Warning, /office/kmymoney/doc/makemostof.docbook is written in an unsupported language. File is not indexed.

0001 <?xml version="1.0" encoding="UTF-8"?>
0002 <chapter id="makingmostof">
0003 <chapterinfo>
0004   <authorgroup>
0005     <author><personname><firstname>Joe</firstname><surname>(joe1011010)</surname></personname>
0006             <email>joe1011010_km@users.sourceforge.net</email>
0007     </author>
0008   </authorgroup>
0009   <date>2010-04-05</date>
0010   <releaseinfo>5.0.4</releaseinfo>
0011 </chapterinfo>
0013 <title>Making the most of &kmymoney;</title>
0015 <para>
0016   While you could go ahead, clicking some buttons and filling in some data,
0017   after a time, you could decide you have done it wrong and start again, even if
0018   you did read the documentation on each part of &kmymoney;.
0019 </para>
0021 <para>
0022   You will get a more effective system if you spend a little time planning how
0023   you are going to use &kmymoney;, so follow the steps given here.
0024 </para>
0026 <sect1 id="makingmostof.basicaccounting">
0027 <title>Basic Accounting</title>
0029 <para>
0030   Imagine your money as balls, or beans, and to stop them rolling around you
0031   keep them in a box, or pot. Accounting, or Bookkeeping, is the process of
0032   counting and keeping track of the beans in the pot, or several pots.
0033 </para>
0035 <para>
0036   You have some money in the pot marked <quote>Cash</quote>. You buy some goods,
0037   so you take some beans out of the cash pot and place them into another pot
0038   marked <quote>Supplier</quote>. The supplier gives you some goods in exchange
0039   for the cash, so you take the beans out of the pot marked
0040   <quote>Supplier</quote> and put them in the pot marked <quote>Goods</quote>.
0041 </para>
0043 <para>
0044   The goods have a value (the price you paid) so you still have the same amount
0045   of beans, some representing cash and some representing goods.
0046 </para>
0048 <para>
0049   In this case you have two movements of beans, or transactions. Each
0050   transaction needs two entries, one to take beans out and one to put beans
0051   in. This is called <quote>double entry bookkeeping</quote> or <quote>double
0052   entry accounting</quote>. The recording of the transactions is done in a
0053   <quote>Ledger</quote>; each pot is known as an <quote>Account</quote> or
0054   <quote>Ledger code</quote>.
0055 </para>
0057 <para>
0058   Now you take some goods and give them to a customer, who gives you some cash
0059   in exchange. The goods were worth some beans and, hopefully, the customer has
0060   given us more beans than that, so making a profit. To over simplify, the beans
0061   from the Goods pot come back as Cash, but we can split that as the <quote>Cost
0062   of Goods sold</quote> and <quote>Profit</quote>. This transaction has three
0063   entries; one side of the <quote>double entry</quote> has been split.
0064 </para>
0066 <para>
0067   This will be covered in more detail later on in this handbook.
0068 </para>
0069 <!-- **** don't forget to make sure this is actually covered, and linked to from
0070      here.  Also, I have removed "in setting up accounts for Businesses." and
0071      modified the section below, since we explicitly say that KMM is not for
0072      business use. -->
0074 <sect2 id="makingmostof.basicaccounting.personalaccounts">
0075 <title>Defining the accounts (personal records)</title>
0077 <para>
0078   Most accounts, or pots, above represent a measure of our <quote>Worth</quote>.
0079   The cash and goods represent our <quote>Assets</quote>; so does what we are
0080   owed if our customers have not yet given us the money. The money we owe, say
0081   if we had not paid our suppliers, are our <quote>Liabilities</quote>. These
0082   accounts are transferable to Cash and have a value.
0083 </para>
0085 <para>
0086   Any pots that cannot be valued are <quote>Income</quote> or
0087   <quote>Expense</quote>. Our phone bill (or the phone company to which we pay
0088   the bill) cannot be valued; we know how much we have paid, but not how much
0089   anyone else has paid.  We know how much our employer has paid us, but we do
0090   not know how much they have paid anybody else, or how much money they have
0091   left to pay us next month.  Although we cannot determine an actual value for
0092   these pots, it is useful to monitor how much we have put into or taken out of
0093   each of them.
0094 </para>
0096 <para>
0097   In some cases a supplier is a <quote>Liability,</quote> in others it is an
0098   <quote>Expense</quote>. This is something we need to consider and decide for
0099   each case. Similarly, you may set up a loan as a Liability, particularly if
0100   you transfer the money into your bank account, but it could be an Expense if
0101   it was to buy some furniture.
