Getting Started With Quicken

Home Money Budgets & Budgeting Tips Getting Started with Quicken

(A few weeks ago we printed this request for help. Karen has used Quicken successfully and will be sending us a series of articles on how to get the most out of the software.)

Dear Dollar Stretcher:
Just visited and what I saw was great, I wonder if you have some bits of advice on how I can control my money? I use quicken but feel it is too cumbersome, my categories are too numerous to mention, what I need is something more basic, is there any software available for just budgeting and saving, Canadian would be better. I have the usual or unusual family, two kids, home, car + lease car. Any suggestions would be much appreciated.
Mike

Mike wants help with budgeting and with saving. With Quicken it will be easy to see what you're doing, stay on track and reach your goal. Before you can budget with Quicken, however, you must start using it to keep track of all your income and expenses by category. You may think that it is complicated and hard to use, but really it's as simple as A B C.

Here are some steps you can take to start using Quicken:

First, set up a Quicken data file, if you haven't done so already. I didn't have to do this, as my husband had already set one up when he started using it two years before I did. Quicken will give you a standard set of home categories. You can use them as is, or change them to suit your needs, as I did. (See "Getting a Handle on Quicken Categories").

Second, start Quicken accounts for each of the ways you normally spend money, whether checking, credit card or cash. To do this you will need your wallet, checkbook, the most recent bank statement, and credit card statement(s) for each of the accounts you're about to set up. You will also need paper, pencil, and a colored marker.

Cash - Set up a new account and select "cash" as the account type; then give it a name and a description. Mine is "Kcash" and the description is "Karen's cash account". Now look in your checkbook register and find the date of your last (most recent) ATM withdrawal, or check you wrote for more that the amount of purchase. Put a colored mark next to that transaction (you'll need to remember it for the next step). Use that date as the beginning date of you new account, and enter 0 (zero) as the amount. Next, empty your wallet and change pocket and count your money. Write down the amount and keep it handy for the next step.

Checking - Set up another new account just like you did for "cash", but select "bank" for account type. If you reconcile your checkbook with your bank statement every month and they are "in balance" I suggest that your start date be the beginning of the month and the beginning balance whatever your checkbook shows on that date. Alternately use the most recent statement ending date and balance, but then only enter the uncleared checks. For each of the entries, whether deposits, checks, other debits or credits, you will need to select a "category" - easy to do by pointing and clicking from the "category list" that pops up when you move the cursor to the category box.

If needed you can "split" the transaction into more than one category by selecting the "split" button at the bottom of the display. If one of the checks you are about to enter was a payment on your most recent credit card bill choose only one category for now. You will be putting the details in the Credit Card account (next step). When you get to the check or the ATM withdrawal that you put a mark by you will enter it as a split transaction with the amount you wrote down (step 1) as one of the split amounts. Instead of one of the regular category names on the list scroll down to the very bottom and select the name of the cash account (the one in brackets [] ).

When you enter this transaction that amount will be transferred from the bank account to the cash account.

Credit Card(s) - The information you need to set up the Quicken credit card account is in the account summary on the most recent statement. From the previous balance amount subtract the credits and the payments. The result is the beginning balance for your Quicken credit card account. If you pay your account in full every month this amount will be zero. Next, look at the list of purchases on the statement and enter a transaction in the register for each of the items. Since you are entering these transactions directly from the monthly statement you should also put an "x" in the "cleared" column of the register. (Note: you will not be able to tab to this field, you will have to use the mouse to position the cursor). If there are interest charges or late fees, enter a transaction for them too.

When you finish, the ending balance should be the same as the new balance on the statement. Now go to the account register for the Quicken checking account that you just started; find the check that you wrote to the credit card company and edit the "category" - select the name of your credit card account (in brackets [] ) at the bottom of the list of categories. Entering this transaction will result in a corresponding "transfer" transaction to the credit card account, reducing the outstanding balance. If you have any charge receipts for purchases made after the statement date, enter them too, but don't put "x" in the "cleared" column.

Finally you're up and running. Keep your accounts up to date and accurate. Anytime you spend money, whether by cash, check, or credit card, enter the transaction in the appropriate Quicken account. Your cash account balance should be what is in your wallet right now. If you lose track, you will have to enter a balancing transaction and charge it to the "misc" category or make approximations to several categories. That's fine, so long as Quicken cash and your wallet match. BTW, I only enter summary transactions to my Quicken cash account. I find it easier to keep the details in a small two-column cash ledger book. If you forget to enter a credit card purchase, you will find out about it when you get your next statement (as you reconcile each item by putting an "x" in the "cleared" column). Likewise, the bank statement, the Quicken bank account, and your checkbook should all agree too.

The more you use Quicken the easier it will get. And not just because your getting used to it. Quicken helps you with the "quickfill" feature whereby it automatically remembers new transactions (by name of "payee") and automatically completes ("fills in") subsequent transactions to the same "payee". After you have been using it for several months (I suggest at least 6 months, preferably a year) you will be able to set up a Quicken budget quickly and easily. It took the Smith family (see "Where Do We Spend Our Money?", in the 7/15 issue) several hours to figure out where all there money was being spent. But if they had been using Quicken they could have had the same information almost instantly with the push of a few buttons.

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