Personal Finance & Your Computer
As far as I'm concerned, if you're looking to get your financial house in order, there are really only three vital tools out there. Tool Number One is desire. (You're here, so you must have at least a little of this!) Tool Number Two is a computer. (Again, you've apparently got that part handled.) Tool Number Three is a financial-management program for that computer.
Which program? There are many. Some folks absolutely love Intuit's Quicken, while others might swear by AceMoney. I'm a Quicken guy myself — my most recent upgrade was to Quicken Deluxe 2013, which I use in combination with YNAB4 — but what I've seen of various other programs tells me that several of them could do just as great a job.
"But why?" you might ask. "If I'm trying to get my spending under control, why would I fork over $50 or more on a computer program?"
Because, when used properly, both of these programs will tell you (at any given time) exactly where your money is going. This bears repeating:
They tell you exactly where your money is going.
And if you don't know where your money is going, then it is simply going away, and you are going backwards. And you are not in control of your money.
For example, one of the reports I generate in Quicken each month is a Cash Flow Report. It looks something like this. In a matter of seconds, as long as you've been entering all your transactions like a good little girl or boy, then you know exactly where the money went. Not "sort of" where it went, or "mostly" where it went, but exactly where it went.
Perhaps more importantly, these programs are also an absolute dream for tracking all your bank, brokerage, credit card, and loan account accounts and balances. All of these items are right at your fingertips. Transactions are handled in the familiar "checkbook register" format; here is a sample screenshot (with some blurring added to protect myself a bit).
In short, Quicken and other apps like it are excellent for:
- Monitoring all account balances (and I do mean "all").
- Seeing where your money is right now, and where it has gone in the past.
- Categorizing your spending and allowing tangible assessment of it.
- Reminding you when transactions and bills are due.
- Calculating net worth, cash flow, and expense statements.
- Tracking tax-related items and expenses.
- About thirty-two other items I can't recall just now.
There's a nice "What can Quicken really do for me?" sort of article at Dummies.com, entitled "Quicken's Basic Functions."
For more information, you can also go straight to the official website for Quicken.
Where Quicken Falls Way Short: Budgeting
Notice that I did not include "budgeting" in the items for which Quicken is excellent. Certainly Quicken includes budgeting capabilities. But in my opinion, these budgeting capabilities fall far short on the customization side. They require entirely too much tweaking and constant revamping. Accomplishing this in an efficient, effective manner just has not happened in any of my attempts.
So it is worth adding here that Microsoft's Excel allows you to generate custom spreadsheets, which can be immensely helpful with financial management, and with planning your future spending (budgeting) in particular.
Because of its high price, though, Excel itself isn't an absolute necessity. If you don't have a spreadsheet program but would like a free one, then head over to OpenOffice.org and download the OpenOffice suite. I don't have a great deal of experience with this program, but I've heard good things about it. OpenOffice supposedly has excellent compatibility with Microsoft Office files; it did open a few of my Excel spreadsheets just fine when I tried it. But the important item is this: You can use OpenOffice to build your own custom financial spreadsheets.
If you're interested in looking at some custom Excel spreadsheets that I've created for daily, weekly, and monthly use, just head to my Excel spreadsheet page. They might not be the prettiest spreadsheets out there, but they've helped me get my finances organized.