Every Thursday I answer a reader’s question.  If you want to ask a question, you can contact me. 

I had a question this week that I didn’t want to answer.  Here is the question:

I’m still very reluctant to turn over passwords to all my private accounts to a software program where everything is together in one package.  Any thoughts on that?  Frankly, it just scares me. 

I should note that in the question the reader did at one point specifically ask about MoneyDance security.  The question came up because of my post on the best personal finance software of 2010.

In fact, when I first replied, I basically just avoided the issue.  Here was my first response:

I’ll be honest (I usually try to be honest )  I don’t really know much
about online security issues.  Here is my philosophy.  The people who
develop these programs know what they are doing and have made it secure, otherwise there is no way it could get past those who do know.  I know that is just blind trust.

How’s that for useless advice?

Here’s my disclaimer on this answer.  This is the first time I’ve ever done any research on the question, but I was intrigued by what I found …

Should I Store My Passwords on a Personal Finance Website or Software?

I read a dated (2002) report on some things with Quicken Security.  What I found most interesting was this statement from the abstract:

I’ve found that the password protection used by Quicken is easily reversed with the purchase of a $30 password cracking application.

Granted, I’m sure that the application can no longer crack the newest Quicken, but as Quicken improves, wouldn’t password cracking tools also?

If I were currently using Quicken, that article would be enough to make me grow a brain and find out if my information is secure.

MoneyDance Password Security

Here’s what the folks at MoneyDance said about their security (via customer support email):

Because Moneydance is a standalone program rather than a web based application like mint.com, your online passwords only ever exist on your computer or in a direct encrypted connection to your bank. Your passwords are not stored on a Moneydance server. By default, Moneydance does not even store your passwords locally on your computer and you have to enter them every time you connect to your bank.

Moneydance does have an option to let you store your passwords locally on your computer such that you don’t have to enter them each time you connect to your bank. And we recognize that storing your passwords on your computer is a security risk. Because of this risk, Moneydance will only let you store your passwords in your data file if you encrypt your data file. If you go to  File->Encryption there is an option to “Store online passwords in file.” Once your data file is encrypted, you will be prompted to enter a single password each time you run the program and open your file. This file password is yours and yours alone. It is never sent to Moneydance.

On the one hand, entering your passwords each time is extremely annoying.  On the other hand, entering a PIN at the ATM is annoying, but the extra layer of security is kind of nice. 

Lesson Learned: Research your own software and see what they have to say about the security of the product.  If you are nervous about your password information, then choose not to have it stored on your program.

Mint Password Security

On the Mint forums, the Mint folks make a big deal about the fact that they don’t store your passwords.  Here’s what they say:

Mint does not at any time store or retain your online credentials, whether in the form of Login IDs, account numbers, passwords or pins for this Account Information.

That’s all well and good, but as you continue to read, all they are saying is they don’t store it so they send that information off for someone else to store. 

Here is an article that asks is Mint safe?

The basic argument is much like my original one.  If Mint.com was ever to have a security breach, that would be the end of their company with hundreds of thousands of workers.  I’m sure they are working feverishly to protect users’ identities.  This will not satisfy conspiracy theorists, but it makes sense to me.

Lesson Learned: You can’t fool all the people all the time.  If it was high risk to store passwords with Mint, someone (who wouldn’t be able to understand their explanation) would blow the whistle.  I’m sure there is a way a password could be stolen, but I prefer not to live in paranoia. 

General Online Password Security

For around five years, I’ve been using a program called RoboForm.  You’ve probably already heard of it as they have 10 million users.

I use RoboForm for two primary reasons.  First, they have an automatic form fill that makes filling out webforms simple as pie.  Second, they have a secure system for storing online passwords.  You already know I don’t know what I’m talking about, but the geeks say Roboform offers file encryption up to AES 256 bit – whatever that means.  I’ve taken the Mint.com approach here.  If the product (designed to store passwords) does not store passwords safely, then they are on the verge of bankruptcy. 

Anyways, I used to have the exact same password for every financial account.  Who can remember more?  Now with RoboForm, it generates and saves unique passwords for me.

You can get a free 30 day trial download, and then you can purchase the product for about $30.  Check out RoboForm here. 

Lesson Learned: Having one password for everything is a bad idea.  If that is what you are doing, all one person needs to learn is one of your passwords and you are going to be in a big mess.  Change your passwords.