0102 </para>
0104 <para>
0105   Consider how you want to track and analyze your income and expenses. This will
0106   help you decide how to set them up in &kmymoney;.
0107 </para>
0109 <para>
0110   Finally, consider if you want everything in one set of accounts, or two or
0111   more. This may depend on the legal framework or just how you want to analyze
0112   things. Each set of accounts would be handled separately.
0113 </para>
0114 </sect2>
0116 <sect2 id="makingmostof.basicaccounting.businessaccounts">
0117 <title>Defining the accounts (business records)</title>
0119 <para>
0120   There are similarities to setting up accounts for personal use, but there are
0121   additional considerations, including legal guidelines and requirements.
0122   &kmymoney; does not explicitly address any of these issues, as it has been
0123   designed as a <quote>personal</quote> finance manager.  In addition, these
0124   additional issues are not addressed in this handbook, but you must be aware of
0125   them if you are going to attempt to use &kmymoney; for a business.
0126 </para>
0127 </sect2>
0128 </sect1>
0130 <sect1 id="makingmostof.mapping">
0131 <title>Mapping your finances to &kmymoney;</title>
0133 <para>
0134   So, collect up your papers and see the following sections for each item in
0135   &kmymoney;.
0136 </para>
0138 <sect2 id="makingmostof.mapping.accounts">
0139 <title>Accounts</title>
0141 <para>
0142   These hold a value. Transactions are created against one or more accounts.
0143 </para>
0145 <sect3 id="makingmostof.mapping.accounts.asset">
0146 <title>Accounts - Asset</title>
0148 <para>
0149   These are the accounts which hold your money and possessions that you wish to
0150   monitor. The following types are available:
0151 </para>
0153 <variablelist>
0154   <varlistentry>
0155     <term>Checking</term>
0156     <listitem>
0157       <para>
0158         Standard bank checking account.
0159       </para>
0160     </listitem>
0161   </varlistentry>
0163   <varlistentry>
0164     <term>Savings</term>
0165     <listitem>
0166       <para>
0167         Standard bank savings account.
0168       </para>
0169     </listitem>
0170   </varlistentry>
0172   <varlistentry>
0173     <term>Cash</term>
0174     <listitem>
0175       <para>
0176         Money in your hand or wallet.
0177       </para>
0178     </listitem>
0179   </varlistentry>
0181   <varlistentry>
0182     <term>Loan</term>
0183     <listitem>
0184       <para>
0185         Loans you make to someone else.
0186       </para>
0187     </listitem>
0188   </varlistentry>
0190   <varlistentry>
0191     <term>Investment</term>
0192     <listitem>
0193       <para>
0194         Money you invest.
0195       </para>
0196     </listitem>
0197   </varlistentry>
0199   <varlistentry>
0200     <term>Asset</term>
0201     <listitem>
0202       <para>
0203         Property, collections, &etc;
0204       </para>
0205     </listitem>
0206   </varlistentry>
0207 </variablelist>
0208 </sect3>
0210 <sect3 id="makingmostof.mapping.accounts.liability">
0211 <title>Accounts - Liability</title>
0213 <para>
0214   These are the accounts which represent your debts and money owed that you wish
0215   to monitor. The following types are available:
0216 </para>
0218 <variablelist>
0219   <varlistentry>
0220     <term>Credit card</term>
0221     <listitem>
0222       <para>
0223         Standard credit card account.
0224       </para>
0225     </listitem>
0226   </varlistentry>
0228   <varlistentry>
0229     <term>Loan</term>
0230     <listitem>
0231       <para>
0232         Loans made to you, mortgages, &etc;
0233       </para>
0234     </listitem>
0235   </varlistentry>
0237   <varlistentry>
0238     <term>Liability</term>
0239     <listitem>
0240       <para>
0241         Anything else you owe that is not a loan.
0242       </para>
0243     </listitem>
0244   </varlistentry>
0245 </variablelist>
0246 </sect3>
0247 </sect2>
0249 <sect2 id="makingmostof.mapping.institutions">
0250 <title>Institutions</title>
0252 <para>
0253   These are completely optional and can be used to group accounts, and show a
0254   total value for all accounts in each group.
