April is the only time of the year that many of us take a close look at our financesand often we don’t like what we see as we write a check to the IRS. Like overindulgers who’ve hopped onto the scales after the holidays, we resolve that this year is going to be different and that we’ll whip our personal finances into shape once and for all. But whether it’s pumping iron or making budgets, a lot of us don’t stick with the program. It’s just too hard; too tedious; and most of all, too time-consuming.
We can’t help with your workout program, but we might be able to get your checkbook and retirement portfolio looking buff and ripped. Best of all, you won’t need to spend hours a week to do it. Our goal is to achieve maximum financial fitness with minimal effort. To do that, we’ll let the Macintosh do the heavy lifting.
Our main workout machine will be Intuit’s $49.95 Quicken Deluxe 2000 (800/446-8848,
), the first new version of Quicken that Mac users have seen in two years (see
, December 1999, for a rundown on this version’s new features). As with preceding versions of Quicken, Intuit has fine-tuned this one for user-friendliness. And yet, because Quicken has more features and options than ever, figuring out where to start can be tough. So, given a limited amount of time, which parts of the program will do you the most good?
Let’s assume you’ve successfully installed Quicken Deluxe 2000. (We’ll also assume that if you were upgrading from a previous version of Quicken, you had the foresight to make backup copies of your data before you installed QD2K. You never know for sure how a new version of Quicken will interact with your precious data filesbetter safe than sorry.) Our basic approach to Quicken is founded on four inescapable truths. After covering those, we’ll offer some essential timesaving tips every Quicken user should know. Think of it as the equivalent of learning good form in the weight room.
Principles to Spend By
Here, then, are the four truths of personal finance. Ignore them at your peril.
You Can’t See Money
OK, maybe this doesn’t apply to Donald Trump or Warren Buffet, but it probably applies to you. We’re not talking about the bills in your purse or wallet but about the constant flow of wealth into and (alas) out of your life. This includes cash, securities, mortgage or loan payments, and all other debts and assets. Unless you’ve taken a vow of poverty, you probably don’t know for sure how much money you’ve got (or haven’t got) at any particular moment, where it disappears to every month, or why you never seem to have enough of it.
The solution is to set up accounts in Quicken that track the money in your life and then to keep those accounts up-to-date. You should at least create
accounts for every bank account you have and for each credit card you use. Later, you can add more-complicated things such as your home mortgage (see the sidebar “Home Sweet Asset”). Quicken comes with excellent Apple Guide help to walk you through the account-setup process. Just type command-question mark (?) at any point and select the Accounts topic. (Quicken tries so hard to be user-friendly that there’s even help on how to use the help.)
Once you’ve set up your accounts, how often you update the registers (with transactions such as checks written and items charged to your credit card) is up to you. The more up-to-date your tracking, the better your knowledge of your current financial position will be. You can do it daily or monthly. If you must enter most things manually (that is, by typing them in), you’ll probably find it easiest to do so two or three times a week.
In reality, though, only masochists enter everything by hand, because it’s possible to have transactions downloaded directly from your bank and credit-card providers. Welcome to the world of online banking. Not only is downloading transactions infinitely easier than entering them yourself but it also makes typographical errors in your register less likely. And typing $45.13 when you intended to type $54.13 will come back to haunt you when the time arrives to reconcile your accounts. But make sure to save all of those paper receipts. You might find yourself needing to double-check them against what the bank says.
We’re such big believers in the importance of online banking for Quicken users that we don’t hesitate to say that you should switch banks if yours doesn’t support Quicken for the Mac. You’ll find a list of banks that support Quicken for Mac on Intuit’s Web site (
). Unfortunately, as you’ll find out, many banks currently support only Windows for online banking.
To help change that, Quicken Deluxe 2000 was supposed to support the OFX format (a standard format for exchanging financial data files, developed by Intuit, Microsoft, and financial institutions). However, the initial implementation of OFX in Quicken Deluxe 2000 had serious bugs that in some cases made it even less compatible with particular banks than the previous version. At press time, Intuit had released a patch to fix these problems (see
Once you’ve got your accounts all set up, though, there’s no getting around one regular chore (you thought this was going to be
reconcile your accounts (what most of us think of as balancing our checkbook) whenever you get a statement from your bank. If you don’t, you’ll never be sure how much money you’ve got. Never balanced a checkbook? Don’t worry, it’s a lot easier with Quicken than with a paper register (see the screen shot “Bookkeeping for Dummies”). Take advantage of Intuit’s Apple Guide help to walk yourself through it. The good news: If you use online banking, reconciling usually takes only a few minutes. That’s because you won’t be hunting for those pesky human errors in the register that come from typing in items yourself.
Financial Knowledge Is Power
Bookkeeping for Dummies
Quicken’s Reconcile window makes checkbook balancing easier, but online banking (indicated by the little lightning bolts) makes it truly painless.
