[Discuss] Financial database / balance?

[alex at pennace.org (Alex Pennace)]

On Sun, Jan 15, 2012 at 01:25:51PM -0500, Daniel C. wrote:
> I considered double-entry, but most accountants I've spoken to say
> that it's overkill for personal finance. ?Also, I could never figure
> out how paychecks are supposed to work. ?Do I have an account called
> "Job" that I just debit eternally so that I can then credit that
> amount to my "funds available" account? 

Basically. Taking Gnucash as an example, it has four basic kinds of
accounts: Assets, Liabilities, Income and Expenses. The underlying
principle is the same, the differences are the column headings in the
register for each kind of account and the signedness used (i.e. you
"debited" your Income account for $40,000, that shows up as +$40,000
in the accounts list, not -$40,000).

Taking an example of a typical paycheck stub:

Gross Pay: $1000
Health Insurance (pre-tax): $50
Dental Insurance (pre-tax): $10
Federal Withholding: $60
State Withholding: $30
Social Security: $20
Medicare: $20

I would enter it in Gnucash as one transaction as such:

Income:Salary:2012                -1000.00
Income:Salary:2012                +  50.00
Income:Salary:2012                +  10.00
Expenses:Taxes:Federal:2012       +  60.00
Expenses:Taxes:State:2012         +  30.00
Expenses:Social Security:2012     +  20.00
Expenses:Medicare:2012            +  20.00
Assets:Current Assets:Undeposited + 810.00

This represents the $1000.00 gross pay, and giving back $60 of that
pay for insurance. It also represents all the taxes I paid out,
leaving the final amount of $810.00 in my "checks to be deposited"
account.

Subsequently, I gather up one or more checks and bring them to DCU,
and at the conclusion of that I move money from my "checks to be
deposited" account to my "DCU Checking" account.

This exercise allows me to quickly find answers to the following
questions which are important for tax purposes:

1. How much income less pre-tax deductions did I receive?
2. How much did I pay to the feds and state for 2012?
3. How much did I pay in social security tax? (this is deductable for
Massachusetts income tax)

>?I guess it would be kind of
> nice to know where exactly my money is coming from, but to be honest
> most of the time I just have one job and that's it. ?My primary
> concern is with tracking savings, expenses, and (ultimately) how much
> I can spend on beer tonight without infringing on either of the first
> two items.

I haven't used Gnucash's budget facility at all. For my part I wrote
up a quick program in Ruby to plan out things for the next 18
months to ensure I don't fail my major constraint (that I have one
year's worth of income in cash) at any point.