How do you organize your finances?

[KingGheedora]

What do you use to keep track of your finances? How often do you do it? Do you use something like quicken? Pen an paper? Excel?

I would like to hear what "your system" is.

Also, is there a book or two you can recommend that could teach me about the different options on what to do with surplus income (money left over after rent and bills)? I don't know much about stocks, different types of accounts, etc. I don't even have a credit card.

 

[DaveSimmons]

First thing to do though is start a high-interest savings account some place like INGDirect.com and put in enough to cover at least a couple of months worth of living expense.

After that you can keep putting in more money to start building up enough for a more aggressive investment like a stock index mutual fund. You'll need several thousand to do this, but meanwhile you'll at least keep earning interest.

www.fool.com is one place for tips on investing once you have more to invest.

 

[bsobel]

Quicken since one of the first versions, back to the early 90's.

 

[compuwiz1]

I don't organize my finances...they organize me.

 

[GeekDrew]

I use Quicken to keep track of all of my finances. I usually update my transactions every 3-4 days. I can't decide whether I want to start scanning + shredding most of my receipts, or just file them all and continue to find more storage space.

 

[MrChad]

I use Microsoft Money to track our bank, credit card and investment accounts as well as my wife's student loan. Dave's advice is excellent, and I'll also recommend you pick up Andrew Tobias' The Only Investment Guide You'll Ever Need, which is an excellent reference on saving and investing.

 

[child of wonder]

We have two checking accounts and one savings account. One checking is our "Spending" account and the other is our "Bill" account and is where all our direct deposits go.

We keep ourselves at $300 each week for gas, groceries, and whatever other expenses come up (though we don't always stick to it). I've written up a simple text document that budgets out every paycheck through the next 6 months like this:

$1000 Pay 1/5
-$150 Daycare 1/5
-$300 Expenses
-$100 Bill 1 due 1/7
-$100 Bill 2 due 1/9
-$350 Save

$1000 Pay 1/12
-$150 Daycare
-$300 Expenses
-$200 Bill 3 due 1/15
-$100 Bill 4 due 1/18
-$100 Car repair
-$150 Savings

Once I get the paycheck, $300 is transferred to the spending account, bills are paid, and the remaining is transferred to savings.

For savings, we write up a list of things we need to save for every year (Xmas, vacation, clothes, etc.) and things we want (LCD TV, stuff for house, etc.) and then arrange them by priority and appropriate our savings accordingly.

I take care of all the money so it sucks being the budget Nazi when my wife wants to go over budget but I just keep reminding her that if we stick to our budget we can have a new car in a couple years, nice stuff for the house, etc.

 

[dullard]

I went all out on Excel because I'm fascinated with numbers. I've got graphs, projections, adjustments for inflation/raises/spending habit changes, etc. I do it all out of fun. But I know many people detest the idea of knowing how much money they have/owe.

I think the most critical thing to start with is to know where your money is going. How can you possibly have a wise plan for expendable money if you haven't even determined how much expendable money you have? For me, I opened up Excel, made a bunch of headings (housing, utilities, food (eating at home), eating out, entertainment, cars, school, health, etc.) Put in as many categories as you think are important. Then with every penny spent, enter it into Excel that night. Yes, even if you put a nickel in a parking meter, record it. After a little bit of time (a couple of months), you'll know roughly where your money is going and you can use that to do all the rest of your financial planning.

Why take all that time? (1) It is less than a minute of work a day and (2) people are very dilusional about where their money goes. You won't believe the number of people who are blatantly wrong about their own spending habits. I see it all the time with people who claim to spend $100/month on food. Then after a little probing you find out they drink a Starbucks coffee each morning at a cost of $1500/year. I'm sorry, but that one drink a day exceeded their entire estimate for all food/drink consumption. If you are dilusional, you cannot have a wise financial plan.

Take your current expenses and add in a safety cushion. You may be healthy now, but you might not be healthy next year. You may be happy with a beater car now, but you might not be happy with it in 6 months. Thus, you have to err on the side of financial surplus and plan for the worst. Take your expense number and add in say 20% of hidden expenses. The rest of your money is what is really expendable.

