How to structure ledger accounts for personal finances

By Kohei Hayashi

In the previous post, I introduced you to the idea of managing your finances using double-entry bookkeeping. In this post, I’d like to show you how you might want to structure your ledger accounts using a fictional book.

Categories of accounts

There are 5 basic account categories in accounting, namely assets, liabilities, equity, income, and expenses.

Account categories in Cagamee

Asset accounts

Assets are things you own, such as cash, your bank accounts, money you lend to somebody, etc.

Here is an example hierarchy of asset accounts.

  • Assets
    • Cash
    • Banks
      • Bank1
        • Checking
        • Savings
      • Bank2
        • Checking
        • Savings
    • Investments
      • Brokerage account
      • Retirement account like 401k
      • Money you invested into your own business (equity)
      • Money you lend to your own business (debt)
      • Angel investments
      • ESOP
      • Social lending
    • Money you’re owed
      • Name of the company you work for (for expense reimbursements)
      • Family
      • Friends
    • Prepaid cards
    • House
    • Car
Asset accounts layout example in Cagamee

Liability accounts

Liabilities are the money you owe to somebody else like credit card balances and taxes.

Here is an example layout.

  • Liabilities
    • Credit cards
      • Credit card1
      • Credit card2
    • Mortgage
    • Auto loan
    • Student loan
    • Taxes payable
    • Social securities payable
    • Money you owe
      • Your company
      • Friends
      • Family
Liability accounts layout example in Cagamee

Equity accounts

Equity is your net worth. You don’t use equity accounts on a regular basis, and your accounting software can automatically calculate it by subtracting your expenses from income. The only time you use the equity accounts is when you enter opening balances to your asset or liability accounts, or when you want to transfer your yearly profits from your income and expense accounts as retained earnings.

  • Equity
    • Opening balance
    • Retained earnings
Equity accounts layout example in Cagamee

Income accounts

Income accounts are things like your salary, earnings from your side business, profits from your investments, etc.

Here is an example layout for income accounts.

  • Income
    • Salary
    • Earnings from your side businesses (consulting, airbnb, UberEats, etc)
    • Investments
      • Capital gains
      • Dividends
      • Interests
      • Rent
      • Social lending
Income accounts layout example in Cagamee

Expense accounts

Expense accounts are something you spend money on, such as groceries, medical bills, travel, utilities, etc. It’s important to focus on big spending or tax-deductible items that you want to track and avoid being overly detailed.

Here is an example hierarchy of expense accounts.

  • Expenses
    • Grocery
    • Utilities
      • Water
      • Gas
      • Electricity
    • Rent
    • Medical
    • Travel
    • Entertainment
    • Phone
    • Taxes
      • Income
      • Residential
    • Social securities
      • Pension
      • Health insurance
    • Mortgage
    • Auto loan
    • Miscellaneous
Expense accounts layout example in Cagamee

This is just an example. You should experiment on your own and create the best structure that works for your specific needs.