Any of the brand name programs will work very well for most people, so it is simply a question of getting a recommendation or doing some research on the net. They all work in approximately the same way, and you can keep it simple or expand it as much as you care to. The basic steps are as follows, however, and you can probably get yourself set up with a simple personal finance program in one weekend day.
Set up your accounts
This is where the controversy may lie, since some people don’t care about keeping track of expenses, and others want to know where every penny goes. A simple set of accounts may be: Home expenses (rent or mortgage, utilities, repairs, etc.), Living expenses (groceries, insurance, car expenses, etc.), Personal expenses (clothing, toiletries, vacation, etc.). If you want to keep better track of details, just break those categories further, for example, instead of Home, you may have House for mortgage or rent, Utilities for electric, gas, telephone, Auto for gas, repairs, tolls. The important thing is to be consistent about how you enter items into their “category”. Every month’s mortgage bill should be entered: mortgage/House or auto repair/Auto or gas/Utilities. If this is done properly, at any point in the year, you can run a report to show you exactly how much you spent on gas for the car this year.
Enter your data
The developers of these programs have made it as easy as they could to get you up and running. Just enter your bank accounts and credit card accounts, give them names and balances and start entering. Don’t worry about what happened in the past. Let’s say you have a checking account with ABC Bank, a Savings account with DEF credit union and credit cards with Visa a Master Card. Grab your last statements, enter the outstanding balance at the close of the statement and you are on your way. If you feel ambitious, you can enter checks that haven’t cleared the bank yet, but as long as your checks are covered, you don’t really have to worry about them until you reconcile the account. Each time you enter a check, pay an online bill or make a credit card transaction, just enter it into the appropriate account. If you move money from your savings to your checking to cover expenses, use the transfer between accounts feature.
Use memorized transactions
You pay the same company and amount for your mortgage and car insurance every month, perhaps you put a fixed amount into your savings account every month, so just memorize those transactions and when you type the first letter, the entire transaction will pop up, including the proper category.
Use due dates
If your mortgage is due on the 1st of the month, set up a reminder to pay it on the 20th; if your insurance is due on the 16th, set up your system so that a reminder pops up on the 10th, and you can just accept it and it is entered. You also have the option to change the date or delay the payment if you have to. This system is especially helpful for automated payments that are charged to your checking account on a given day.
Learn how to reconcile
If you freak out when your checking account does not balance to the penny, you have probably spent countless hours finding a discrepancy, even though you know the bank is right. Your accounting program cannot make arithmetic errors, and so the only reconciling items you will have to enter are the ones you forgot to enter. You will not believe how much time you will save.
Learn how to run reports
As long as you have categorized correctly, it is a simple matter to run any report for income and expenses that you like. Most of the programs have preset settings for the most common reports, but you also have the capability to customize them as you like.
Add your investment accounts
If you really want to go through the time and the trouble, you can add your investment accounts to your system. This allows you to add any 401k contributions each month, mark your account to market with changes in market value, enter purchases and sales of stocks and bonds. If you are just starting out, you may want to put this off until you have mastered the rest of the system.
Today, you can pay all of your bills online, link your personal accounting program to your bank accounts and even upload them to a tax preparation program. Personal finances were never so easy.
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