Using Financial Software

Posted by Mike Smith :: August 20, 2007 @ 6:55 am

Financial software has revolutionized personal finance. You can use it to simplify nearly every aspect of your cash management, budgeting, and planning tasks. I use Microsoft Money but other programs, such as Intuit’s Quicken, are equally capable. Here’s how I use it:

I have all of my accounts entered into the program: checking, savings, credit cards, mortgage, investment, and retirement accounts. Valuable personal property, such as my house, cars, etc., can be entered as well. The program calls these assets, but I hesitate to use that term. You could also add in other items, such as your P2P loan or lending account from Lending Club with relative ease.

When I make a purchase using my debit or credit card, I save the receipt. I download my bank transactions on a weekly basis and my credit card transactions on a monthly basis. I compare the downloaded amounts to my receipts to ensure accuracy. Then I categorize each transaction, trying to be as specific as possible. When I get my monthly statements, balancing my accounts tends to go very smoothly.

Once all of your transactions are captured and categorized, the real value of the program comes through. You can use your categorized income and expenses to set up a budget. By scheduling recurring income and expenses, you can forecast future cash flow as well as set up savings goals. If you’re in debt, the software can also help you to analyze your situations and help you make a plan to get out of debt.

As time progresses and you keep your transactions up to date, you can compare your budget to actual income and expenses. You can then make adjustments to your budget, or your spending, to bring things back in line.

Having all of you finances tracked in one location makes it much easier to stay on top of them. While the entire process may seem time consuming, it actually takes very little time at all. The initial setup does take a few hours, but that’s time that you’ll quickly make up through the increased efficiency of using the software. Adding financial software to your personal finance regimen will simplify your finances, save you time on routine tasks like balancing your accounts, and given you insight into ways to save yourself money. If that’s not incentive to start using it today, I don’t know what is!