For many years I've tracked all my income and expense using a personal finance tool. It all started one year - it was the dreaded tax time. It turns out I hadn't kept any records, which made it a real challenge to work out what to put on my tax return. I decided a really good move would be to go to the bank and get them to print off copies of my bank statements (this was before the days of internet banking). So I went into the bank - I think it was the one on the uni campus as i was a student at the time, and asked for copies of my bank statements. Well, i was flabbergasted to find out that I'd have to pay $2 per sheet! Getting a copy of MY banking records was going to cost me a small fortune!
From that day forward I vowed to always record every transaction myself so I'd have full access to the records whenever and where-ever I wanted without having to pay a cent.
So the question was, what package to use? I started with MS Money. It was a great product which I used for many years but eventually Microsoft stopped supporting it. You don't want to rely on a product that is no longer supported - what if something goes wrong? So I started looking around for something else. I wanted a proper accounting package, but didn't want to pay the exhorbident fees charged by the professional packages like MYOB. Plus, it was just for my personal finances, I figured I didn't need to pay big bucks for that. There was the old faithful Quicken, but that still cost maybe $100 pa. Surely there was a good one out there without the high price. Like maybe an Open Source product.
Enter GNUCash. This product is excellent. It's Open Source, runs on Linux, Mac, and Windows, and it's free! I have done some basic accounting work, and so loved GNUCash's ability to enter proper Debits and Credits in different accounts. You can transfer money from one account to another simply by entering that account in the account field of a transaction. For example, here's a transaction entry for some groceries I bought at the supermarket the other day:
It shows an expense (debit) of $35.73 to an account I've created to record grocery spending - Expenses:Private:Food:Groceries, and a corresponding charge to my credit card (credit) for the same amount. If I'd paid some of this with cash, I could easily have reduced the amount going to the credit card, and added another line to enter the amount spent from Cash.
The accounts I've made together are called the 'Chart of Accounts'. GNUCash can get you started with a standard Chart of Accounts which you can customise to suit your needs. All you're considering when deciding what accounts to have is how do I want to break down my income and expenses? Don't create all these extra accounts if you don't care about the breakdown. For example, you might create a few accounts like this:
But maybe you don't actually care who the clothing is for, so you might be better with just one account - Expenses:Private:Clothing
Keeping GNUCash up-to-date is the challenge. I've found the best way it to enter transactions regularly. That way the task is less onerous and you feel more inclined to do it. Plus, if you wait a month to enter transactions, apart from taking ages to do, you'll likely forget what some items were and have to make educated guesses.
So that's a very brief introduction to using GNUCash. I love it, and if you've ever considered recording finances before, I bet you'll love using it too.
I'd love to hear from anyone who's used this or a similar program. Or if you have any questions about how I do things, just let me know in the comments below.