This post does contain affiliate links.  Read more about my ad policy.

Anyone understand computer security geek issues?  How do you determine if your passwords are safe?  Do you ever do research or just blindly trust that things are secure?

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Earlier this year I started on a quest.  It is the most noble of pursuits – to find the best personal finance software.

My mission, of which I was given no opportunity to accept, is to find or upgrade my a personal finance software by April 30th, 2010.

I currently have Quicken Personal Finance Software, but alas my friends at the Intuit company want to continue to generate income so as of that date I will no longer be able to update my information via the internet.  This, unfortunately, renders my current software as virtually useless.

So, to be honest I’m a little anxious to get away from Quicken.  I wanted to teach Quicken a lesson (don’t charge useless fees or you’ll lose customers) but, I didn’t want to deal with the learning curve of a new program.

Best Free Web based Personal Finance Programs

I’ve never used any of the programs below.  However, from my research the all seem like viable options.

Mint www.mint.com Easy to use and navigate, popular, satisfied users.  Cannot track cash, small bank and credit union issues, tracks what has been spend instead of what will be spent

Wesabe www.wesabe.com – similar to Mint but does track cash Wesabe will be discontinued effective July 31st, 2010.

Yodlee www.yodlee.com

If you want a product that has a different feel to it try the free PocketSmith online tool.  If you want to try and win a free PocketSmith premium membership valued at $60 just be sure to leave a comment on one of the Money Saving Monday posts this month.

Disadvantages of these free products:

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Tomorrow I’ll be updating you on a new MH4C schedule, but I’ll let you know this much – every Thursday I’ll start answering a readers question (instead of Friday).  If you have a question you can contact me. 

A reader asked:

We are also missionaries in PNG (currently on furlough in Canada).  For quite a while we’ve been wondering if there are any simple-to-use personal finance software programs out there that deal in multiple currencies.  Do you know of anything like that?  Especially something inexpensive/free and user friendly? (my husband and I are both not very computer savvy…I’ve used programs like Quicken and Money Matters in the past without problems, but have no clue how to do Excel Spreadsheets and things like that!)  We’ve found that one of the most challenging things for us financially since moving overseas, has been dealing in PNG Kina, USD, and Canadian dollars and tracking our spending and really having a good idea of where we stand at any given point.

First let me say, that I completely identify with this question.  In fact, the parallels between my family and this family are uncanny.  We are both missionaries in Papua New Guinea.  We both deal with US dollars, Canadian dollars, and Papua New Guinea Kina on a regular basis.

There are only a small population of the world that must deal with the unfortunate reality of budgeting in and purchasing multiple currencies.  Because multiple currency users represent such a small percentage of the population most popular budgeting tools exclude a useful multiple currency function. 

It seems as if the process should be quite simple, but believe me, it can become very complicated.  However, to help you avoid that hassle I am going to show you the two most helpful tools that assist our family in tracking multiple currencies. 

How to Track the Flow of Money for Multiple Currencies : Money Dance Personal Finance Software

The best software I have discovered is Money Dance (affiliate link).  I’m sort of getting ahead of myself because I have more to say about MoneyDance next week, but since it fit so well into my question this week I thought I would say a few things about it. 

For a long time we used an Excel spreadsheet and Quicken.  However, a couple of months ago we made a switch to a financial software called Money Dance.  After doing a lot of research (that I will share next week) I found that it was the best in our situation.

Here’s what I wrote to the reader and said about MoneyDance:

• You can get a free (100 transaction) trial download.  This way you can download it and try it out before you commit to buying it.  If you like the product you buy it and they give you a code that allows you to get the full product with unlimited transactions.
• VERY EASY to set up foreign currencies.  When I went hunting for a new personal finance program that was obviously on the top of my list.  I’m from Ontario, my wife Wyoming, and we live in PNG so accounting in foreign currencies is a must.  Money Dance is set to handle multiple currencies.
• Very clean interface – basically it is easy to use with essential features.
• As for cost it is $40 but you are never forced to upgrade.  Quicken (as an example) makes you upgrade every three years (if you want to keep online updating).  I got tired of paying for upgrades and Money Dance is 1/2 the price of Quicken.
• Easy to budget.  We’ve now stopped using our excel spreadsheet to budget and now only use Money Dance.
• Great customer support.  Quicken was never helpful.  I’ve had great help with Money Dance.

