Managing finances with GnuCash

GnuCash is a powerful and intuitive accounting program for managing finances for both individuals and small businesses. Thanks to the integration of the Home Banking Computer Interface (HBCI), the European standard for online banking, the program can retrieve bank account activity online and arrange for the transfer of funds. In addition, the GnuCash app lets the user on the go use mobile devices to manage their finances.

The source code and the binary packages for various Linux systems can be downloaded from the project site [1]. Under Ubuntu, you can use the command:

sudo apt-get install gnucash

to install GnuCash. Once setup is complete, you can use a shortcut to start the program, or you can start it from a terminal using the gnucash shell command.

Setup

After you have installed GnuCash, you will need to set it up. File | Import lets you incorporate data from an existing accounting process into GnuCash. The program supports both QIF and QFX/OFX formats, which are widely available. This means you can import data from your old accounting software into GnuCash, which should make migrating to GnuCash easy.

If you don't already have an accounting system, the installation assistant will help with selecting the correct settings (Figure 1). In order to start with a new file, you should select File | New File in the start screen, which at this point is still empty. Private users will need settings that are different from those needed by users who run a business or work as a freelancer.

Figure 1: Thanks to the installation assistant, it is simple and convenient to create a new file. The program offers accounting frameworks for both business and private use.

First, select the default currency. Next you need to decide on the accounting system. The default setting General Accounts usually suffices for private users. Others such as Real Estate can be added.

Business owners can choose from various standard accounting frameworks (see the "Accounting Framework" box). If necessary, you use the next step to modify the chosen framework. This can also be done once setup has been completed.

After you have selected all of the required accounts, it is time to record each account's opening balance. This should include checking and savings accounts, your credit card balance, and the amount of cash that you have on hand. This can also be done at a later point in time. Finally, you should decide on the name and the location for saving your new file. This concludes the setup process.

Account Overview

Upon startup, GnuCash shows an account overview (Figure 2) with the balance for each account. This is where you will find a summary of your assets, such as cash, bank balances, house, car, and others. In addition, there is a place for liabilities, such as credit cards and card balances. At the bottom of the window, GnuCash computes your equity, meaning the amount that is left over after subtracting liabilities from assets.

Figure 2: The account overview gives you a summary of your financial status.

The account overview also contains a list of your income and expenses. At the lower edge of the screen, GnuCash computes your profit, which is what is left over after expenses are subtracted from income.

You can set up new accounts and delete accounts that are no longer used with right-clicks and the Context menu in the account overview. Right-clicking on an existing account causes a menu to display. Select Edit Account from the menu for editing account settings. This would involve changes such as a new account name or saving the account number for a bank account.