Sunday, January 13, 2013

How To Track Cash in Quicken


How to track cash in Quicken

To track cash click on "add an account"-->Click cash-->Name the account (I use our envelopes to name the accounts)-->Select the beginning of year--> Enter the starting balance (we started tracking cash after we started the envelope system, so I entered what we had in the envelope as the starting balance)-->Your done

Over time we are able to see if we need to increase cash in one envelope or if we can get rid of one we don't use too much. It helps us communicate, and it saves us money.

Why Use Cash


There is a big difference between logging into your bank and seeing $100 in your account, and physically holding a $100 bill. In our current age, money is an abstract object. Yes we see numbers that represent money when we view our balances online. We see positive numbers increase the balance and negative numbers subtract from it, we don't think about the very act of paying for items. We just swipe our bank card or credit card to pay for an item.

Want to reduce spending? Open Quicken( this should be done after you import your checking accounts transactions and categorize them) click on the spending tab, then change the graph to represent only your checking account, and the time range for last month only.

From that monthly total, subtract bills that you pay using your checking account (car payments, mortgage/rent, utilities, etc...) so all that you are left with is spending on everything else that you swipe the card for. Now take that amount and divide it by four weeks in a month.

Once you find your weekly number, round down to the nearest twenty. The reason to round down to the nearest twenty is because most ATMs dispense cash in increments of twenty. An example is if your weekly spending is 256.55, you would withdraw 240 every week.

Take the cash you withdrew and sort them into envelopes with each category you spend on. My family has an envelope for groceries, housing goods, kid supplies, going out to eat money. When the cash in a specific envelope runs dry, no more spending. The system works if you don't raid another envelope to increase the cash amount in another. My wife and I had a problem with this. We would "borrow" from the grocery envelope to pay for a trip to go out to eat.

This system works if you keep on top of it. Right now my wife and I withdraw only 160 per week to pay for our food, supplies, and misc. items. We use to spend 372.50 per week swiping the card (not to mention the credit card also). To put that in perspective:

372.50 x 4 weeks=  $1,490.00 per month

160 x 4 weeks= $640.00 per month

Savings of $850 dollars a month!

We haven't been perfect, but on average we spent at least 500 dollars less on average every month. That amount of savings is like getting a raise!

I track our envelopes in Quicken which helps my wife and I stay on track. She does the shopping so handles the cash and withdraw of money. I track the spending and adjust our budget based on her suggestions. Over time we are able to see if we need to increase cash in one envelope or if we can get rid of one we don't use too much. It helps us communicate, and it saves us money.

What type of system do you use to control spending?