How To Customize Your Own Excel Budget to Track Multiple Currencies

Download your free customizable budget worksheet.

How to set up your budget:

When setting up your budget you need to decide what will be your primary ‘tracking’ currency.  For example, in my case I spend more PNG Kina than any other currency, but I prefer to track all my spending in USD (basically because I’m paid in USD).

Since I am paid in USD I set up my budget according to how much USD I want to spend in each budget category. 

From there I have added a detailed recording list to the bottom of the budget.  In the section below I have the following columns:

Date

Place

Total in Local Currency

Total in US Currency.  In this Colum Excel is preset to take my most commonly spent currency (kina) and convert it into my tracking currency (USD).  This is done simply done by a function that refers to the total in the local currency then multiplies that number by the exchange rate.  For example, =3D (local currency cell)*.36 (exchange rate).

When we enter our receipts we enter the date, the place, and the cost in the local currency.  Based on the formula above Excel automatically converts the local currency to USD.

If, however, we buy something in the USD that month when we enter into our budget we would:

Enter the date, the place, skip the local currency line, and enter the US currency total. 

If, however, we bought something in CAD that we month when we enter it into the budget we would:

Enter the date, the place, enter the CAD total, then manually override the formula (=3D*.36) to make it match the CAD exchange rate (=3D*.93). 

While this process still sounds complicated it is by far the easiest free way I’ve found for tracking multiple currencies.

How to Customize the Free Budget Worksheet

You will need to know a little about Excel to customize this budget.  By the way, this is the budget template we used while we were living in the states so you can use it even if you only budget in one currency.

You can add your own categories and expenses directly into the budget itself.

You will need to know some common excel functions to use the budget.  Take a look it should be ready for you to use. 

Download the Free Budget Template

This template is adapted from this original template provide by Microsoft.

If customizing your own budget sounds like too much work why not give MoneyDance a free test run?

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“Hey, Craig.  What’s the most important financial decision you’ve made?”

I wish my answer could be more glamorous.  I wish I could tell you it was that stock I bought for .10 cents that is now worth $85.  I wish I could tell you it was my decision to buy a piece of property right before the economy improved.

However, one of my first answers would be dry and boring – the decision to start a budget.  Sorry I couldn’t give you anything more flashy, but I think that the decision to start budgeting has been one of our best financial decisions.

20 Reasons To Start A Budget In 2010

1. You and your spouse can be sure you’re on the same page financially.
2. You can make a plan to pay every bill that you will receive.
3. You’ll never have to say – I just don’t know where all the money goes.
4. It can be a painless process if you have the help of a budgeting tool like You Need A Budget
5. There is no greater tool to help you pay off debt.
6. You might actually be able to have some money for a vacation.
7. Gives you something to do – cheap, free entertainment.
8. Sense of accomplishment.
9. Secure your financial future.
10. What better way can you honor the 40 hours + that you worked hard to earn your money?
11. You can make a giving plan.
12. You’ll learn a new skill.
13. It is a challenge.  Like I never say, “Why skydive when you can budget?”
14. You already have everything you need – a pen and paper or if you have internet (I’m guessing you do if you’re reading this post) .
15. Budgeting reduces stress.
16. Budgeting will help you achieve some financial goals.
17. When you budget, after a month or two you feel like you’ve received a raise.
18. You can stop feeling guilty.
19. You can pay for things with cash when you want to buy them
20. Budgeting is a good example for your children and helps lay a healthy financial foundation for them.
21. It will save you tens of thousands of dollars over a life time.
22. Helps keep you organized.  This is important if you ever need to file a warranty claim or return a product.
23. Forces you to take a second look at your spending habits.  This second look could help you make some important cut backs.
24. You cannot get to where you’re going until you know where you’ve been.
25. Because I said so.

3 poor excuses for not starting a budget

It’s too much work.

It does involve some work.  Yes, most of your work will go towards setting up the budget.  However, once everything is set you can keep your budget with minimal effort, but you must first develop the habit.  You can significantly reduce your budgeting time by using a free template or by purchasing You Need A Budget.

It’s not worth it.

