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Previous discussion: https://news.ycombinator.com/item?id=7707262

Unaffiliated with, but an extremely pleased user of http://www.youneedabudget.com.

accounting != budget management

accounting is more a business thing. all accounts needs to be balanced ie you always needs to have zero.

C'mon this is HN. If your personal budget doesn't zero out, you're not planning carefully enough.

YNAB is both. It's a double-entry budget management system.

YNAB is not double-entry. In fact I interviewed with them one time and they asked me how I would design it, and I started outlining how I run my ledger-based YNAB-like system with double-entry accounting. Their response was something along the lines of "wish we had thought of that, it would have been easier."

I have seen that more than once, and considering double entry accounting is 500+ years old, it amazes me people still do it that way.

Wait, it isn't? My understanding of double entry is that asset moves across accounts are recorded in both accounts, so if I were to, say, pay a credit card bill, I show a debit from my checking account and a credit to my card account.

Is this incorrect?

You'd do the same in cash accounting. Otherwise you're recording wrong values, as compared to the actual account statements. Double entry means balancing active and passive sides for all activities, asset and debt. When you buy a laptop with a credit card, you add (for example - the details depend on legal requirements, how much detail you want to capture etc) an entry with 1000 on the passive side, in the cc account, 500 on the active side (asset it's not worth what you paid for it any more) and 500 under depreciaton. Then when you pay the bill, you reduce the cc account and the checking account. Each of these operations individually are balanced, ie they sum to 0.

that's in fact the way I learned it and ynab doesn't look like it. however I didn't seen many people who use double accounting for their personal budget? maybe i didn't seen enough people yet, since it looks like that a lot of hn'er using double accounting...

Double accounting for personal budgets is too much overhead, which is why ledger is a nice middle ground. I doubt many ppl reading this use double accounting for their personal finances - by the time you need that, you'll have someone else do it for you, and they won't be dicking around with ledger...

YNAB is double-entry but not the way you would normally do it (note, I have no idea how it is implemented under the hood, I'm just referring to how I explain YNAB's system to myself). YNAB essentially puts your accounts (assets and liabilities) on one side of the balance sheet and the budgets on the other. It is double-entry in the sense that every transaction is either between two accounts, or between an account and a category (a budget account), so there are two sides to every transaction.

However, in "normal" double-entry accounting, you would not have assets and liabilities on the same side of the balance sheet, and the way YNAB does this leads to some strange behavior. For example, if your net wealth (assets and liabilities) is negative, you need a negative budget ("pre-YNAB debt"). So now you have in your budget both money you plan to spend on actual expenses, and debt.

You could, in principle, design a YNAB-like double-entry accounting system where your assets balance against equity and debt, and where the money that is "available to budget" matches the actual money you have available, regardless of whether that money originates from equity or debt. That would be closer to the normal understanding of double-entry accounting.

That's my understanding of double-entry.

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