A ledger for personal finances is similar to a general or accounting ledger. However, the former mainly includes income and expenses while the accounting ledger contains at least five categories. Knowing how to use a ledger for personal finance can become an important skill to learn.

When creating a ledger, you can use a computer software or make a physical ledger whether it’s for your business or personal finance. What’s important is to add columns that will reflect your debits, credits, descriptions, and transaction dates.

How To Make a Ledger

As mentioned, you can make a ledger using traditional books. But these days, you must take advantage of technology. This includes sophisticated accounting software or excel sheets to make recording transactions simpler and more efficient. That way, you can evaluate your finances’ health much easier.

Generally, you can do the following steps when making a ledger:

1. Make A Chart of Accounts

Here, you need to create five sections for the chart of accounts. These sections include Expenses, Revenues, Equity, Liabilities, and Assets.

2. Choose A Bookkeeping Method

Bookkeeping methods include computer programs and a physical ledger.

By using electronic systems, updating your books or ledgers will be automatic. For instance, whatever you enter on the general journal will automatically be entered on the ledger. The general journal is similar to the ledger’s transactions but only has a different template.

Meanwhile, using a physical ledger also means using a general physical journal. You’ll write all entries in the journal and again write the entries from the journal to the ledger. Thus, this process doubles your task of writing entries.

3. Make the Ledger

Setting up your ledger is simple. You only need to check where you’ll need sub-pages or multiple pages for tracking the accounts’ details.

When formatting, you can customize it or go with the general formatting style. Here, ensuring you’ve included all the accounts needed to track your finances is vital.

How to set up a household ledger?

Step 1

Similar to the general ledger, you must first choose your bookkeeping method. If you want a physical ledger, use a booklet or several sheets of ledger paper. This will help you make your entries be in a logical manner.

Step 2

Next is to label each sheet depending on the expenses and income sources. These labels include miscellaneous, clothing, gas, housing, food, and bills.

Step 3

When recording your transactions, you must add the details like amount, brief description, and date. It’s also best to enter these data as soon as possible so you won’t forget about them.

Step 4

You must total each transaction or section on the columns provided at every end of the month.

How To Use A Ledger

After setting up a ledger, whether for your business or household, it’s time to make use of it. First, you can use the ledger to know how much balance is there in your account. You can also use it to create balance sheet reports or income statements. All of these are possible because you have all your financial transactions in an organized document.

Most importantly, use the ledger to compare your past expenditures. By knowing how much you spend monthly, you’ll know if your monthly income is enough. If expenses exceed your income, you can go back to your list of transactions, and remove unnecessary expenditures to create a budget for the following months.

Ledger Accounts

A ledger account also has five types. These accounts are categorized based on your transactions and knowing them helps you organize and manage your finances better. Here are the types of ledgers and what constitutes them:

1. Assets

This contains cash, assets, accounts receivable, and prepaid expenses. All of these are vital because they can affect the assets ledger.

2. Liabilities

This ledger contains accrued expenses, loans, accounts payable, and debt.

3. Equity

This is also known as the assets minus liabilities or the net assets. When you have more liabilities than your assets, the net equity decreases, and vice versa.

4. Revenue

Here, the transactions came from the receivables or cash from the sale of your services of goods. Income or revenues are rarely debited since they’re only generated.

However, the revenue account can be debited if sales or goods are returned or refunded. Do so by reversing the recorded transaction that has been canceled.

5. Expenses

As its name sounds, this ledger contains detailed expenses. You can use this account to check where your money is going so you can prevent mismanagement or overspending.

How do you fill out a ledger?

Before filling out a ledger, it’s essential to have a journal. You’ll use it to enter every type of transaction, such as cash disbursement, cash receipts, and the like. Then, you can transfer all of the recorded data from the journal to your ledger. Doing so prevents mistakes and double entry.

As mentioned, you can make this process more efficient if you’re using a ledger generated or created by a software. That way, you won’t have to manually find the type of ledger you need, or write the entries individually on each ledger, as these tasks are automated.

What’s important is to keep all the data accurate when recording. This means you shouldn’t change information written in the journal when transferring them to the ledger.

How To Use A Ledger For Personal Finance

How Do You Use an Accounting Ledger For Personal Finance?

An accounting ledger is also suitable for managing your finances. It’s similar to how accountants use an accounting ledger, but the entries are somewhat different.

In personal finance, you only need to include dates, transactions, and descriptions of the transactions. You also need to create columns for each type of transaction. For instance, make a column for the debit and another for the credit.

A debit is usually recorded in the left column while the credit is next to it. You’ll know if your transaction is a debit if it decreases funds while a credit adds to your funds.

Similar to the household ledger, you also need to balance your personal finance ledger every end of the month. Do so by totaling the debits and credits of your ledger. Then, use the totals in comparison to the receipts and bank statements. As a result, you can ensure that your current financial information is updated.

Lastly, you should carry over the balance of last month’s ledger to the next accounting period. This will then become a credit, which you’ll write in the right column.


A ledger contains all of your financial transactions. You can use it to create your budget, analyze your expenditures, and check whether you’re gaining more credits or debits. Without a ledger, it’d be hard for you to remember where your money is going.

You may create a budget, but you may forget some expenditures that most likely eat up your finances. But with a ledger, you can ensure that all your bills and income sources are listed in your budget.

FAQs for the article:

What is a personal ledger account?

In a nutshell, a personal ledger contains your credits and debits. It summarizes all the expenses and income sources you have, which you can review at the end of the month.

How to use a columnar pad for personal budgeting?

The columnar pad is similar to the booklet or sheets of ledger paper. This is most suitable if you prefer to write and enjoy the color of the accounting pads—yellow.

When using it, you also need to label the columns. This includes your income and expenses and the expected dates of such. It’s also best to group your expenses according to the category, such as fixed and recurring expenses.

After recording all your financial transactions, total them and subtract your expenses and income columns. Again, you can use this to assess the health of your finances.

Leave a Reply

Your email address will not be published.