How do you know if you’ve never tried it?  Setting up a budget is like a treasure hunt.  You will find money lurking in almost every financial corner.  You will find places where you’ve almost literally been throwing money away.  After a few months you’ll ask yourself – where did all this money come from?

I make too much money.

There is a misconception that only vagabonds should budget.  However, as stewards entrusted with our money by God, it is important that we handle our money just as God would want us to.  There is no clearer way to review your spending for a stewardship purpose than by budgeting.  At the end of the year you can easily ask – did I spend my money appropriately?  You can ask this question because you tracked your spending.

Photo by amber rae lambke.

Any other good reasons to start a budget?

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Budgeting is one of the important elements of a healthy financial plan.  This free budget budget spreadsheet will help get you started.

This free spreadsheet is highly customizable, but will require a minimal knowledge of Excel.

This Excel Document is compatible with Excel 97-2003 & Excel 2007: Free Household Budget Spreadsheet (97-2003 Workbook) (1327)

Instructions to download the free budget spreadsheet:

1. Click on the link above
2. Choose to open the document
3. The Excel file should appear automatically
4. The document will be [read only] – to input information, change, and customize the document you will need to click “Save As” and save the document in your own documents.
5. Enjoy!

In the top section of the budget you will enter your estimated budget amount.  The budget will automatically tell you the percentage of your total that represents.

When you enter your expenditures you can either do that in the top section by using the function: =item cost + … or (recommended) at the bottom of the page enter your purchase, item, and date.  Those numbers will automatically be entered into the top section.

Free Budget Spreadsheet Features:

• Ready to use
• Fully customizable and reproducible
• Easy to use
• Free
• Categories already entered into the sample budget.

How To Make An Effective Spending Plan With This Free Budget Spreadsheet

Search out a way to save time budgeting. A simple budget is the key to having an effective spending plan. Most people should be able to keep a spending plan in a few hours a month. It will, however, take more time the first month to get the spending set and running. This is how to make a budget.

Create the free budget spreadsheet together. As a husband and wife, you should sit down together.  This is an important part of a healthy marriage and money relationship.   This is true regardless of who makes or spends the money. It will be a reflection of your goals in life. It is so important to be in agreement about how you want your money spent.

Compare your budget with an effective one. You will need to confirm that your recommended budget percentages are appropriate. By comparing your it to some standard percentages you will be able to confirm that your numbers are (1) realistic, and (2) appropriate amounts that still allow you to develop a healthy financial plan.

Lay out a daily, weekly, or monthly budgeting schedule and plan that works for you. As a part of this schedule you will need to answer the following questions:

What will I do with receipts when I get them?
How often will I enter receipts into the free budget spreadsheet?
What day will I prepare  for the next month?
What day will I review the budget from the previous month?

This post includes affiliate links.  Learn more about our ad policy.

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Learning how to make a budget it an important skill.  That is why This blog talks a lot about budgeting.

A popular myth is that you can get financially fit even if you don’t make a budget.  They say don’t work hard.  Don’t track your spending.  But, you must.

If I had to identify one financial tool or resource that made the biggest financial difference in my life I would say it is the budget.

But, you cannot change your financial habits until you are willing to experience a little challenge to your financial world.  Before you start to track your spending, make sure you know what has kept your from budgeting.

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Sometimes you should spend money before you earn it.  The only good way to spend money before you earn it is to spend it on PAPER.  Spending it on paper first is especially important for UNRI (Unexpected Non-Reoccurring Income)

Sources of Unexpected Income

• Gifts – Christmas, birthday, or any other occasions where someone gives you money
• One time earning opportunities – this might include an honorarium for a speaking engagement, a thank you gift for a service you offered someone, or getting paid to participate in some type of survey.
• Side Job – Perhaps you’ve been working towards turning a hobby into a source of income.  Sometimes you make money, sometimes you don’t.  It certainly isn’t consistent enough income that you can depend on it or predict the amount of money it will provide. 
• Inheritance
• Prize/bonus money – while I personally don’t gamble and rarely even participate in raffles, some people will get money this way.  You might even have signed up for something that rewards you with a cash bonus.
• Any other source that currently you do not know the amount, frequency, or likelihood of getting money.

My theory is if you don’t pre-spend unexpected non-reoccurring income on paper you will waste it when it comes! 

If you don’t make a plan you’ll probably make a bad money choice.

