Wednesday, January 26, 2011

Do You Track Your Cash Flow?

Do you know how much cash comes in each month? Do you know how much cash leaves every month? Do you know much you spend on groceries, gas for your car or even your mortgage?

I have used Quicken software since the mid-90's when I bought my first computer. Quicken lets me assign every transaction that I enter to a category. Except for the cash allowance that we allot ourselves each month, every dollar that comes in or is spent is assigned to a category. We have around 20 categories.

I work a budget around what comes in, what we spend and what I would like to spend, hopefully leaving some leftover to devote to more debt reduction or savings. It doesn't always work out in my favor.

Recently, I ran a report in Quicken to see what we spent by category for 2010. I then entered these numbers in Excel to get the percent to total for each category. Yes, I am a total nerd!

I wasn't surprised that our mortgage was our number one category at 19% of our spending. But I was surprised that the "Household" category was 9%. Our "Household" category could be anything from light bulbs to major home renovations.

I have a little investigating to do now. Thankfully, I can run a report that will list all of the transactions that I tagged as "Household". I'll be doing that immediately. It's been a long year and I obviously have forgotten about some of the purchases.

The Road to Financial Freedom
Do you want to head down the Road to Financial Freedom? Great, but if you answered NO to my first question in this post, I'm afraid you might end up spinning your wheels.

We have to know how much money is coming in and where it is going. Unfortunately money doesn't just grow on trees for us to use to reduce our debts or increase our savings. We have to either increase our income or reduce our spending. The latter always sounds really painful, but if you track your spending and know where the money is going, there might be some red flags that will make the job a little easier.

How do you track your cash flow? Let us know in the comments.

If you would like to receive FREE updates of FBS, there are four ways to do so:


  1. The answer for us is a resounding YES! We keep track of our spending each month from what we pay out in mortgage, tithe, and grocery (our three biggest spendatures) to the little stuff that happens every so often like birthdays, date nights and childrens activities. Each penny has a name and it has helped us get a handle on our spending since we don't use credit cards and are debt free. We generally have a certain pre-set amount left over each month (my husband has set that amount at what makes him feel comfortable) and we strive to not go under that amount.
    We don't have a fancy computer program ( I would prefer to use and Excel spread sheet). My husband simply uses a pen and a legal pad, works out the months budget and we stick to it.
    This month, we tried to go all organice and all-natural with our grocery budget just to see how we would fair and we totally bombed. Our family grocery budget was over by 50%! Yikes! I guess we will do baby steps ☺. Better luck next time!

  2. We keep track of our finances with Microsoft Money Plus. Quick question do you track your expenses down to the penny. If so how do you track your returns in quicken? I am talking about product returns not tax returns. Eg. In Money if I buy some groceries I categorize it as grocery but how do I handle the situation when you return one of the grocery items? Hope I didn't confuse you.

  3. Annie - Thanks for the comments.

    Anonymous - If I return something and the return money goes back into an account, like my checking, then I would enter it as whatever category I took it out of and the money would be a deposit. Please let me know it that doesn't answer your question. Thanks for the comments.

  4. That makes sense, however in Money a deposit cannot be added as an expense category. So I have the charge showing as an Expense. Then if I have a return I make a deposit and have to show it as an Income category. :(

  5. I use Quicken and use to be dependent on the cash flow reports. Now that I have a pad in my account it's rocked my world. I can pay bills when I want rather than when I have enough cash in my account.

  6. Every single penny. I use Moneydance, which I've found to be a much better alternative to Quicken. Mainly because I'm a Mac guy, and Quicken abandoned that platform a long time ago. Moneydance was only $25, and it's open architecture, meaning I can move files back and forth to any operating system, and I can actually customize aspects of it that work better for me. I highly recommend it. There's also an iPhone app where I can enter expenditures on the go, and when I'm home they will synch up wirelessly to the version on my Mac. Pretty slick.

    As a result, I can tell you exactly how much I've spent buying coffee at my local joint in 2010 or 2011 YTD. Yes...I'm that anal.


Thank you for reading Family Balance Sheet and taking the time to leave a comment. I love to hear from readers.