plain text accounting

Who is using this, and how?

Who's using Ledger? has some stories.

Is it a good fit for me?

If you would like to use a GUI that provides lots of guidance, PTA tools currently don't meet that need. Most current PTA users tend to be comfortable using the command line, editing plain text, and perhaps using version control.

What are the alternatives?

Traditional GUI-centric accounting software:
Free/open-source: GNUCash, Grisbi, KMyMoney..
Commercial: Quicken, Quickbooks, You Need A Budget..

Online/cloud-based accounting software: Xero, FreeAgent..

Here is Wikipedia's Comparison of accounting software. Also:

• spreadsheets
• keeping accounts on paper
• using a bookkeeper/accountant.

What are the advantages over traditional (Free/open-source) accounting software, like GnuCash?

Some key factors:

a. The plain text, human readable, well supported data formats.

b. The division of concerns between creating and managing the data (your responsibility) and analysing it (the tool's responsibility). Ie "immutable data" + "referentially transparent reporting tools".

c. The command-line interface.

d. The ecosystem of related tools.

create synergies such as:

1. The data is more future proof. You can access it relatively easily with different software, newly-written software, or no software.

2. The command-line based UI, together with the plain text format, allows easy integration with other software, custom workflows and automation.

3. The user's responsibilities and mental model feel simpler, ie: "I just need to keep a list of transactions". Complex features and tools are not visible until you need them. Common actions can be easily scripted for daily use.

4. The data can be managed using the rich ecosystem of tools for managing text. This is appealing to folks familiar with such tools.

5. Most significantly, the data can be effectively version controlled, providing an audit trail, unlimited "undo", and collaboration.

6. Because the software (mostly) does not touch your data, and because version control would let you know and roll back if it did, you can have great confidence in the integrity of your data. If the software misbehaves, your data is not at risk. It's safe and relaxing to try out new features or new software on your data.

7. The data/tool separation facilitates decentralised development, stimulating an ecosystem of more tools and integrations.

8. The free form DSL-style format provides great expressiveness for modelling and documenting real-world financial activities, without UI-imposed limitations.

What are the advantages over commercial accounting software, like QuickBooks?

In addition to the advantages above, being Free or Open Source software helps ensure: - No lockin - your data remains accessible, and there are no yearly fees. - You can fix, enhance and port the software. - The software is more portable, scriptable, and lightweight.

Where can I read more discussion of this approach ?

• The Surprising Ease of Plain Text Accounting
• Articles linked below...
• ...

Objections and Concerns

Isn't personal accounting a waste of time?

People have very different needs and practise personal accounting for many different reasons. There is of course a point of diminishing returns; tailor your accounting practices to your needs. Needs change over time. Some of us would benefit from doing more (or better) accounting, some less (I would guess this second group is smaller). In The Millionaire Next Door (highly recommended), one research finding was that above-average wealth accumulators spend more time on financial planning, which for many of us requires accounting as a foundation. "Minimal time dedicated to financial planning is a leading indicator of a UAW [Under Accumulator of Wealth]".

Must I edit text and type cryptic commands?

Not entirely! "Plain Text Accounting" is a broad description, referring mainly to the data format. We welcome optional GUIs, and they are coming.

Do you really enter every little transaction?

Yes! Many folks in our community do it. Mahatma Gandhi reconciled to the penny every night. J.D. Rockefeller was famous for his ledgers. It's not required. I started doing it as a temporary learning exercise, and still like it. It makes troubleshooting and reconciling easier.

How is that possible?

Practice, and a process/toolset that suits you. Some folks import most of the data from their banks, so little manual data entry is required. A few prefer to manually enter everything, for the increased awareness and insight. "Manual" data entry is usually assisted in some way: interactive console tools (hledger add and similar), web-based tools (hledger-web and similar), GUI tools (ledgerhelpers), smart editors (eg emacs & ledger-mode), recurring transaction scripts. I currently use a mixture of bank CSV import and rapid copy/paste in emacs. I spend 15 minutes a day on average, and for me that's currently a good investment.

