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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

#61

Post by BeetleB »

symbogra wrote: post #23

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.

And then you get married and have kids and wonder why you have trouble paying the bills despite having a household income in the top 5%.

Then you discover that you really do need to know how much you are spending on sandwiches.

I went through this a bunch of times. Always hoping for an obvious smoking gun expense I could just cut. It always was many little things adding up.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#62

Post by spiffytech »

ajdude wrote: post #15
huhkerrf wrote: post #3

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…

I used YNAB since back when they used to just sell the software and maintained a subscription for a little while. I will say that their approach to budgeting has changed the entire way of how I look at money, and even though I have switched to GNU Cash, I have essentially replicated the envelope method there (it requires four entries per transaction instead of the standard two). For anyone who wants to use this envel…

I switched from YNAB to Actual Budget. It's FOSS, and has nifty power user features like a DSL for distributing monthly funds and cleaning up extra at the end of the month.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#63

Post by InitialLastName »

bombcar wrote: post #48
tantalor wrote: post #47

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 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.

I find there area few things the budgets and spreadsheets help with from a personal finance perspective:

- Values vs reality: A $3000 candle budget is fine, but if you're spending $10/work-day on candles it might be easier to see when that accumulates and you can compare it against your longer-term aspirational goals. This is especially true for less tangible expenses like subscriptions where it can be difficult to see "I'm spending $3000/year on candles I never burn" from ground level.

- Planning and decision-making: It's easier to make good life decisions (e.g. "should I take $job" or "can I buy $house") if you have an accurate accounting of your life expenses.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#64

Post by ajb »

miroljub wrote: post #46
symbogra wrote: post #23

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.

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 he…

This begs the question though, of why individuals still need to do this like a 17th century clerk, when it costs their counterparties fractions of a man-second. Imagine if their was a law which said, every business that takes a credit card has to supply the consumer with the data in standard, machine-processable format (ie not pdf) via their credit account (IE, not making obtaining their email address a condition).

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#65

Post by SkyPuncher »

bombcar wrote: post #48
tantalor wrote: post #47

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 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.

My wife and I have moved all of our personal, individual spending to a dedicated card each. Sure, some stuff still makes it into other cards, but the simplicity makes budgeting so much easier. Even if we only accurate capture 90% of our spending, we close enough to targets that it doesn’t matter.

My general rule is a simple system that works well enough is better than a complex, but precise system.

We build our budget with this slop in mind, so anything left over is bonus.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#66

Post by mpyne »

InitialLastName wrote: post #63
bombcar wrote: post #48

Earlier quoted context omitted.

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.

I find there area few things the budgets and spreadsheets help with from a personal finance perspective: - Values vs reality: A $3000 candle budget is fine, but if you're spending $10/work-day on candles it might be easier to see when that accumulates and you can compare it against your longer-term aspirational goals. This is especially true for less tangible expenses like subscriptions where it can be difficult to s…

Yeah, before we picked up YNAB more than a decade ago we never had issues with $3k of candles disappearing in the budget, but we still struggled to save money.

When we started using YNAB and entering our spending into it, it was like a hockey-stick diagram on our household net worth.

And this isn't even double-entry accounting (which I've adopted for my own personal spending). One thing I'll say is that the way we use YNAB seems different from most other people: we hand-enter every transaction, we don't import it afterwards from the bank. Then we reconcile what we thought we spent vs. what the bank says we spent.

In this way we have to be a bit more intentional about what we're spending money on since there's not some kind of big monthly exercise to make the numbers line up and then a "we'll try to be better next month". Instead it's more like an envelope system where we are tracking budget categories as the month goes by.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#69

Post by vladvasiliu »

mpyne wrote: post #66
InitialLastName wrote: post #63

Earlier quoted context omitted.

I find there area few things the budgets and spreadsheets help with from a personal finance perspective: - Values vs reality: A $3000 candle budget is fine, but if you're spending $10/work-day on candles it might be easier to see when that accumulates and you can compare it against your longer-term aspirational goals. This is especially true for less tangible expenses like subscriptions where it can be difficult to s…

Yeah, before we picked up YNAB more than a decade ago we never had issues with $3k of candles disappearing in the budget, but we still struggled to save money. When we started using YNAB and entering our spending into it, it was like a hockey-stick diagram on our household net worth. And this isn't even double-entry accounting (which I've adopted for my own personal spending). One thing I'll say is that the way we us…

I used to use YNAB and I think this was its whole point: you allocate money in different envelopes (budgets) and as the month goes by, you enter your transactions and see how your envelopes deplete.

I didn't actually do this that much, I was much more interested in where my money was going over longer periods (say a year). It was nice enough, but I dropped it a few years ago when they had big price increase and became more expensive than it was worth to me.

Re: One Number I Trust: Plain-Text Accounting for a Multi-Currency Household

#70

Post by BoiledCabbage »

rmunn wrote: post #34
thehours wrote: post #24

Earlier 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…

> (This is one of the reasons why only the economically illiterate would propose a tax on "unrealized capital gains": that means taxing people for income they have not actually received, but merely could theoretically receive. Which is both immoral and stupid.)

But your statement misses the important point of situations where people use the unrealized gains as collateral for a loan which they then use (for example to live off of). This in fact effectively "realizing" them without paying appropriate taxes on them. As long as gains are purely theoretical and not used for any transactions they should remain untaxed. As soon as they become "active" by being sold, or for example in unlocking additional assets by being collateral for a loan, they should be taxed.

Same concept as a retirement account. You can sell within a retirement account and rightfully don't have to pay taxes because you don't really have "access" to the cash. It's still "locked" within the account. Only when you withdraw to have access to it and make it active/real do you pay taxes. But if you take out a large loan leveraging that retirement account as collateral (or against an unrealized gain) you are not making it active and correctly should pay taxes.

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