PERSONAL FINANCES: Figuring out where the money goes

From the archive [originally posted 13 Feb 2012]

Well, tax season is finally just around the corner, and I hope you’re been diligently collecting your slips as they arrive in the mail (perhaps into a special folder labelled 2011 Tax Information, but that’s just a guess 😉 ).

Have you ever taken a moment to really look at the numbers? I mean, to really, carefully study the YTD values on your T4? Do you ask yourself, “where did the money go?” We sure do! When my husband brought his home, we were baffled! We had to really think about what we had done in 2011 because the dollar values make you feel like your bank account should be higher, your investments should be soaring, and your wallet should be full. But the reality is that whether you make a lot or a little, it’s hard to keep track of those fast-moving dollar bills (especially when such a large percentage of them are only ever seen on a statement or computer screen)!

After our befuddled attempt to recollect our spending habits of the past year, I’ve decided to (yet again!) try to keep a better grasp on our ins and outs. In the past, I’ve used a couple different Personal Finance software packages (some free/some purchased), along with both self-created and downloaded Excel spreadsheets, but I’ve never found anything I particularly loved. The hard part about tracking your personal finances is the time it takes to get your accounts set-up, and the diligence to remember to update and review on a regular basis. Considering I’ve been working in business/money-related jobs since my teen years, I can’t imagine how awful this task must be for people who really hate dealing with money and numbers. Even still, I’m going to challenge you to join me in this daunting task – because we all know that it will be good for our bank accounts (and sanity) in the end!

As a QuickBooks ProAdvisor, Intuit gave me a copy of Quicken Home & Business, and that’s what I’m trying right now. It allows me to download our accounts, classify our spending into expense categories, and then gives me our (colour-coded) financial snapshot. The benefit of using software over Excel (which I would usually recommend, since I ❤ Excel SOOOO much!) is the ability to download your transactions. This is a HUGE time-saver (you just have to be signed up for online banking to use the feature). If you want a copy – they sell it at Staples and Best Buy (and many other places). I can also save you 30% on the Home & Business version, if you are interested.

For those who want to use what you already have, you can create a simple Excel spreadsheet where you enter and categorize your income and purchases for the past X months (however long you think it will take you to get a good feel for your spending habits). Here is an example of a more detailed template.

If you really want to keep it simple, the paper-and-pen method works just as well. Just record all of your income and purchases, and then calculate totals for each spending category.

Once you have everything sorted – take a good, long look – you might be surprised! Carefully consider the amounts spent in each place – are you happy with those numbers? Upset? Outraged? All three?  No matter what you’re feeling – there is hope! There are many, many ways to manage your money in a way that suits your skills, interests, and lifestyle. In my next post, I’m going to talk about (the dreaded) budget and why it’s so hard to stick with, along with a few strategies to save money in places you may not have considered before.

All in all, money management can be a really frustrating experience, but it can also be very rewarding (including more money to spend where you choose and less stress). Let me know if you’re going to come along on this adventure with me – it’s not so scary when you’re not alone!

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