<?xml version="1.0" encoding="UTF-8"?>
<chapter id="makingmostof">
<chapterinfo>
  <authorgroup>
    <author><personname><firstname>Joe</firstname><surname>(joe1011010)</surname></personname>
            <email>joe1011010_km@users.sourceforge.net</email>
    </author>
    <author> &Jack.H.Ostroff; &Jack.H.Ostroff.mail; </author>
  </authorgroup>
  <date>2024-12-01</date>
  <releaseinfo>5.2.0</releaseinfo>
</chapterinfo>
<title>Making the most of &kmymoney;</title>

<note><title>Help improve this Handbook</title>
  <para>
    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 <ulink url="https://kmymoney.org/support.html">Support page</ulink>
    at the <ulink url="https://kmymoney.org/">&kmymoney; web site</ulink>
  </para>
</note>

<para>
  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;.
</para>

<para>
  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.
</para>

<sect1 id="makingmostof.basicaccounting"><title>Basic Accounting</title>
<para>
  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.
</para>

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

<para>
  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.
</para>

<para>
  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 <quote>double entry bookkeeping</quote> or <quote>double
  entry accounting</quote>. The recording of the transactions is done in a
  <quote>Ledger</quote>; each pot is known as an <quote>Account</quote> or
  <quote>Ledger code</quote>.
</para>

<para>
  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 <quote>Cost
  of Goods sold</quote> and <quote>Profit</quote>. This transaction has three
  entries; one side of the <quote>double entry</quote> has been split.
</para>

<para>
  This will be covered in more detail later on in this handbook in the section
  on <link linkend="details.ledgers.split">split transactions</link>.
</para>

<sect2 id="makingmostof.basicaccounting.personalaccounts">
  <title>Defining the accounts (personal records)</title>
<para>
  Most accounts, or pots, as described above, represent a measure of our
  <quote>Worth</quote>.  The cash and goods represent our <quote>Assets</quote>,
  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 <quote>Liabilities</quote>. These accounts are transferable to Cash and
  have a value.
</para>

<para>
  Any pots that cannot be valued are <quote>Income</quote> or
  <quote>Expense</quote>. 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.
</para>

<para>
  In some cases a supplier is a <quote>Liability,</quote> in others it is an
  <quote>Expense</quote>. 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.
</para>

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

<para>
  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.
</para>
</sect2>

<sect2 id="makingmostof.basicaccounting.businessaccounts"><title>Defining the accounts (business records)</title>
<para>
  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 <quote>personal</quote> 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.
</para>
</sect2>
</sect1>

<sect1 id="makingmostof.mapping"><title>Mapping your finances to &kmymoney;</title>
<para>
  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.
</para>

<sect2 id="makingmostof.mapping.accounts"><title>Accounts</title>
<para>
  An <quote>Account</quote> in &kmymoney; represents one of the <quote>pots</quote>
  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 <quote>real life,</quote> 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.
</para>

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

<para>
  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.
</para>


<sect3 id="makingmostof.mapping.accounts.asset"><title>Accounts - Asset</title>
<para>
  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.
</para>

<variablelist>
  <varlistentry>
    <term>Checking</term>
    <listitem>
      <para>
        Standard bank checking account.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Savings</term>
    <listitem>
      <para>
        Standard bank savings account.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Cash</term>
    <listitem>
      <para>
        Money in your pocket or your wallet or in a jar or box on the shelf or under
        your bed.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Loan</term>
    <listitem>
      <para>
        Loans you make to someone else.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Investment</term>
    <listitem>
      <para>
        Money you invest.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Asset</term>
    <listitem>
      <para>
        Property, collections, &etc;
      </para>
    </listitem>
  </varlistentry>
</variablelist>
</sect3>

<sect3 id="makingmostof.mapping.accounts.liability"><title>Accounts - Liability</title>
<para>
  These accounts represent your debts and money you owe to others.
</para>

<variablelist>
  <varlistentry>
    <term>Credit card</term>
    <listitem>
      <para>
        Standard credit card account.
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Loan</term>
    <listitem>
      <para>
        Loans made to you, mortgages, &etc;
      </para>
    </listitem>
  </varlistentry>

  <varlistentry>
    <term>Liability</term>
    <listitem>
      <para>
        Anything else you owe that does not fit the other liability account types.
      </para>
    </listitem>
  </varlistentry>
</variablelist>
</sect3>
</sect2>

<sect2 id="makingmostof.mapping.institutions"><title>Institutions</title>
<para>
  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.
</para>
</sect2>

<sect2 id="makingmostof.mapping.categories"><title>Categories</title>
<para>
  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.
</para>

<para>
  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.
</para>

<sect3 id="makingmostof.mapping.subcategories"><title>Sub-Categories</title>
<para>
  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.
</para>
</sect3>

</sect2>

<sect2 id="makingmostof.mapping.tags"><title>Tags</title>
<para>
  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.
</para>
</sect2>

<sect2 id="makingmostof.mapping.payees"><title>Payees</title>
<para>
  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.
</para>
</sect2>

<sect2 id="makingmostof.mapping.schedules"><title>Scheduled transactions</title>
<para>
  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.
</para>
</sect2>
</sect1>

<sect1 id="makingmostof.usefultips"><title>Useful Tips</title>
<para>
  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.
</para>

<para>
  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 <menuchoice><guimenu>File</guimenu><guimenuitem>New</guimenuitem>
  </menuchoice> menu item in order to set up a data file.
</para>

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

<para>
  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.
</para>

<para>
  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.
</para>

<para> 
  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.
</para>

<para>
  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.
</para>

<para>
  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.
</para>

<para>
  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.
</para>

<para>
  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.
</para>

<para>
  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.
</para>
</sect1>

<sect1 id="makingmostof.plugins"><title>Plugins</title>
<para>
  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.
</para>

<para>
  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 <ulink
  url="https://www.kmymoney.org">&kmymoney; web site</ulink>.
</para>

<para>
  See the section on <link linkend="details.settings.plugins">Plugins</link> in the
  chapter on <link linkend="details.settings">Settings</link> for more information on
  determining which plugins are installed and active, and how to configure them.
</para>

<para>
  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.
</para>

</sect1>
</chapter>
