About a year ago a friend’s mother moved into an assisted living facility. Upon cleaning through her belongings my friend found boxes of paper receipts and journals that his mother used to record every expenditure from over thirty years ago. This is how she managed her personal finances and the record keeping for her husband’s medical practice.
I have all of my spending records since 1998. The difference? Mine is neatly contained in one Quicken file. Software has made keeping track of our money easier and less cluttered.
So why is it that Americans are worse off financially today than there were in the 1970’s and earlier? We have all tools necessary right? One of the reasons for this is that software creates a disconnect from the emotional component of money. It becomes just a number on a piece of paper and not an actual dollar that we are responsible for.
Money is emotional, and when you are able to quickly put a budget together on software then you have not processed any emotions with your money. It is just another software program tracking another aspect of our lives. On the other hand if you write out your budget line by line and add all the numbers up with a calculator, it becomes very real.
You feel the reality of being under budget, or not saving enough when you actually have to write that number down on paper. When you write out how much you spend on clothes you have to admit that not only is that accurate, but you have to process that it is the cause of you being negative on your budget.
When you work with a paper version, you think harder about what is happening in your life, which allows you to connect with your money. Suddenly the reality of your $450 car payment is there in ink that you wrote on paper.
So how do you reconnect with your money, but still take advantage of the efficiencies of software so that you don’t have a basement full of boxes of receipts? (Which I highly recommend).
First, reestablish your connection with your money by doing your budget on paper for a few months. This will allow you to get to know your money. You will become intimately aware of where you spend your income and how everything works together. You should also include tracking where you are in your budget throughout the month on your paper experiment.
Second, after a few months begin to merge your written budget with a software program. Continue to write out a budget, but begin to track it afterwards with software.
This allows you the convince of efficient record keeping while maintaining a connection to your budget. It also makes it easier to keep track of yearly expenses that you may have forgotten about, such as car registration. Yet at the same time because you create your budget on paper first you keep that emotional connection to your money.
This is the method that I use today. Using last month’s budget and my records from my software I create a budget on paper. I track my monthly expenses in my software while reviewing and updating the paper version. This maintains my emotional connection to my money, but gives me the resource to be able to review the year as a whole, or look up past expenses.
Finally, set aside time each week to download your transactions into your software and review your budget. By taking 10 minutes each week it does not turn in to a three hour, or more, attempt to catch up. This will help keep you motivated to stay on top of your budget and better manage your money.
You are on your way to reconnecting with your money! By harnessing the power of software and your emotional connection to money you can improve your financial situation.
Free Online Tracking Software: I tried it and liked it, but did stop using it as I had way to many years in my Quicken file. Great for setting up reminders for when you are going over budget. Only negative, was I did not like the way that it always categorized things (but I think that was also a negative since I was so used to the Quicken set up – I have been using it since 1998!) Best Part: FREE!
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