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.
One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
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Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#42https://simplifi.quicken.com/
This was the cheapest and easiest way to account for stuff for me
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#43Earlier quoted context omitted.
25 years ago when my wife and I were poor grad students we had to do this. I tracked everything religiously and she cut coupons for the grocery store. We were generally positive about $100/month at best. Tracking it allowed us to not go negative. As soon as we got real jobs with a real income, we didn't waste time with that. Our philosophy now is to just make sure that we spend well under our means and not track. We…
It probably worth at some level not totally losing track of various subscriptions or routine daily purchases. Won’t buy you a house but can be a few thousand a year.
One of the things that the tracking taught me was to be allergic to subscriptions. I only have a few where significantly more convenient because I know I'll use it. Outside of our phones (and the kids don't get phones), we have one music service for the family, I'll allow two video streaming services and if the kids want to add one, they have to pick one to cancel, and I have a coffee subscription because the owner lives down the street from me and it's fresher than I'd get in the grocery store.
It's a good point about the routine daily purchases, I never thought of that. But I live semi-rural so I'm not out every day wandering around the city and picking up a snack or anything like that. I imagine that could add up.
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#44Earlier quoted context omitted.
How are investments modeled in this system? e.g I buy $100 of an index fund which can fluctuate in value.
Not an accountant, so if I get it wrong someone please correct me. But index fund shares are an asset: something you own. So is your car, your house (if you own it), and your computer. When you buy an asset, you paid a certain price for it. When you sell it, you pay a different price. Until you sell it, though, you don't actually have the money, so it hardly matters what its value is until you sell it . If you buy $1…
I feel I should also mention one more thing. The fact that you don't have the money until you sell the shares is also why "net worth" can be a highly misleading concept. (All numbers in the following example are fictional and made up on the spot, BTW). Billionaire Gill Bates, whose net worth is reported to be $20 billion, does not actually have 20 billion dollars. He has $5 million (million, not billion) of actual dollars in his bank account(s), but the rest of his net worth is in assets: he owns 200 million shares of MegaSoft Corp, whose share price is currently $100 per share. If MegaSoft Corp's shares suddenly drop in value (say, because a hacker group announces that MegaSoft's Doors 12 OS is full of, well, backdoors and suddenly nobody wants to buy it anymore) and now their shares are selling for $90, then Gill Bates's net worth will become 18 billion dollars instead of 20 billion. Did he "lose" 2 billion dollars in one day? NO. He never had those dollars. The "net worth" calculation is just the theoretical amount of money he could make if he sold all his shares.
And in fact, he could never actually make that amount of money by selling all his shares, because if he did put 200 million MegaSoft shares on the market, he'd never be able to find buyers for all of them at the current share price, and he'd be forced to drop his asking price by quite a bit before he managed to sell all 200 million shares. Not to mention the fact that if he tried to sell his entire holdings of MegaSoft Corp, many people would wonder what he knows about MegaSoft's long-term prospects, and would be afraid to buy those shares, driving the share price down even further. Gill Bates would be lucky to make $5 billion, let alone his theoretical net worth of $20 billion, if he were to suddenly sell all his shares. (If he sold them in a trickle over the course of ten years, he might well make the full $20 billion in the end, but not if he dumped them all on the market at once).
This is why (well, it's just one of the many reasons why) net worth is misleading. It's a theoretical number, but the actual amount of wealth someone has in practice entirely depends on market conditions at the moment they need the money, as well as how urgently they need it. (If the market is low right now, can they afford to wait six months for it to recover? Or do they need the money tomorrow and have to sell at a lower-than-ideal price?)
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#45This 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 guess it depends on the complexity of ones personal finances? The author had multiple currencies, investments, and who knows what else. I ran a small business for a while, and I would draw a parallel to that. Once a family's finances hits the complexities of a small business, multiple assets, loans, cars, long term savings, investments, I'd say the granularity is worth it. I would certainly like to try it out.
I tick all the boxes you listed after having worked in a handful of different countries, but personally I don't really see the value add. My bank shows an overview in my main currency of choice and so do brokerage accounts. Perhaps to turn the question around, what value do you get out of it for personal finances? I wouldn't really compare to a business too closely since understanding all of your input costs down to a fine level is much more important there, at least in my opinion. The price of flour doesn't matter too much to the cent when you buy a bag every now and then, but it matters a lot when you're buying in tons.
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#46I 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.
Here's another enlightenment for you:
Tracking expenses doesn't take more than 5-10 minutes per day, if you do it daily. With the correct workflow, it shouldn't take more than 30 minutes per month. There are even apps that would do that for you without any effort, though not so perfectly as fine tuned apps.
And now, the enlightenment part: how is expense tracking preventing you from making more money than visiting hecker news, reddit, social media, listening to the radio, watching TV, reading the news, or a million other things? Do you really spend all your waking hours earning more money so tracking expenses for a few minutes would make you make less?
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#47You 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.
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#48You 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 tha…
You don’t even need to be precise for net worth, whereas double-entry accounting needs to be.
For personal finance the problem is almost always very obvious ($3,000 on candles) and all the spreadsheets and budgets won’t change that.
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#49Earlier quoted context omitted.
> How do you think it compares time-wise to using existing accounting software? Author here. I tried various consumer budgeting apps before I ended up building my own (and then going to Beancount). The main problem with every one of the apps I tried is that they don't handle investments well. 99% of my money is invested and having net worth figures which are wildly wrong because the app is only tracking bank accounts…
> The main problem with every one of the apps I tried is that they don't handle investments well. Could you expand what were you looking for with respect to investments that was lacking? I use GnuCash for many investment accounts (in multiple currencies) and haven't run into any limitation, it can show me the true net worth graph.
I'm talking about apps similar to Mint and YNAB. Specifically I used to use an app called Yolt (which was shut down) and then was on an app called Emma for a bit.
I'm sure GnuCash would also work just fine but ultimately it's also a full double entry system. I never tried it because I came across ledger/hledger/beancount first and, being command line tools, they appealed more to my sensibilities.
Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household
#50Earlier quoted context omitted.
Happy to answer :) > What impact has having such clear visibility into your accounts had on your relationship with your wife? That's a great question. Thankfully when it comes to finances we are very aligned in our habits and goals. So we find it very natural to be open because we know that we're both going to be aligned. Where we differ heavily though is how much we are willing to really getting onto the nitty gritt…
I love that, thank you for sharing. Would you consider a follow up blog post about how you structure and approach your monthly finance sessions? I understand that it would be well outside of your topics of software engineering, performance and open-source, but I find that the human component of our industry is often missing. An insight into how someone has successfully navigated that would be a wonderful read.
Given the comments on this post and the other Beancount one in the frontpage, I definitely think there's enough I want to say for at least one if not two followups. Stay tuned!