Joe(joe1011010) joe1011010_km@users.sourceforge.net
&Jack.H.Ostroff; &Jack.H.Ostroff.mail;
2024-12-01
5.2.0

# Making the most of &kmymoney;

Help improve this Handbook

This and the following sections have had no significant updates since the very early versions of &kmymoney;. While the basics of bookkeeping have not changed over the years, and there is nothing inaccurate or misleading here, there have been requests to update this area. If you have any specific suggestions or ideas for this, the author would like to hear from you, through one of the routes listed at the Support page at the &kmymoney; web site

While much of &kmymoney; might be obvious to a naive user, and you could go ahead, clicking some buttons and filling in some data, after a time, you might decide you have done it wrong and want to start again, even if you did read the documentation on each part of &kmymoney;.

You will get a more efficient and effective system and much better use of your time if you first spend a little time planning how you are going to use &kmymoney;, so follow the steps given here. This may seem very simple, and indeed, it is simple, but taking the time to assure that your understanding of how things work is the same as &kmymoney;'s will almost certainly save you time later.

## Basic Accounting

Imagine your money as balls, or beans, and to stop them rolling around and getting lost you keep them in a box, or pot. Accounting, or Bookkeeping, is the process of counting and keeping track of the beans in the pot, or more important, the beans in several pots.

You have some money in the pot marked Cash. You buy some goods, so you take some beans out of the cash pot and place them into another pot marked Supplier. The supplier gives you some goods in exchange for the cash, so you take the beans out of the pot marked Supplier and put them in the pot marked Goods.

The goods have a value (the price you paid) so you still have the same amount of beans, some representing cash and some representing goods.

In this case you have two movements of beans, or transactions. Each transaction needs two entries, one to take beans out and one to put beans in. This is called double entry bookkeeping or double entry accounting. The recording of the transactions is done in a Ledger; each pot is known as an Account or Ledger code.

Now you take some goods and give them to a customer, who gives you some cash in exchange. The goods were worth some beans and, hopefully, the customer has given us more beans than that, so making a profit. To over simplify, the beans from the Goods pot come back as Cash, but we can split that as the Cost of Goods sold and Profit. This transaction has three entries; one side of the double entry has been split.

This will be covered in more detail later on in this handbook in the section on split transactions.

### Defining the accounts (personal records)

Most accounts, or pots, as described above, represent a measure of our Worth. The cash and goods represent our Assets, which also include any amount someone owes us for goods we provided or money we loaned to them. The money we owe to others, say if we had not paid our suppliers, are our Liabilities. These accounts are transferable to Cash and have a value.

Any pots that cannot be valued are Income or Expense. Our phone bill (or the phone company to which we pay the bill) cannot be valued; we know how much we have paid, but not how much anyone else has paid. We know how much our employer has paid us, but we do not know how much they have paid anybody else, or how much money they have left to pay us next month. Although we cannot determine an actual value for these pots, it is useful to monitor how much we have put into or taken out of each of them.

In some cases a supplier is a Liability, in others it is an Expense. This is something we need to consider and decide for each case. Similarly, you may set up a loan as a Liability, particularly if you transfer the money into your bank account, but it could be an Expense if it was to buy some furniture.

Consider how you want to track and analyze your income and expenses. This will help you decide how to set them up in &kmymoney;.

Finally, consider if you want everything in one set of accounts, or two or more. This may depend on the legal framework where you live, or just how you want to analyze things. Each set of accounts would be handled separately.

### Defining the accounts (business records)

There are similarities to setting up accounts for personal use, but there are additional considerations, including legal guidelines and requirements. &kmymoney; does not explicitly address any of these issues, as it has been designed as a personal finance manager. In addition, these additional issues are not addressed in this handbook, but you must be aware of them if you are going to attempt to use &kmymoney; for a business.

## Mapping your finances to &kmymoney;

So, collect your recent financial papers and explore the following sections for more information on how you can map your own finances to each of the different areas of &kmymoney;. Note that each of these sections below is presented in more detail in later chapters of this handbook.

### Accounts

An Account in &kmymoney; represents one of the pots of the previous section: it can be anywhere which holds your money and possessions that you wish to monitor. You generally create an account in &kmymoney; to represent each different account you have in real life, whether it is with a bank or other financial institution, or a store, or even just the cash in your wallet. There are several types of accounts available, which represent different types of places your money may be.

Transactions (to be described in more detail later) are created to indicate money moving in or out of one or more accounts.

As described below, accounts can either hold money which is actually yours (assets) or money which you owe (liabilities.) Liabilities can be thought of as magic pots, which you can take beans from even if there are not actually any beans there, but which you eventually need to replace.

#### Accounts - Asset

There are multiple types of Asset Accounts. They are all essentially the same, in holding your money, but there are some differences in the details of how money enters and leaves the different types of accounts.

Checking

  Standard bank checking account.

Savings

  Standard bank savings account.

Cash

  Money in your pocket or your wallet or in a jar or box on the shelf or under your bed.

Loan

  Loans you make to someone else.

Investment

  Money you invest.

Asset

  Property, collections, &etc;

#### Accounts - Liability

These accounts represent your debts and money you owe to others.

Credit card

  Standard credit card account.

Loan

  Loans made to you, mortgages, &etc;

Liability

  Anything else you owe that does not fit the other liability account types.

