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I hope someone can help re-word my question... but I'm looking for a numeric or alphanumeric system to help me categorize income and expenses by type. I'm not interested in a system that separates "Debit" from "credit", but rather separating "travel" from "CableBill", "mortgage", etc.

I'll bet some computer software already does this, and probably does so in a numeric hierarchy.

Can someone familiar with personal finance point me to a system that lays this out for me?

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How come? I could do it easy, but how will it help? Just curious. –  MrChrister Dec 12 '12 at 8:27
    
@MrChrister I'm looking at embedding this logic within a certain aspect of Bitcoin for transactions. Ideas / more questions are welcome! –  makerofthings7 Dec 16 '12 at 4:33

2 Answers 2

What you are describing is a Chart of Accounts. It's a structure used by accountants to categorise accounts into sub-categories below the standard Asset/Liability/Income/Expense structure.

The actual categories used will vary widely between different people and different companies. Every person and company is different, whilst you may be happy to have a single expense account called "Lunch", I may want lots of expense accounts to distinguish between all the different restaurants I eat at regularly. Companies will often change their chart of accounts over time as they decide they want to capture more (or less) detail on where a particular type of Expense is really being spent.

All of this makes any attempt to create a standard (in the strict sense) rather futile. I have worked at a few places where discussions about how to structure the chart of accounts and what referencing scheme to use can be surprisingly heated! You'll have to come up with your own system, but I can provide a few common recommendations:

  1. Make the account numbers memorable, people will be referring to them by number in no time
  2. Reflect hierarchy in the numbering system, e.g. start all of your Asset accounts with an "A"
  3. Leave plenty of gaps between account numbers so there's room for expansion

If you're looking for some simple examples to get started with, most personal finance software (e.g. GnuCash) will offer to create an example chart of accounts when you first start a session.

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Holy smokes it is a real thing? I was gonna make one up for the poster. Genius. –  MrChrister Dec 16 '12 at 18:32

Mint.com does a pretty good job at this, for a free service, but it's mostly for personal finance. It looks at all of your transactions and tries to categorize them, and also allows you to create your own categories and filters.

For example, when I started using it, it imported the last three months of my transactions and detected all of my 'coffee house' transactions. This is how I learned that I was spending about $90 a month going to Starbucks, rather than the $30 I had estimated.

I know it's not a 'system' like an accounting outfit might use, but most accounting offices I've worked with have had their own home-brewed system.

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Mint.com is good for work categories, but the poster was asking about numeric systems. –  MrChrister Dec 19 '12 at 2:46

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