|Volume 6: No. 35|
I spent much of last week learning Quicken 5, a helluva good bookkeeping package for tracking personal finance and cash-based businesses. Highly recommended. Quicken can combine home and business accounting in a single database, with transfers between accounts treated differently from expenses. Or you can keep separate databases. It's all "object oriented" or "truth maintenance," so that changing an entry updates all its ramifications. (There's no audit trail other than your periodic backups, so this isn't for employers who don't trust their bookkeepers.)
Setting up report templates taught me a lot about accounting, and the budgeting and retirement functions illuminated my financial situation. My wife interprets the numbers differently, but at least we now have a common vocabulary. (This is a woman who set up our investments and who feeds her family well on $2.35/person/day, so I'm inclined to listen.) I hear that Managing Your Money is even better for tracking investments, but I'm satisfied with Quicken's fund portfolios -- with simple graphs and ugly-but-flexible reports -- and mortgage, college-planning, and retirement calculators. The chief limitation I found is that tax-deferred and non-deferred savings can't be combined in a single retirement planning computation. (You have to do the analyses separately and then add the results on paper. Perhaps Quicken 6 has fixed that.) Next year I'll try out the built-in tax reports. Now that I've got the categories set up, I can barely wait for the next ten years of data.
Now when I buy software or plan an expense I have to think about my goals: Recreation? Entertainment? Education? Personal? I need a similar discipline for budgeting my time -- but entering all the "transactions" would leave no time for anything else. :-( (I hear that Fred Brooks kept several time clocks by his desk and would "punch" them every time he switched activities -- even just to speak with a visitor. He's the efficiency expert who noted that adding manpower to a late software project makes it later.)