### Institutions

These represent financial institutions, such as banks or stores or investment brokers. They can be used to group accounts, and can show the total value of all your accounts within that institution. These do not need to reflect actual organizations, but are for your convenience in grouping your accounts. Their use is completely optional.

### Categories

A Category is a special type of account used internally by &kmymoney; to track income and expenses. These accounts are non-managed, because as mentioned earlier, they do not have real values, and show only what you have gotten from them or contributed to them. Each category shows the total value of transactions which mention it. The principle of double entry accounting requires that every transaction includes a category or transfer account. This will also be explained in more detail later in the handbook.

Income Categories are used as places from which you receive money, and Expense Categories represent purposes for which you spend money. On rare occasion, money can flow the "wrong" way, such as getting a refund for an over-payment of a utility bill.

#### Sub-Categories

Categories can be split into sub-categories, but this relationship is primarily for your convenience, and is used for display purposes. Most of the time, the sub-category totals are not included in the higher level category total, although there are specific reports and displays where this can be done.

### Tags

Tags are very similar to Categories, as they are also non-managed accounts that do not have a value. However, unlike Categories, the use of Tags is completely optional. They can be used to group transactions for reporting purposes.

### Payees

A Payee (or Payer) represents someone or some group to which you pay money or which pays you money. As with Tags, they are non-managed, and do not have a value. They are primarily a convenience for being able to report how much money you have sent to someone or spent at a particular store. These are optional for most transactions, but are required for Scheduled transactions, which are describe below. A transaction history, with categories, can be shown for each payee.

### Scheduled transactions

Where transactions occur on a regular basis, such as salary or utility bills, these can be set up against a Schedule. Transactions are created from Schedules. Upcoming scheduled transaction as well as those which are overdue can be shown on the home page.

## Useful Tips

When you start &kmymoney;, the Home View, or Home Page, shows a high level overview of your finances. It is divided into several sections, and you can customize which are displayed, and in what order. Along the left, there are icons for each of the major Views. Each view is used by &kmymoney; to present a different type of data for entry or review.

Unless you keep your money under your mattress or under the floorboards, you probably make use of one or more institutions, where you have accounts, which may be in credit or debit. In order to familiarize yourself with the way &kmymoney; works, choose an account you want to track with &kmymoney; and select the File New menu item in order to set up a data file.

If you have used another personal finance manager, you may be able to import the data from it into &kmymoney;.

If you have some regular receipts into or outgoings from this account, you can go to the Payees View and enter the names of both the payers and the payees involved; then go to Scheduled Transactions View and fill in a New Schedule for each recurring transaction. If you haven't entered the payee or payer, &kmymoney; will offer you the opportunity to do this in the middle of entering the Schedule.

To add other transactions go to the Ledger View; you can add new payees and categories while entering a transaction or by going to the Payees or Categories View before entering the transaction.

Depending on which option you chose when setting up the data file, you will probably find that the default Categories do not exactly match your needs; you can easily delete ones you know you are never going to need and add others that you do need. But when you are entering a transaction, you only have to type a few letters of a category and &kmymoney; will offer you a dropdown list of the matching categories from which to choose.

You can add different accounts managed by different institutions; the favorite ones (also called preferred) will show when you open &kmymoney; but you can quickly switch to any of the others.

When you make a payment, &kmymoney; will work out what the next check number should be; delete this if you are not making a check payment or edit it if the first check you enter is not check number 1. Alternatively, it is possible to switch off auto-increment of check numbers.

Every so often you may get statements of your account from the institutions you use. You can reconcile your &kmymoney; accounts against these statements so that you know you have an accurate representation of the current state of your finances.

If you go to the Reports View, you will find several default reports. To customize these, open the one most similar to the sort you prefer and then select 'New' (not 'Copy'.) You can then customize this to your needs and mark it as a preferred report if you wish.

Though &kmymoney; is not intended for use in a business context, if you are running a business on your own and so do not need payroll functions, you may find that &kmymoney; is sufficiently customizable to meet your needs, particularly as it comes with budgeting and forecasting features, and you can export your customized reports via CSV into other applications.

## Plugins

While a detailed knowledge of plugins is not necessary to use &kmymoney;, a basic understanding is helpful, as the concept is mentioned in many places throughout this handbook. When &kmymoney; was originally designed, all features and functionality were implemented within the source code of the program. As more features and functionality were added to the program, a plugin system was designed, so additional functionality could be added in a way that did not require modification of any of the core source code files. When &kmymoney; starts, it looks in a specific directory for any plugins, and it creates the appropriate menu and configuration entries for those it finds.

When the first plugins were written, even though their source code was included with the complete source code of &kmymoney;, not all &Linux; distributions included them in the versions they compiled. For some time, the handbook included instructions for checking this and for compiling them yourself, if necessary. At this point, many of the basic features of &kmymoney; have been implemented as plugins, and they are included by all distributions, as well as the &Windows;, &macOS;, Appimage, and other versions distributed on the &kmymoney; web site.

See the section on Plugins in the chapter on Settings for more information on determining which plugins are installed and active, and how to configure them.

If you wish to write your own plugin in order to implement a new feature, such as importing or exporting data in a custom format, you should use one of the existing importer or exporter plugins as an example. If you do so, please write to the developers' mailing list &devlist;, in case someone has already started a similar effort, and because your work may be of interest to other users.