How do I use the transaction data in my bank's web or mobile app?

If you can export it as CSV, you can import it and run queries against it. There are also some tools for converting OFX, QIF etc.

So I've got a huge list of transactions recorded, duplicating my bank statements. How does that help?

Accounting is modelling flows of money (or other value). Such a model aggregates information from many sources, in one trusted place. With it you can efficiently generate reports, forecast things (cashflow!), answer questions, try experiments. Some people need a very simple model, others benefit from a more detailed one, and we don't know up front what we might need in future. The most fundamental accounting data is a simple list of transactions (the journal). Once you have captured this, you can mine it for anything you may want later on. Plain text accounting provides nice open data format(s), tools and practices for doing this, and could be a good foundation for more powerful tools.

Isn't a command-line tool too limited for real-world accounting needs?

"I am sure for a simple expense/budget ledger it will work OK, but when it comes to recurring journals, multiple reconciliation accounts, inter company transfers, control account tracing etc., give me a nice GUI any day..."
Understandable. The current plain text accounting tools provide a very generic double entry accounting system with which you can model such things, and script them. There are a number of generic GUIs available (hledger has curses and web interfaces, and there are web/curses/GTK interfaces for Ledger and beancount). But there are not yet a lot of rich task-specific GUIs. There's no reason they can't be built, though.

Isn't a plain text format too limited for large organizations?

"it's pretty obvious that plain-text files don't scale to a multinational, with hundreds of accountants of various types all trying to work with the same files. Even with proper use of Git I bet that would get old fast. You would instead want a real database, with a schema, and some data validation and some programs/webpages to smooth out the data entry and querying and whatnot."
I'm not sure. Current plain text accounting tools can do some schema definition and data validation, and will do more in future. The plain text storage format is open, human-readable, future-proof (useful even without the software), scales smoothly from simple to complex needs, and taps a huge ecosystem of highly useful tooling, such as version control systems. And, despite the name, there's no reason these tools can't support other kinds of storage, such as a database.

If this is double entry accounting, where are the debits and credits?

Most (not all) plain text accounting implementations use signed amounts instead of debits and credits. This makes them "double entry light" perhaps, but it has been a rather successful simplification, intuitive to most newcomers.

How do I communicate with my accountant?

Clean up text reports by hand, print them as PDF, export CSV reports to a spreadsheet..

What if my accountant only uses QuickBooks?

You'll need a new accountant, or a duplicate set of books in QuickBooks, or to pioneer *ledger -> QuickBooks exporting.

Can I use this to do my taxes?

You can use this to track and report the data needed for tax reporting. Fill out and submit tax forms with another tool, or by hand.

Getting started, Practicalities

Where can I see a comparison of hledger, Ledger, beancount, and the rest?

Glad you asked! See below, and also comparisons. hledger's FAQ discusses differences from Ledger, Beancount docs probably do too.

How to organise files ? Should I split the journal into many files ?

All in one file (or one file per year) and ordered by date is simplest and creates the fewest headaches (balance assertions/assignments, scope of directives, where to put entries, finding things..).

If you use emacs: it’s possible to insert org headings (which are comments to h/ledger) and then use org-mode or org-minor-mode to collapse/expand/navigate sections of your journal.

Also in emacs: in ledger-mode, C-c C-f can give you a filtered view of just one account’s transactions. (But be careful, if you edit in the wrong place it will lose data.)

https://www.reddit.com/r/plaintextaccounting/comments/d69slp/how_do_you_manage_multiple_accounts_in/

How big is your ledger/journal file ?

For individual accounting, somewhere between 500-1500 transactions and 100-400K of journal per year seems typical.

https://www.reddit.com/r/plaintextaccounting/comments/dbjizl/how_big_is_your_ledgerjournal_file/

How do I do budgeting?

See budgeting below. I emulate YNAB-ish envelope budgetting (see third link).