0255 </para>
0256 </sect2>
0258 <sect2 id="makingmostof.mapping.categories">
0259 <title>Categories</title>
0261 <para>
0262   These represent non-managed income and expense accounts that do not have a
0263   value. The total value of transactions is shown against each category. A
0264   category or transfer account is required for each transaction.
0265 </para>
0266 </sect2>
0268 <sect2 id="makingmostof.mapping.subcategories">
0269 <title>Sub-Categories</title>
0271 <para>
0272   Categories can be split into sub-categories, but this relationship is only for
0273   display purposes, as the sub-category totals are not included in the higher
0274   level category total.
0275 </para>
0276 </sect2>
0278 <sect2 id="makingmostof.mapping.tags">
0279 <title>Tags</title>
0281 <para>
0282   Tags are very similar to Categories, as they are also non-managed accounts
0283   that do not have a value.  However, unlike Categories, the use of Tags is
0284   completely optional.
0285 </para>
0286 </sect2>
0288 <sect2 id="makingmostof.mapping.payees">
0289 <title>Payees</title>
0291 <para>
0292   These are optional for transactions. They are required for Scheduled
0293   transactions. A transaction history, with category, is shown against each
0294   payee.
0295 </para>
0296 </sect2>
0298 <sect2 id="makingmostof.mapping.schedules">
0299 <title>Scheduled transactions</title>
0301 <para>
0302   Where transactions occur on a regular basis, these can be set up against a
0303   Schedule. Transactions are created from a schedule; any that are overdue can
0304   be seen on the home page.
0305 </para>
0306 </sect2>
0307 </sect1>
0309 <sect1 id="makingmostof.usefultips">
0310 <title>Useful Tips</title>
0312 <para>
0313   Unless you keep your money under your mattress or under the floorboards, you
0314   probably make use of one or more institutions where you have accounts, which
0315   may be in credit or debit. In order to familiarize yourself with the way
0316   &kmymoney; works, choose an account you want to track with &kmymoney; and
0317   select the <menuchoice><guimenu>File</guimenu><guimenuitem>New</guimenuitem>
0318   </menuchoice> menu item in order to set up an account file.
0319 </para>
0321 <para>
0322   If you have used another personal finance manager, you may be able to import
0323   the data from it into &kmymoney;.
0324 </para>
0326 <para>
0327   If you have some regular receipts into or outgoings from this account, go to
0328   Payee and enter the names of both the payers and the payees involved; then go
0329   to Schedule and fill in a New Schedule for each recurring transaction. If you
0330   haven't entered the payee or payer, &kmymoney; will offer you the opportunity
0331   to do this in the middle of entering the schedule.
0332 </para>
0334 <para>
0335   To add other new transactions go to Ledgers; you can add new payees and
0336   categories in the middle of a transaction or by going to Payees or Categories
0337   before entering the transaction.
0338 </para>
0340 <para>
0341   You will probably find that the default Categories do not exactly match your
0342   needs; you can easily delete ones you know you are never going to need and add
0343   others that you need. But when you are entering a transaction, you only have
0344   to type a few letters of a category and &kmymoney; will offer you a drop down
0345   list of the matching categories from which to choose.
0346 </para>
0348 <para>
0349   You can add different accounts managed by different institutions; the
0350   preferred one will show when you open &kmymoney; but you can quickly switch to
0351   any of the others.
0352 </para>
0354 <para>
0355   When you make a payment, &kmymoney; will work out what the next check number
0356   should be; delete this if you are not making a check payment or edit it if
0357   the first check you enter is not check number 1. Alternatively, it is
0358   possible to switch off auto-increment of check numbers.
0359 </para>
0361 <para>
0362   Every so often you may get statements of your account from the institutions
0363   you use; you can reconcile your &kmymoney; accounts against these statements
0364   so that you have an accurate statement of the current state of your finances.
0365 </para>
0367 <para>
0368   If you go to Reports, you will find several default reports; to customize
0369   these, open one similar to the sort you prefer and then select 'New' (not
0370   'Copy'); you can then customize this to your needs and mark it as a preferred
0371   report if you wish.
0372 </para>
0374 <para>
0375   Though &kmymoney; is not intended for use in a business context, if you are
0376   running a business on your own and so do not need payroll functions, you will
0377   probably find that &kmymoney; is sufficiently customizable to meet your needs
0378   particularly as it comes with budgeting and forecasting features and you can
0379   export your customized reports via CSV into other applications.
0380 </para>
0381 </sect1>
0382 </chapter>