Monday, January 04, 2010

Track your spending with these free and low-cost tools

Now that we are into the New Year, it's a good idea to look back at your expenses from 2009 and see where you spent your money.  If you don't use one already, popular, easy-to-use budgeting software can greatly aid in tracking your financial life. After some initial set up, you can typically automatically download your transactions, reducing the need for manual entry, which can cause mistakes.  Basic editions of these programs retail for about $30. More advanced features, such as investment advice, are in pricier versions.

Alternatively, using credit/debit cards to the extent possible (responsibly, now) is another method to account for your spending, albeit quick and dirty.  Every time you make a purchase, your transactions should be grouped into major categories on your statements.  They might not always be 100% accurate, but with some deduction, any incorrectly categorized purchases should be easily spotted.  And, you might be able to reassign the category right on your credit/debit card’s website.  By early January, or your next billing cycle, there should also be a summary provided to you of your 2009 purchases, which is a handy, at-a-glance way of seeing where you spent your money.

Another tracking option is to take advantage of personal finance management tools, such as Mint, Wesabe, and Yodlee. The benefit of these is that they are free, available on-line, and can track more than just banking transactions. If you are so inclined, you can track your entire financial existence to include mortgages, credit cards, retirement, bill pay, and rewards programs accounts.  Look for a handy snapshot feature that shows the balances of all of these accounts on one page. In a second, and without cumbersome calculations, you can see your entire net worth.

Regardless of which one of three methods you use, traditional software, credit/debit card statements, or the websites mentioned, there’s little excuse left for not being able to see where your money is going in 2010.