Budgeting Software Basics

There are plenty of options available on the market today if you're looking to track your finances electronically with a budget. Software is a good alternative to pen and paper, but it can also have its share of drawbacks. What do you do when your budgeting software, as much as the budget itself, gives you a headache? Indeed, software tools are an aid for those using a budget, but they are by no means a magic pill. Installing the software on your computer and then adding your information certainly won't make all of the debt miraculously disappear. The hard part of the work must still be done by you and your family.

When setting up your software, making too many different categories can be a prescription for insanity. Each transaction that you enter will need to be placed in a category. Sometimes the categories that you've chosen for yourself may not be listed in the software program. Or, to make things even more 'fun,' it might ask you for a subcategory. When you're in a hurry to enter your data, this can be a nuisance.

Software programs like Quicken and Microsoft Money can track your automatic deposits and debits once you've entered them into the system. They'll ask you for information about recurring transactions and will handle them for you each month.

One thing that software doesn't do, however, is keep track of interest earned and fees charged by your bank. In this respect, it's no different than a standard checkbook ledger and could show a different total of deposited funds than your bank does. Fees charged by banks for ATM withdrawals, overdrafts and other items can add up quickly and they must be accounted for. To do this, you'll have to contact the bank regularly by phone or online to view your account activity, or wait until a monthly paper statement comes in the mail. There is a program offered online that will retrieve information directly from your banking institution, but it's not free; there is a fee associated with it. Since you're trying to budget and save money, you might not want to add another expense when you can successfully budget using other more cost-effective means.

Some budgeting software will also help you to reconcile your spending at the end of the month. But to check on spending before then, you'll have to utilize receipts and online banking statements. Review your budget on a regular basis for any bad spending habits that may creep back in as you're trying to control them.

When your software gives you too much of a headache, try something else. Now, that doesn't mean to give up on your budget. It simply means that you should try other things, such as the online resources provided by your bank. Free budget worksheets are also available all over the Internet. You can even find free e-courses that will teach you how to budget. Budgeting software is good, but it's just one of many options that are available to you, including the old-fashioned pencil-and-paper method.

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