5 Unexpected benefits of using personal finance software

I might be a bit of a computer geek. I’ve probably been rightly accused of that. As a result, many years ago I decided to buy a copy of Quicken to manage my checkbook. At the time I really didn’t have much more in mind than just the fact that I’d rather use the software to keep track of my checking balance than a pencil and paper check register. That was probably close to 20 years ago and I’ve been using Quicken ever since.

What I discovered though to my surprise that there are other benefits that come with personal finance software that I hadn’t even thought of.

personal finance softwareTracking categories

When you enter your financial transactions you can categorize each expense. The software provides a bunch of predefined categories like groceries or auto expenses, or home expenses, and of course you can create your own custom categories if you don’t like the ones that are provided. When I was first starting to use Quicken those many years ago, I used the categories but I didn’t really put a lot of thought in it.

Fast forward a few years and I decided I needed to do a real budget. One of the most difficult parts of starting a budget for the first time is figuring out how much to put in each category. How much money did you spend on groceries last month or eating out? I suspect most people don’t really have a good idea of what they are currently spending.

When I started to create my first budget I suddenly realized the tremendous value of having used those categories over the years. I could look back month by month and see exactly what I spent. That made it so much easier to get started with my budget.

Yearly Reports

Similarly, reporting was another place where I found great value, particularly the yearly reports. Many times we have small expenses that reoccur on a regular basis. These little expenses don’t seem like that much when it’s just a few dollars here or there. But when you multiply those out over a period of months or a year, you suddenly realize just how much you are spending. You run the yearly report and have a moment where you exclaim,” eating out at lunch is costing me how much????”

This kind of information is very helpful in getting control of your financial situation. When you realize you spent $2,000 the previous year on your cell phones, maybe you decide to cut back. Or maybe you decide that’s ok. There aren’t necessarily right or wrong answers here. The point is these reports give you the information you need to make proper choices.


Financial software also comes in pretty handy come tax time. Do you dread tax time? Does tax time mean spending hours digging through your records trying to find information you need? If you tag things properly when you record your expenses, then finding that information when it comes time to do your taxes is a breeze.

Historical information

Another thing I love about keeping my financial records in Quicken is the historical information.  Just as an example, my coffee maker recently died. I had bought a little more expensive model, hoping it would last a little longer than the previous one I had. It didn’t seem like it had been very long ago that I had purchased it, so I was easily able to check back through my records and find the date I bought it. (It was only 6 months ago:  I won’t be buying that brand of coffee maker again!)

Automatic downloads

Lastly, most software packages now allow you to connect directly to most banking institutions. The great thing about this is I can download all my transactions automatically. That’s a big time saver. All I have to do is review the transactions to make sure everything looks correct.

So where do you start?

There are many personal finance options. I’ve used Quicken for nearly 20 years. I have looked at other packages over the years, but usually come back to Quicken probably as much out of familiarity as anything. Mint.com is very popular. Mvelopes takes the idea of using the envelope system and makes it electronic. You Need A Budget is another very good option. Many banks now offer free software for managing your money as well.

All of these programs have their pluses and minuses. If you currently don’t use personal finance software, I’d encourage you to try one out. I started using Quicken many years ago just to make it easy to balance my checkbook, but I have found it a critical tool in my financial tool belt.

What personal finance software do you use?

Photo credit: GoodNCrazy (creative commons)

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