Or is it? Are you truely saving enough for retirement (run a 10 minute online calculator once a year to answer that question)? Are you truely saving enough to meet your dreams (house, vacation, new car, etc)? Only after that can you say the excess money is expendable.

A few other things:
1) I assume since you know nothing of stocks, that you have no retirement savings. It is really wise to get on this early if you can at all afford to do so. When you are ready, post again on ATOT and many people can give you advice on where to start. I personally suggest (and buy myself) a variety of mutal funds covering the wide range of companies (small/big, value/growth, US/international). You can buy all that in a few minutes and you'll beat 95% of other investors who spend hours a day on stocks.

2) If you can control your spending get a credit card as soon as possible. Not having one is harming you greatly in ways you can't even imagine. If you can't control your spending, do NOT get one.

3) Don't forget to treat yourself. The best way to save money is NOT to become Scrooge - living a life of misery just to have a huge pile of money. No, reward yourself along the way. Just don't go overboard.

4) I think the best way to do it all is to practice delay. Buy that new car 6 months later (and get 6 more months of free use of your current car). Watch that great new move at the $1.50 place a month later instead of at the $8 movie theater. Buy that new video game 3 months later at $25 instead of $60. Wait one more week for each haircut and save $100 per year. Wait for the new toy to go on sale/rebate (watch the hot deals forum here) and get it at half the price over an impulse buy. Do all this and you can have your cake and eat it too.

 

[FoBoT]

my wife and i go through our budget 2-3 times a year
we use online banking to watch the money go out of our checking account
we save some into a seperate credit union savings for emergency
401(k) is taken out before paycheck for long term retirement savings

KISS

 

[LS20]

i used a simple template in Excel.

it was updated twice a month... around mid-month when i have some free time, and around end of month when credit card bills arrive to double-check (since ALL of my purchases are through CC).

i did that for a short while but now im too lazy to keep up.

my current system is: increase auto paycheck-deduction (savings to 401k and savings to stock option) for backup. spend such that i get a positive net going into the savings account..... any big "toy" purchases are spent from the surplus savings account. that way, i have a fall-back, and i know im keeping my regular/monthly spending under control (checking = regular spending)

 

[fLum0x]

i use quicken to do everything. It is really nice to use and is not that hard to set up. It takes some use to get used to everything, but once you get it down, it will tell you everything you want to know.

 

[JEDI]

i use online bill pay.

i took a random month, and wrote down all my expenditures:
mortgage
electric
gas
phone
insurance (car/house/unbrella)
property tax
credit card

under credit card, i broke it into more categories:
dsl, gym membership, food, entertainment, gas, misc

that's how i got the # for monthly expenditures.

i also d/l my online credit card statements into quicken.

 

[Gunslinger08]

I don't. I pay every bill that I can with my credit card (cash back), the rest directly from my bank account. Put around 1/3 of my monthly income into my HSBC account. About 1/4 of my monthly income goes to car payment and another 1/3 for other expenses (insurance, cell phone bill, cable, lunches, entertainment, etc.). The remaining 1/12th goes into buying something big that I want or savings.

 

[ch33zw1z]

check book + my brain.

 

[TallBill]

Track all spending with online banking. I recently set up an over 5% savings account through USAA for emergencies. Mostly keep track of stuff in my head though.

 

[IronWing]

I use MS Money and track all expenses. IMHO, tracking expenses is a far more valuable exercise than setting up a budget. I set up a cash account to track cash spending.

I skim off "extra" money every month (or more often) into a high yield savings account and take out CDs as rates warrant.

 

[K1052]

I been using Quicken lately to organize everything and like it.

Surplus money typically goes in to my liquid reserve (high interest online savings), Scottrade account, or to paying down the principal on my mortgage depending on what I want to do.

 

[D1gger]

I have been using Quicken for years and find it does the job for me. I have every expenditure categorized, and except for a few general categories such as my wife's credit card, it is broken down to a very fine level so we can look at it anyway we want.