After I mentioned to a coworker that I had a blog about personal finance, he told me that he and his wife combined their finances over the summer. This was a big deal for them, since for the first 9 years of their marriage, they kept separate accounts. They still have individual accounts, but they do all of their real spending out of their joint account (bills, groceries, etc).
He explained that they kept track of the accounts on their computer. Apparently, instead of using Quicken, Quicken Online, Mint, or the like, they use a Mac program called Checkbook. Because they had trouble linking it to their bank account, they enter each transaction manually into the program, just like balancing a shared digital checkbook.
At first I was a little surprised, I didn’t think anyone would have the discipline to do that. So I asked how it was working out. He said that it had transformed the way they looked at their finances.
Before, they had a general idea of things, kept track of their balances online. By entering the numbers and using the categories, he and his wife are able to see how much money they spend on things every day, every week. He said they spent a lot more money on groceries, snacks, and restaurants than they’d realized.
This sounded like my experience with manual tracking. I like Quicken and Mint, but sometimes it helps for me to sit down with a spreadsheet and see what we really do spend. It’s intimidating and I think it’s important for everyone to do for at least a month at some point. It changes the way you look at your spending.
Since he seemed pleased with the system, I asked him if they’d found any problems. He said that the only one they’d run into was actually entering the data. That’s why I gave up and started using tracking programs (and getting my info from them periodically). If you’re too tired one night, busy the next, things start to back up. And before you know it, you’ve lost receipts, notes, and know you’re missing important data.
Is there a best way to keep track of your money? Ideally, I’d say that manual is still the best. Putting the numbers in yourself really brings home your spending habits.
But it’s hard to keep up with everything manually. That’s why I recommend using software such as Mint.com (free) or Quicken Online (free) to track your bank accounts. This way, you can always get a quick picture of your finances in one place. And by taking an hour or less a couple times a month, you can tally up your spending by category without worrying about saving receipts (except for cash) or finding time every day.
I don’t think there’s a right way, except doing it. Or, perhaps, the only wrong way of doing it is not doing it at all.
How do you keep track of your spending? How do you watch your accounts?