Bye bye Elbank
The main reason for switching is budgeting. While Elbank was a cool experiment, it is not an accounting software, and inherently lacks support for powerful budgeting.
When I started working on Elbank as a replacement for Ledger, I was looking for a reporting tool within Emacs that would fetch bank transactions automatically, so I wouldn’t have to enter transactions by hand (this is a seriously tedious task, and I grew tired of doing it after roughly two years, and finally gave up).
Since then, I learned about ledger-autosync and boobank, which I use to sync my bank statements with Ledger (more about that in another post).
YNAB’s way of budgeting
I only came across YNAB recently. While I won’t use their
software (being a non-free web application, and, you know… there’s no
ynab), I think that the principles behind it are really appealing for personal
budgeting. I encourage you to read more about
it (or grab a copy of the
book, it’s great), but here’s
Embrace your true expenses: Plan for larger and less frequent expenses, so when a yearly bill arrives, or your car breaks down, you’ll be covered.
Roll with the punches: Address overspending as it happens by taking money overspent from another envelope. As long as you keep budgeting, you’re succeeding.
Age your money: Spend less than you earn, so your money stays in the bank account longer. As you do that, the age of your money will grow, and once you reach the goal of spending money that is at least one month old, you won’t worry about that next bill.
Implementation in Ledger
The implementation in Ledger uses plain double-entry accounting. I took most of it from Sacha, with some minor differences.
Budgeting new money
After each income transaction, I budget the new money:
2018-06-12 Employer Assets:Bank:Checking 1600.00 EUR Income:Salary -1600.00 EUR 2018-06-12 Budget [Assets:Budget:Food] 400.00 EUR [Assets:Budget:Rent] 600.00 EUR [Assets:Budget:Utilities] 600.00 EUR [Equity:Budget] -1600.00 EUR
Did you notice the square brackets around the accounts of the budget
transaction? It’s a feature Ledger calls virtual
postings are not considered real, and won’t be present in any report that uses
--real flag. This is exactly what we want, since it’s a budget allocation
and not a “real” transaction. Therefore we’ll use the
--real flag for all
reports except for our budget report.
Automatically crediting budget accounts when spending money
Next, we need to credit the budget accounts each time we spend money. Ledger has another neat feature called automated transactions for this:
= /Expenses/ [Assets:Budget:Unbudgeted] -1.0 [Equity:Budget] 1.0 = /Expenses:Food/ [Assets:Budget:Food] -1.0 [Assets:Budget:Unbudgeted] 1.0 = /Expenses:Rent/ [Assets:Budget:Rent] -1.0 [Assets:Budget:Unbudgeted] 1.0 = /Expenses:Utilities/ [Assets:Budget:Utilities] -1.0 [Assets:Budget:Unbudgeted] 1.0
Every expense is taken out of the
Assets:Budget:Unbudgeted account by default.
This forces me to budget properly, as
Assets:Budget:Unbudgeted should always
be 0 (if it is not the case I immediately know that there is something wrong
All other automatic transactions take money out of the
Assets:Budget:Unbudgeted account instead of
A Budget report
This is the final piece of the puzzle. Here’s the budget report command:
ledger --empty -S -T -f ledger.dat bal ^assets:budget
If we have the following transactions:
2018/06/12 Groceries store Expenses:Food 123.00 EUR Assets:Bank:Checking 2018/06/12 Landlord Expenses:Rent 600.00 EUR Assets:Bank:Checking 2018/06/12 Internet provider Expenses:Utilities:Internet 40.00 EUR Assets:Bank:Checking
Here’s what the report looks like:
837.00 EUR Assets:Budget 560.00 EUR Utilities 277.00 EUR Food 0 Rent 0 Unbudgeted -------------------- 837.00 EUR
Ledger is amazingly powerful, and provides a great framework for YNAB-like
budgeting. In a future post I’ll explain how I automatically import my bank
transactions using a mix of