Ledger have to be KISSed too

When you try to keep a ledger to track your personal expenses, a decision have to be taken. Will I try to track every single transaction? Or else what transactions will I track?

I first started tracking my personal income and expenses back in 2007, I used a program that would set up few accounts for me. Out of the box, I had an assets group under which all the bank accounts would exists, an expenses group under which car, insurance, medical and other expenses would go. There was also an Income group, a liability group and finally the always complicated idea of equity.

As the set up was already given, I started to track every single movement of money, and believe me when I say that you will get tired, if you try to do the same. Live its too short to waste it tracking very beer you have drunk. Try to KISS (Keep It Simple Stupid), otherwise you will stop tracking all together. Below I state the points that worked for me. It does not mean it will work for you. Remember that this is for personal finances.

1. Use a simple text file to track your expenses. You can edit it everywhere without having to install anything. Then query it with ledger[link].

2. Use only the most common accounts. Bank accounts usually suffice for assets. You might have stock values in which case those accounts will be needed. Do not create a wallet account.

3. When you get cash out money into your pocket, consider it expended.

4. Track petrol,car insurance and car fixes, if you own a car. Similarly track phone expenses, if you own one. I have lately used this when I had to make a decision whether to change contract. Things like electricity and gas can be interesting to track too.

5. Try to track all the bank transactions. It will be a place to check whether some of your numbers are correct.

Finally use the collected data to make judgements!
Enjoy

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