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Keeping track of finances with Homebank

Short explanation of using software to monitor domestic financial status.

| | | topics: life | keywords: DIY, finance, free-software, homebank
id: 39b10a81-86bc-4bd4-8733-ea475214c3c8

About Homebank

Homebank is my preferred tool for keeping track of the accounts, but there are others too. I use it to track the expenses based on categories and budgets, which then generate the reports. It is open source, cross platform and free of cost.

The main screen might seem daunting (depends on previous exposure to serious software), but a lot of it is unnecessary to do the basic checks. This article is meant to help you get started. Time to muster discipline.

Configuration

Before getting to the stage of daily use, first configure the program. Below is a list of the most useful elements to configure and some tips from personal experience.

I have skipped features which I think aren't necessary to start using the Homebank, but feel free to explore them after a while.

Accounts

In the simplest case, your bank account. Start with tracking your current account (main account) if you want to find out where your money is going. Expand to other accounts you may have if you want total control, but it's not necessary and you may find it takes a lot of time. Accounts are edited from:

Manage > Accounts

The interface is simple enough for the level of this article. For your account type select "bank" for the current account. The starting balance should be what is in your account just before the first transaction you provide Homebank with.

Categories

Probably the primary and most useful way to determine where you are spending and what percentage of your total income.

Manage > Categories

Categories in Homebank are a hierarchical "taxonomic classification" system. Each category can have sub-categories and a transaction amount can belong wholly or be split in categories.

Before you start randomly plucking categories out of thin air, take some time to think this one through. Over the years I've had to keep changing this to eventually have the charts portray useful results. One idea is to use the categories provided by your national statistics provider, so that you can compare to your country's statistics (e.g. these). I took a long time rethinking my categories and ended up with similar ones to those provided in the example, so it might be good idea for start.

Finally, but very importantly, categories go hand-in-hand with budgets. Keep that in mind when you are deciding what and how your categories should be.

Automatic assignments

Because your time and life is too important. Using text found in your bank transactions, Homebank can automatically assign the payee and the categories to the transaction. It is normally the memo field provided by the bank. Getting this right can result in most of your transactions being automatically assigned every time you import them.

Budget

Probably the second most important function of the program. This is where one can set expectations for expenditures and income. Wisdom comes very handy in this section, but it's beyond the point of this article; I may write one on the subject. One quick tip: track your account for a quarter and extrapolate for the next ones; once you have a year's worth, you can budget the next year.

Manage > Budget

There are two tabs on the top: Expense & Income. You don't have to budget everything, but certain expenses might be very useful. Budgets can be broken down to different ones for each specific month, or same rate for each month and are linked to the categories set previously.

For irregular expenses (one of big outgoings), work out the average per month and use that as a value. Not only is this simpler for filling the fields, but the budget then represents the "spread of the load" to the other months.

Payees

The entities (e.g. people or companies) you usually pay money to. Don't bother listing every single payee; instead start with those you pay the most money to in a month Payees help to get a different perspective beyond the one provided by categories (see next). Payees configuration screen:

Manage > Payees

You can come back and edit the payees at any time, there isn't a need to worry about them in the beginning.

Use

Transactions

With the above configured, you are ready for the essence of this program, the transactions. All of your income and outcome is broken down to the individual transactions. It is tracking and analysing those which will reveal what is truly happening to your finances.

Importing

Homebank, like other accounting software, needs the transactions of your accounts as an input. You can manually enter those, but it's orders of magnitude more convenient to get the transactions from your online bank account as an export. I prefer the .ofx format (based on reasons I no longer remember), but there others which your bank may provide. Go to the bank account and export the transactions from the last point you last exported to the latest ones. Then use File > Import to import the file and follow the instructions on the screen. During the import check for duplicates and after the import check that your account's balance matched the balance stated on the online account. If not, go back and look for a missing or erroneous transaction.

After the import, double click on the account you just imported the transactions and check their properties. The important ones are category and payee. The other's become useful when you get creative. Check that all transactions are categorised and that most of them have a payee, especially the very valuable transactions. Transactions which are correct and assigned, need to be reconciled (there is a button to reconcile selected transactions). Once all reconciled, close the transaction window.

Reports and statistics

The panel on the right, titled "Where your money goes", should be updated now, telling you the most expensive categories and one for all the others. Under "Reports" you can check the budgets reports. The budget reports are where you can see if you are spending more money then you wanted and where. In the trend report you can see if you are generally spending more than you are earning. You can explore these, you can't break anything from here (as far as I know).

Conclusion

Learn more about, visit http://homebank.free.fr/help/index.html.