I Bought Quicken, Now How Do I Use It?

There’s no better time than the beginning of a new year to implement a new budget in order to gain control of your spending.  In the final installment of our series on Quicken, we provide a few pointers to make using Quicken more meaningful so that you can better track where your money goes.

Should I be trying to hit the same number every month?

Comparing expenses on a monthly basis can be another source of frustration. There are many fluctuations that occur throughout the year, like holidays, summer vacation, and surprise home/car maintenance issues.

This is why it’s most helpful to measure your progress against a rolling year period. For example: You’ve just finished November, so you will want to measure December 1st of last year to November 30th of this year against the calendar year amount of your budget. If the amount is more, then you know you are a little ahead of pace and you should scale back.

If you’ve been diligent enough to hang in there for a year of budgeting, then you are fortunate enough to have a full year of meaningful comparison points.  So for this month, it would be best to investigate how January 2010 is comparing to January 2009’s data.  Barring any unusual spending activities in Jan. 2009, you should have some useful targets to compare to this year’s spending.

Performing this exercise monthly can greatly improve your overall financial picture as it allows you to have greater control over your regular expenditures.

How many categories should I be using?

Trying to determine which category your expense should go can be very confusing when you have forty to choose from.  Add in multiple subcategories for each of the main categories and you’re about ready to pull your hair out.

Luckily, Quicken allows you to edit the category list which should be your first action step when loading the software.  We recommend using 8-10 categories that will capture all of your spending.  This list includes:

  • Clothing
  • Communication (Phone, TV, Internet)
  • Discretionary (Cash, Travel, Fun, Church/Charity Contributions)
  • Food (Dining Out, Alcohol, Groceries)
  • Debts (Mortgage, Equity Line, Car Payments, Credit Card or Student Loan Payments)
  • Education (Books, Private School, College Tuition)
  • Health & Hygiene (Gym Membership, Doctor Visits, Prescriptions)
  • Household (Maintenance, Home Improvements)
  • Investments (Roth/IRA Contributions)
  • Risk Management & Financial Services (Bank Charges, Insurance)
  • Taxes
  • Transportation (Gas, Repairs, Car Insurance)

By practicing these two steps you should be well on your way to becoming a successful budgeter.

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