Once you’ve got your accounts running smoothly, you can start doing something useful with them. Your first goal should be to create a budget. If you’ve been categorizing your transactions (that is, selecting one of a predefined set of categories and subcategories, such as Phone, Auto:Fuel, Food:Groceries, or Ent:Wrestling, then you’ll be able to get Quicken to create a proposed budget based on your actual expenses. You can then adjust the budget until your outgoing expenses are the same as or less than your incoming cash flow. Quicken comes with a list of proposed categories that make a good starting point, but you can and should customize it to match your own situation (see the screen shot “It’s Categorical”).
Quicken comes with a long list of recommended categories for personal use, but don’t be afraid to personalize it. Maybe you aren’t ready to collect a pension, for instance.
Using categories allows you to ask and answer questions such as “How much have I spent on sushi this year?” and then adjust your diet accordingly. Sound like a lot of work? Not really, because if you have the QuickFill feature turned on in your Quicken Preferences (highly recommended), the program remembers and applies categories you’ve previously assigned. You can also tell Quicken to memorize (command-M) important transactions that you know repeat regularly, such as paychecks.
Be careful when you set up categories. You’ll rely on them heavily, so think about which ones will be most meaningful and whether you’ll have the discipline to track them. You probably
be willing to record every little stick of gum you buy, so allow yourself a petty-cash category for miscellaneous expenses. Don’t use this as a slush fund for cheating on your budget, though.
Sticking to It
The Budget Monitoring window goes a long way toward controlling your spending. You can monitor by year, month, or quarter.
For motivation, check the Budget Monitoring window (to find it, go to Activities: Budgeting: Budget Monitoring) to monitor your progress (see the screen shot “Sticking to It”). Another way to see the results of your financial efforts (kind of like working out in front of a mirror) is to use a new feature called Quicken Insight. It provides a customizable snapshot of your finances as reflected in all the different parts of Quicken: bank accounts, credit-card debt, and so on. With luck, the graph of your net worth should climb as you increase savings and reduce debt.
Of Death and Taxes, Taxes Are More Frequent
Everyone hates taxes. The pain will be a little less this April, though, if you set up your Quicken categories so that tax-related expenses (and income), such as deductible business expenses, 401K contributions, and vehicle license fees, get tagged that way. One thing a lot of people overlook is entering their paychecks. Take the time to break down your check by all the various categories such as federal tax withheld and Social Security payments. When you’ve got one check entered correctly, have Quicken memorize it so that you won’t have to repeat the effort every two weeks.
Write It Off
The Tax Deduction Finder walks you through a quiz to figure out which deductions you can claim and then creates corresponding Quicken categories.
Use Quicken’s Tax Deduction Finder
you set up your account categories (you can find it under the Planning tab); it will actually create categories for whatever deductions you qualify for (see the screen shot “Write It Off”). Setting up tax categoriesand unless you’re self-employed, there are probably fewer than you thinkwill enable you to generate tax-related reports and even file your federal taxes online by using WebTurboTax (included in the cost of Quicken Deluxe 2000; see
for details). You can also easily export your data to Intuit’s $29.95 MacInTax (800/446-8848,
). It will save you from retyping all that information, and it ensures that the figures are accurate.
Paying attention to tax-relevant categories will pay off even if you choose to have an accountant prepare your taxes. He or she will appreciate having neatly formatted reports on items such as long-term capital-gains distributions and interest payments. It also makes getting your paperwork together much easier and can translate to a lower tax-preparation bill.
With Luck, You’ll Get Old
Once you have a handle on how much money you’ve got, your next priority should be to figure out how much money you need later on. Quicken Deluxe 2000 has a link to the retirement planner at the Quicken.com Web sitepart of this version’s heavy integration with the Web. Use it. It might be the most important job you do with Quicken. If you have a retirement-savings shortfall, then you have a new goal for your budgethow to save enough money every year to make up the difference. The longer you wait, the more painful that is going to be.
Eight Ways to Use Quicken Smarter
Now that you’ve resolved to start using Quicken to get financially fit, here are some tips on proper form.
Increase Quicken Memory
Quicken definitely runs better on faster Macs, particularly if you’re, say, generating a net-worth report, which involves lots of calculations. The difference between a first-generation Power Mac (the minimum for running Quicken) and a G3 is downright dramatic. Still, even if you don’t have a superfast Mac, you might be able to speed it up by assigning Quicken more memory (highlight the Quicken Deluxe 2000 program icon, press command-I, and select Show Memory).
Use Shortcuts for Typing Dates
How to Get a Date
Press the following keys to jump to different dates fast. These shortcuts work in both the registers and the Investment Portfolio.
Beginning of the month
End of the month
Next month, same date
Previous month, same date
Beginning of the year
End of the year
Quicken is smart about dates. Type the day of the month, for instance, and press tab; Quicken enters the current month and goes to the next field. You can always enter the current date in a Quicken field by pressing the T key. See the table, “How to Get a Date,” for a complete list of date shortcuts worth memorizing.
Move Transactions between Accounts
All too often, credit-card transactions end up in the checking register and vice versa. If you make such a mistake, use the easily overlooked Shortcuts button in the register to move it to the correct account.
Assign command-Key Shortcuts to Accounts
Quicken lets you assign command-key shortcuts to any account (or any menu item, for that matter)so, for example, you can simply press command plus a key of your choice to pull up the Quicken Calendar, which otherwise doesn’t have a command-key equivalent. Just hold down the command key before you select the account or menu item to which you want to assign a shortcut.
A Key Addition
Although not new in this version, the QuickMath feature is still one of the most underutilized time-savers in Quicken.
QuickMath is available almost anywhere in Quicken that you enter numbers. Type an arithmetic operator (+, -, /, *) after any number, and an on-the-fly calculator pops up (see the screen shot “A Key Addition”). You can also create your own operators (go to Preferences: QuickMath) to do things such as calculate sales tax when you press the T key after a number (useful if you’re doing split transactions with both taxed and untaxed items). Or use it to do approximate foreign-currency conversions when entering all those credit-card charges in francs or rubles.
Enter ATM Amounts Automatically
Type a description such as 100ATM in the Payee field when you withdraw $100 or 60ATM when you withdraw $60. Then, if you have QuickFill turned on, you can just start typing 100 or 60 the next time you record a withdrawal of $100 or $60, and Quicken will enter the correct amount.
Jump between Registers for a Single Transaction
Move It On Over
If you click on the Shortcuts button on the transaction line, as we’ve just done here, you can move a transaction between two accounts without leaving your current register.
Some transactions appear in two registers. For instance, if you pay your credit-card bill from your checking-account register, it also appears in your credit-card register (in the former, it’s a debit; in the latter, it’s a credit). You can instantly switch between the transaction’s appearances in the two different registers by typing command-left bracket ([).
Archive Each Year’s Account Data
At the end of a calendar or fiscal year, it’s a good idea to archive the previous year’s data and create a Quicken file for the new year. Use the Save A Copy option to create the new file and retain the ending balance, classes, categories, memorized transactions, and unreconciled transactions from each account. Besides giving you an annual archival backup, this will make working in Quicken faster, by reducing the size of your account registers. You will, however, be giving up the ability to run reports that compare data from two different years.
The Last Word
Using Quicken may not be as exciting as day trading in Internet stocks, but odds are that you’ll reap bigger benefits when you invest time learning to tame your spending and increase your saving. With any luck, when next April rolls around, the IRS will be writing
JAMES BRADBURY, former editor of
and of Macworld Online, put his fee for this article into an IRA.
Home Sweet Asset
If you’re a home owner, there’s a good chance your house is your single biggest asset. At the same time, your mortgage is probably your single biggest debt. Here’s how to set up and track this important debt and asset with Quicken. One advantage to putting this information in Quicken is that it will give you a much more accurate net-worth calculation, making financial planning more realistic.
There are various ways to track a mortgage. We’re going to opt for the most accurate method, even though it means creating up to three different Quicken accounts. We’ll make things easier, however, by starting with your current payment and ignoring any you’ve already made. You should be able to set everything up by using only your most recent mortgage statement.
Let’s start with the (hopefully) good news: the actual worth of your house. Create a new account (choose the Asset type) and enter an estimate of your home’s current worth. Now create a liability account, name it Mortgage, and enter your current principal balance as the starting amount.
Next, set up your home loan, by selecting Loans from the Lists menu. During the loan interview, say you’ve made payments and you want to start tracking with the next payment. When you get the Loan Setup window, you’ll need to enter the date of your next mortgage payment and your current principal and interest payments.
There’s also a box for any part of your payment that isn’t either principal or interest, such as PMI or escrow funds (which usually pay for property taxes or insurance). If you’re contributing to an escrow account as part of your payment, then set up another Quicken account called Escrow (make it a cash account). For the principal account, enter
. If you have a fixed-rate loan, enter the interest rate. For a variable loan, enter the most recent rate and check the Confirm Payment Before Recording box. Then, when the rate changes, you can enter the new rate and payment amount as you confirm each payment.
If you’re not sure how many payments are left on your loan, just enter the total number of payments (12 by 30 equals 360 for a 30-year loan). When your new loan appears in the Loans window (under the Lists menu), click on the Preview Payment button and scroll down to see how many payments appear. That’s how many you have left. You can now edit your loan by changing the payment number to the correct amount.
When it’s time for your next mortgage payment, Quicken splits the payment transaction three ways: It deducts the principal from your Mortgage account. It categorizes the interest and then deducts this from your taxes (make sure you’ve checked this category as tax-related!). It deducts any escrow payment from the Escrow account you set up. (You’ll need to enter disbursements from your Escrow account manually in that register when the bank pays your taxes or insurance.) This all might sound complicated, but once you get it set up, Quicken will do the work for you.