Our spending can be categorized in one of two ways: Reactionary or Proactively.

Reactionary Spending:

We get a check for helping someone and we say to ourselves, “Hmm.  I wonder what I should buy?” 

On other occasions we might get a cash gift and we immediately start to wonder how we should spend the money.  People love to ask the question “What would you do if you won a million dollars?”  Most of us won’t really need to answer that question, but many of us will need to know what we would do if we got $100. 

The problem with reactionary spending is that it tends to be spent on short-sighted, temporary desires. 

Proactive Spending:

A better way to spend is proactively according to a predetermined game plan.  In other words, spend it on paper before you make it.

Allocate Unexpected Income to One of the Following Categories

1. Giving

   If you decide that you will give only when you have extra money, you will probably never have extra money.  Decide today to give a certain percentage of your next UNRI dollar.  Once you receive that dollar you don’t need to decide if you are going to give some or not.  That decision has already been made before your greed can emotionally influence you to keep more of the money. 

2. Debt Reduction A common complaint when it comes to paying off debt is that people feel as if they are not getting any traction.  They feel as though they are simply treading water without making any progress.  Putting your UNRI towards debt payment will both reduce your debt load and motivate you to become debt-free. 

3. A Long Term Saving Goal

   This might be saving for retirement, saving up for a new car purchase, or saving for a home down payment.  Because the money is UNRI it shouldn’t impact your normal budget so this gives you a great opportunity to contribute to some of your long term goals. 

4. Short Term Purchasing goal: 

   Perhaps you have been wanting to do an upgrade on your house.  Maybe the car needs a new air conditioner.  Perhaps you have been wanting to take a vacation for some time.  This unexpected income can help you purchase some of those items.

5. Fun:

   Some of this extra money can be used just for fun.  It’s not bad to blow some of your UNRI, but make sure you decide how much you want to blow.  Since the money is unexpected it is alright to enjoy it, but keep your passions in check by predetermining how much you are willing to use for fun.

Go ahead and decide today, how are you going to plan to spend your UNRI?

You don’t need any number, just percentages.  Grab a paper or open a Word document and write the words give, debt, long term savings goals, short term spending goal, and fun.  Now beside each word put a % amount.  The only rule is the numbers need to add up to 100%.  Below is an example (but not a suggestion).  You will need to customize these numbers according to your situation.  If you have consumer debt that should get your largest percentage by far).

Give: 15%

Debt: 20%

Long term savings goal: 25%

Short term purchasing goal: 25%

Fun: 15%

Now you have officially decided to be proactive with your spending.  Next time you get an unexpected check you know exactly where to put that money.

This post has been edited and revised from a previously published as a guest post at Frugal Dad.

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Just like the rest of you, I have certain goals and adjustments that I make every year.

One of the frustrating things about financial management is that we often have so many choices and we rarely know what is right.  Sometimes we just want a point of reference.

Blogs are by design an extremely open and intimate form of communication.  Therefore, in order to help you I have decided to tell you what we do with our finances with the hope that you this openness will help give some structure to your own financial goals for 2010.

Ford Family 2010 Financial Goals and Plans

None of these goals should be seen as financial advice.  Since each of us have completely different financial situations, our needs and goals will also differ.  Nevertheless, I think it’s helpful for you to have a point of comparison for your own financial management.

Giving:

At the start of this year (2009), my wife and I agreed to give according to the a graduated tithe schedule.  You can read about the graduated tithe in detail, but basically it means the more you earn the more you also give.  For us, this is not about a legalistic pattern, but about a structure to help us curb our emotions, desires, and lust for more.

Investing:

Our family has a very basic investing plan.

On a regular basis we have money automatically withdrawn from our savings account and deposited into our various mutual funds.  Though I previously owned some stocks, I feel more comfortable with mutual funds.

• 15% of our retirement savings is invested in a high risk strategy called “Sector Rotation”.
• 10% of our retirement savings is subject to my various investing whims.
• 75% is diversified amongst several different mutual fund types.

For my retirement funds we participate in the TD Ameritrade Omnium arrangement that allows me to get unlimited mutual fund trades for $99 per year (note: this program is no longer accepting new applications).  For my wife’s funds we work directly with a mutual fund company.

We both have Roth IRA’s.  In 2009 we rolled over a couple of Traditional IRA’s.

