend trip? On the rare occasion I end up spending cash, keep a receipt or take a note on your phone. Still, a fair chunk ends up in "Cash from wallet expenses." But since I know how much used to be in my wallet, I know how much was spent. > ok, assume we put every cent spent into the app. How does it help? First, Double entry apps help because they prompt you to think about whether things are an expense or an asset, and secondly whether your assets are properly allocated. Few tangible assets earn a return, and even cost money to store; a full accounting makes it easy to not only rebalance a portfolio of stocks and bonds, but your portfolio of crap in your house to investments and debts. Why stop at only the past? Good apps allow you to record future dated transactions, so I can see whether I need to transfer money out of savings to cover a large purchase / family loan. Scheduled transactions help, and there've been points in my life where cash flow mattered, and having an app track what comes and goes when was useful for stress relieving by building confidence that the plan was viable. Finally, a monthly habit of data reconciliation makes it easy to find fraudulent charges on your bills -- if your app has never seen a charge before, it can't autoclassify it to an appropriate expense account, and prompts you for advice. > I already have all my transactions listed in my bank's mobile app. How to use it? Good accounting tools can import qix/qfx/ofx. Sometimes you can even configure the app to download directly from the bank.
• Kluny 10y ago
  I'm on board with living frugally, investing, living below my means, and all that. But I can't do expense tracking like these guys are describing. I simply can't keep track of all the details to my satisfaction - whenever I try I get the same feeling that I used to get from trying to keep my iTunes library straight while Apple systematically destroyed my organization with each update. It's impossible, so I gave up. I go with the "pay yourself first" method. The first thousand dollars I get goes directly to long term savings. The next thousand pays the bills (rent, hydro, internet, food, gas, insurance). The next thousand is for whatever I feel like buying. In practice, I keep my impulse buying to a minimum, and that last thousand ends up paying for vacations, motorcycles, and replacements for expensive items that I ruin due to carelessness. (Hearing aids, laptops, cell phones, work pants, etc). It's not a perfect system by any means, and there's lots of inefficiency and room for improvement. But in terms of practical results, I'm far ahead of most of my peers, and I'm not wasting any brain cycles on it.
• maus42 10y ago
  >How do you remember all that. I ask for receipt for everything (mind, here every cashier is legally mandated to offer you one without asking, so I decided to take advantage of that). I neither use a fancy app, but old LibreOffice Calc thing I started a couple of years ago. I can now reliably predict my grocery expenses for each year; I also have a fairly good idea exactly how much I can afford to spend on unnecessary things like entertainment (books, Spotify etc) each year, so I now pay the mental effort to actually prioritize how much I want different things. I no longer pay things without planning it beforehand. Maybe some people can do that kind of mental accounting without help of writing that all down on a paper or using software, but I've found it helpful.
• UweSchmidt 10y ago
  For a while I just wrote down every single expense in an Excel sheet. I didn't bother with doing any kind of analysis on the data. Just the act of writing things down and was incredibly enlightning. It made me look at all the expenses I had, confronted me with silly little purchases like a chocolate bar (that's another annoying cell in the spreadsheet) and highlighted days where I spent no money at all. You can do it without quantifying your life or submitting to a stifling plan.
• maxerickson 10y ago
  You can do whatever you are comfortable with. For example, for the trip, if you like cash you could just make an entry that moved whatever amount of your savings to an expense account associated with leisure travel. Done. It's less useful to do that for non cash spending (Because having the accounting system balance spending transactions against the bank records is one of the things it is good for). As far as what other uses, analyzing your finances over time. Once the information is machine readable and you have categorized the spending to some extent, you can see where money is really going. Most accounting systems will make it trivial to generate time based reports. (I say this having used ledger for a while and then stopped...)
• dbrgn 10y ago
  > But how do you actually use them? The key concept you need to understand is the concept of the balances. A transaction is always a transfer between two accounts. Buying a beer with cash is a transaction from assets:cash to expenses:beer. Getting cash from an ATM is a transaction from assets:bank to assets:cash. > Do you really put every cent you spend into it? Mostly. I started doing personal accounting together with my wife about a year ago (currently in Gnucash). I enter the payments into the software every 1-2 months. Usually my cash amount is off by 20-100$. I simply book that on the "unknown" account. > How is it possible? How do you remember all that. for example, during a weekend trip? Bank transactions are easy, I simply download the transaction statement. For cash, I either write it into a "accounting" Telegram chat that my wife and I share, or I keep the receipt and put it in my drawer. It takes quite some time to do, but I think after 1-2 years I know enough about our expense behavior to be able to adjust it properly and to stop doing the accounting part. Another welcome side effect: If I lend someone money, I never forget about it anymore ;)
• dragonwriter 10y ago
  > Do you really put every cent you spend into it? How is it possible? How do you remember all that. for example, during a weekend trip? The same way people who have had to account for things because of expense accounts, etc., always have: receipts. Of course, these days its a lot easier; you don't usually have to keep paper around until you are ready to log everything, you can use your phone to photograph receipts or take notes as transactions occur. > Next step: ok, assume we put every cent spent into the app. How does it help? Same as profiling a program: it provides an important input to let you know where its useful to spend effort on improvements.
• sliverstorm 10y ago
  ok, assume we put every cent spent into the app. How does it help? Most people use it to figure out what their spending looks like. A common realization is "holy cow, I spend a ton of my income on [eating out|smokes|alcohol]" You can use it to project future balances with greater accuracy, you can plan bills, etc. I think the value goes up (rapidly) the closer your expenses are to your income. If, by chance, you spend 5% of what you make, tracking your spending is probably utterly uninteresting- it'd be smarter to worry about tracking your investments. But if you spend 90%, 100%, 120% of your take-home, you really really need to track your spending. It can also be handy at tax time if you have more complicated taxes. In my case it gives me a clearer picture of my loans & repayment. As some have mentioned, it makes fraud detection easy.
• rsaarelm 10y ago
  I buy stuff with debit card linked to my bank account. My bank website lets me download a CSV dump of all transactions in the account in a given timespan (it automatically sets it to after the last time I did the download). I have a script to sanitize the CSV and a hledger ruleset that parses the CSV entries to hledger log and tags common receiver names like grocery stores or utility bill companies with the appropriate spending categories. Work needed from me: Downloading the CSV once or twice a year, running the script, checking the output for anything that didn't get tagged by the existing rules and needs extra annotation.