Plain Text Accounting — An Enjoyable Way to Manage Your Finances
I hated accounting at school. But for personal and professional reasons, I’ve had to get back to accounting. Hopefully, I’ve found a way to make it actually enjoyable: plain text accounting.
What is Plain Text Accounting?
Plain text accounting is a method of managing financial records using simple plain text files instead of specialized accounting software or complex spreadsheet programs. It involves storing financial transactions and information in a human-readable, plain text format that can be easily understood and manipulated by both humans and computers.
The concept of plain text accounting emphasizes simplicity, transparency, and portability. Instead of relying on proprietary file formats or complex databases, financial data is recorded using plain text files using a standardized format. This format often follows certain conventions, such as using a plain text markup language like Ledger, hledger, or beancount.
With plain text accounting, transactions are recorded in a ledger file, where each entry represents a financial transaction, including details such as date, description, account names, and amounts. These entries can be organized into different accounts, allowing users to track income, expenses, assets, liabilities, and other financial aspects.
Since the data is stored in plain text files, it can be easily viewed, edited, and shared using basic text editors and version control systems like Git. This makes it easier for individuals (or small businesses) to manage their financial records without the need for specialized software.
Furthermore, plain text accounting promotes transparency and auditability. The plain text format makes it easy to review and understand the financial transactions, and it enables users to track changes and revisions over time, providing a clear audit trail.
An Example of a Transaction
Here’s how look like a transaction in plain text accounting format:
2019-07-15 Grocery Expenses
Expenses:Groceries $100.00
Liabilities:Credit CardThe transaction took place on July 15, 2019. It represents a purchase of groceries for $100. The transaction is categorized under the account “Expenses:Groceries,” indicating that it is an expense related to groceries. The amount is subtracted from this account.
The transaction also involves a liability account called “Liabilities:Credit Card,” suggesting that the purchase was made using a credit card. This account would be increased (negatively so that the sum of transactions is 0) by the transaction amount, indicating an increase in the outstanding credit card balance.
It’s as simple as this!
Plain Text Accounting Ecosystem
The ecosystem of plain text accounting is very developed. For the choice of software, you have options like Ledger, hledger, and beancount.
Ledger is somewhat the precursor of plain text accounting. The others drew inspiration from it. It is very easy to get started with and suitable for basic use. I recommend starting with Ledger if you want to explore plain text accounting.
Next, hledger is a clone of Ledger with a few minor differences.
The last one is Beancount, which offers more features than the other two, allowing for more advanced usage.
In addition to these software options, there are also tools to interact with your files, generate reports, web interfaces, and more… And everything is open-source!
My Thoughts About Plain Text Accounting
I currently use the Beancount software to manage my finances. I started getting interested in plain text accounting about a year ago. I began with Ledger, but since then, I’ve switched, and I won’t go back to Ledger. Beancount works perfectly for me.
I even enjoy recording my transactions in Beancount; I see it as a game. It’s a game involving money, but still a game. When I generate my reports afterward, it’s satisfying to see how much money I’ve earned, from which sources, where my expenses go, etc. I have a sense of control over my finances that I didn’t have before.
In any case, I find that plain text accounting makes managing my finances fun.
However, a major drawback is that it involves quite a bit of manual work. Personally, I don’t have thousands of transactions each month, but if you manage a fairly developed business, it might be better to opt for an automated solution rather than plain text accounting.
Final Note
I don’t get the impression that plain text accounting is widespread. However, I think it’s an excellent way to manage your finances when you have only a few hundred transactions per month.
I encourage you to give it a try and see if it suits you!
Thanks for reading! Here are some links that may interest you:
