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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

#71

Post by twodave »

spiffytech wrote: post #57

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 n…

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.

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

#72

Post by altairprime »

For those trying to use these examples on a Mac and having issues:

    env FAVA_PORT=5050 \
        PATH="/opt/homebrew/opt/bison/bin:$PATH" \
    ./scripts/quickstart.sh [args]
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).

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

#73

Post by 8n4vidtmkvmk »

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…

If you want it to be accurate to the penny, you kinda do, no?

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.

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

#74

Post by StopDisinfo910 »

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.

It's hard to find general truth when it comes to how people keep track of their money.

For a long time, I didn't understand either because I thought everyone was like me always roughly aware of the balances of all their current accounts and with enough reserve that a moderate unplanned event is insignificant but that's not the case.

Some people have a terrible grasp of how much money they currently have. Some work on so tight a budget that even a small deviation triggers a lot of undesirable effets - banks are actually awful for that because they really milk their customers with resource issue.

That's why budgeting is so effective for some people. If your budget is killed by a few overdraft events, just avoiding that will give you a lot of breathing room.

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

#75

Post by StopDisinfo910 »

Etheryte wrote: post #45
phil-martin wrote: post #13

Earlier quoted context omitted.

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…

I used to use an application in France which automatically sorted all my expenses - it sadly doesn't work as well anymore.

I have to say seeing some macro-budget category summed on a year and seeing how much of my money they consume was quite useful just to recalibrate. It wasn't life changing but it triggered things like: am I really ok spending that much on restaurants?

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

#76

Post by StopDisinfo910 »

BeetleB wrote: post #61
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.

If your income is in the top 5% and you struggle paying bills, it's nearly always an issue with to much of your money stuck in mandatory expense: you are over mortgaged, or have to many car loans, or pay too much for the kids schools.

Budgeting can make that manageable by significantly lowering your living standard but small expenses are rarely the root cause.

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

#77

Post by mrngm »

nubg wrote: post #2

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.)

[0] https://beancount.github.io/docs/the_double_entry_counting_m...

[1] https://news.ycombinator.com/item?id=46464893

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

#78

Post by jaapz »

StopDisinfo910 wrote: post #76
BeetleB wrote: post #61

Earlier quoted context omitted.

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.

If your income is in the top 5% and you struggle paying bills, it's nearly always an issue with to much of your money stuck in mandatory expense: you are over mortgaged, or have to many car loans, or pay too much for the kids schools. Budgeting can make that manageable by significantly lowering your living standard but small expenses are rarely the root cause.

I think you underestimate the amounts some people spend on things like clothing, coffee, going out to eat and other stuff you wouldn't even think about

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

#79

Post by kassner »

StopDisinfo910 wrote: post #76
BeetleB wrote: post #61

Earlier quoted context omitted.

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.

If your income is in the top 5% and you struggle paying bills, it's nearly always an issue with to much of your money stuck in mandatory expense: you are over mortgaged, or have to many car loans, or pay too much for the kids schools. Budgeting can make that manageable by significantly lowering your living standard but small expenses are rarely the root cause.

> Budgeting can make that manageable by significantly lowering your living standard

I’d say that budgeting allows you to see how far off your ideal standard you are living. Spending too much on the kids school can be a deliberate choice or an afterthought from 4 years ago. Budgeting lets you see that and be deliberate about those choices.

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

#80

Post by kassner »

tossandthrow wrote: post #38
tonyedgecombe wrote: post #28

Earlier quoted context omitted.

Not that a sandwich will make much difference but you have to remember that employers like their staff to be indebted, it makes them compliant.

It is not really binary. I hate budgeting and still save around half my salary. Though I do realize that this is a different game for some people, where some need it more than others.

You are the exception. Most people follow the “Parkinson’s Law” for money.
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