Children’s College:

Each month we contribute $100 to each of our kids’ college fund.  We start saving these funds from the day they are born.  Each child has a Educational ESA.  For our kids’ funds we diversify as much as possible even though the account balances are much smaller.

Daughter #1 – all her funds are invested directly, automatically with a mutual fund company.

Son #1 – all his funds are in a TD Ameritrade account.  We purchase no fee transaction mutual funds.

Daughter #2 – we have not officially opened her account.  We are still waiting to have a large enough amount for minimum payments and waiting on her social security card.  For my younger daughter I am looking into taking advantage of Schwab’s no fee ETFs.

Debt Repayment:

In June of 2006 we paid off our last student loan so we currently have no consumer debt payments.  With the help of a church we were able to secure our vehicle with cash, so we have no auto debt.

House Mortgage:

Each month we budget between 5-10% of our income to use for extra payments on our house.  We are on track to have our house paid off soon.

Budgeting:

Every month we still keep a budget. We keep every receipt from the week and then my wife and I sit down together to review all of the charges.  Honestly, these last six months have been extremely busy (Hmmm.  I have a daughter who is 6 months old and a blog that is 6 months old.  I wonder if either of those things has contributed to a busy schedule?) so we probably only get to the budget three times a month.  We are, however, committed to keeping up with the budget as we think it is the tool that has made the largest contribution to our being debt free.

Vacation:

Our family loves to vacation.  Every two years we travel back to North America and along the way we like to try and stop in some fun places.  So far as a family we have traveled to Japan, Australia, New Zealand, Canada, and the United States.  Because vacations are important for us as a family we are always saving part of our salary for a vacation fund.  In addition, I do a lot of stuff with points and such so we can get free hotels and even some spending money.

Future Vehicle:

Since we have decided as a couple that we will always pay cash for our vehicles, each month we put money into a savings account so we will have money in the bank when it comes time to buy another car.

Emergency Fund:

We already have an emergency fund in place we don’t make any additional contributions to our emergency fund.

Well, that’s our game plan.

Photo by Tim in Sydney.

Do you have a game plan?  What are your financial goals for 2010?

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One of the six habits of the financially fit is to organize your finances.  Unfortunately, many people are unwilling to organize their finances because there is simply too much to do.  I am reminded of a proverb that says, “How do you eat an elephant? One bite at a time.”  Reduce financial organization to individual tasks.  Instead of saying, “I need to organize my finances”, say, “I need to balance my check book.”  By having a list of smaller, specific tasks, you will ultimately be able to get your finances organized.  To help in that endeavor, I have included a list of tips for organizing your finances.

