The ledger and how transactions work
Every dollar (or euro, or dong) you record goes through one ledger. It is not double-entry bookkeeping — there are no debits, credits, or a chart of accounts to balance. It is a two-leg transaction model: a transfer is a single event carrying both ends, so “move $500 from checking to savings” cannot be recorded half-right.
This page explains what’s actually happening so the numbers make sense. You don’t have to do any accounting yourself.
What a transaction is
A transaction is one event: spent, received, moved between two of your own accounts, a balance correction, or a buy/sell. Every transaction has a kind, which determines what it can carry:
| Kind | What it means | Category? |
|---|---|---|
expense | Money left an account | Optional |
income | Money arrived in an account | Optional |
transfer | Money moved between two of your own accounts | Optional |
adjustment | A manual balance correction | Never — always uncategorized |
investment | A buy or sell that touches your portfolio | Optional |
A transfer always needs both ends — Open Net Worth refuses to save one with only one side filled in, and refuses a self-transfer (an account can’t send money to itself). A fee or interest charged on an account, rather than money moving between two, is an expense or income — not a transfer.
Splits
A single purchase can cover more than one category — a $140.00 Target run that’s really $90.00 groceries and $50.00 household goods. A split divides one transaction’s amount across several categories; the lines must add up to the total exactly — a mismatch is refused rather than silently rounded away, because that kind of silent correction is exactly what quietly drifts a budget over time.
What the two-leg model buys you
Because a transfer is one event with two legs, not two independent transactions, your accounts can never drift out of sync — there’s no state where checking says money left but savings never says it arrived. And because every transaction is a real, addressable record, your balance and net worth are always computed fresh from the full history — never a stored total that could get stale. See Net worth for how that computation works.
Where this shows up
- Accounts and opening balances — the special first transaction every account has.
- Categories — how spending gets labeled (or deliberately doesn’t).
- Base currency and FX — how a transaction in a foreign currency gets valued for reporting.