28 Ideas for Organizing Your Finances

1. Have an easy to access reference for all your financial documents. This may be a central location where all the documents are located or a list that describes the location of all those documents.  This practice is helpful because it forces you to look at a big picture of all your financial products.  When you list your account information for five banks you might realize that it is time for a little house keeping.
2. Use a well organized filing system. Depending on your financial needs your filing system may contain physical hard copies or electronic copies.  You should have one file for each credit card, each bank account, auto insurance, health claims, health insurance, life insurance, and so on.
3. Keep a copy of all your important documents. This includes things such as passports, credit cards, and social security cards.  Be sure to list important contact numbers in case the documents are stolen.  Keep these safely on file.
4. Put important documents in a safe. In the case of a fire or theft you should have important documents in a safe.  We keep our title, passports, and government issued documents in the safe. 
5. Consider getting a safe deposit box at your bank. If you are uncomfortable with the idea of having important documents at your house, put them in a safe deposit box instead.
6. Put a notebook beside your phone. This way you can write down information when you make important calls.  Write when you called, who you talked to (employee ID number if available), and the suggested course of action.  You never know when one phone call will turn into your next company saga.
7. Close duplicate accounts. If you have more than one bank account or credit card consider downsizing unless the accounts play very specialized roles.
8. Have one location in the home where you always put your bills.  Regularly check the box and take a few moments to take care of the bills.
9. Designate one day a week at a convenient time to send bill payments.
10. Automate your payments. If you have a regular bill with a regular payment amount, consider setting it up as an automatic bill payment.  Schedule your investments to automatically be invested on a certain date. 
11. Use a calendar to write important payment due dates or bank transaction dates. When you initiate an electronic payment be sure you write it on the calendar before doing anything else.
12. Put a shredder next to the desk where you often deal with financial documents.  If you don’t need to keep a piece of paper, go ahead and shred it right away.
13. Make it a rule to avoid opening financial mail until you know you have a least a minute to deal with the item. Once it is opened and set aside you are more likely to forget it.
14. When you read an email that requires action, always put a reminder or flag on the message to be sure it does not get buried under other emails.
15. Use a system, like Evernote, to keep all your online payment confirmation numbers. 
16. Sign up to receive electronic bills and be sure you have a good e-filing system.  When the bill arrives, save it into the right file before moving on to another job.
17. Carry a notebook.  Record your purchases every day.
18. Once a week sit down to record all your purchases from the week.  Don’t miss that day, because if you don’t do it this week, what makes you think you will have twice as much time next week?
19. Set up a simple budget and use its direction on a month to month basis.
20. If you are married, allocate appropriate responsibilities between each spouse.  Know clearly who will do what and be sure you plan to do a job you enjoy (if at all possible).
21. Keep a small notebook in your glove box. Record gas purchases.  Date, total price, price per gallon, and current mileage.
22. Keep every pay stub.  Put a file in your filing cabinet and keep this information on hand.
23. Get rid of one item for every new one you buy.  For example, donate a shirt to Goodwill every time you get a new shirt.
24. Save every receipt.  Once a week take the receipts out of your wallet, write them on your budget, and put them in an envelope.  Keep the envelope for a year and then start throwing out old receipts.
25. When you buy an item with a lowest price guarantee write the date and information in your computer calendar.  Set the calendar to remind you one week before the offer date ends.  Call around or visit around that week to see if the prices have dropped.  
26. Take a list when you grocery shop.  Stick to the list.
27. Take an evening and track down all your one time expenses – life insurance, health insurance, auto insurance and anything else you pay once.  Divide that number by 12 and be sure you are saving that amount each month.
28. If self employed, calculate your estimated taxes.  Total annual tax bill / 4 gives you your quarterly payment.  Take the total annual tax bill and divide it by 12 to be sure you are saving that amount each month.

The key goal of organizing your finances is to know how much you make, where your money is going, and how to control the flow of your cash.  Once you learn some of these skills financial management becomes much easier.

Photo by evelynishere.

What ideas do you have for organizing your finances?

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Determining the right budget categories and budget percentages is not a difficult task.  In my article on the six habits of the financially fit I mentioned budgeting as one of the habits.  One of the greatest budgeting fears is that you might get it wrong.  You fear that your allocation for groceries won’t actually allow you to make it through the month.  Unfortunately, this fear is one that can only be resolved by creating and experimenting with a budget.  Another reason folks do not budget is because they believe the process to be a waste of time or a completely burdensome event.  Neither of these are necessarily true.  In this post I have provided some recommended budget percentages so as to simplify your budgeting experience.   Photo by karindalziel.

Budgeting Categories, Budget Percentages, and General Information

What is a ‘budget’? It does not need to be a complex thing.  In fact a good definition for a budget is an intentional money plan.  Budgeting is about deciding both what to spend and what to save.  The process of budgeting is usually best preformed on paper, but can be done other ways as long as it helps you direct your spending and has a method to help you to be sure you don’t spend more than you earn.  Here’s how to make your first budget.

Is budgeting a waste of time?

Why Budget? It will help you achieve your financial goals.  In fact, if you are not budgeting I think making financial progress will be difficult.

As you begin start of with a simple budgeting process.  Here are Five Ways to Simplify the Budgeting Process.  You might also want to check out a sneak peak into our budgeting process because there are some suggestion for making a budget work.

Suggested Budget Percentages According to Budget Categories

While you will need to customize and personalize your family budget I thought I would share two suggested guidelines as well as my own percentages just to help you see how things work in my home.

The first suggestion source is The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey (TTMM).  The second suggested source is Money Matters by Larry Burkett (MM).  For the Money Matters list I have used the $45,000 dollar category.  You should notice that MM has the tithe and tax excluded from net spendable income while TTMM excludes only tax.  Regardless they offer a helpful guide:

My total does not equal 100% other budget categories.  12% goes to health, life, auto, and disability insurance.

Did I just do my ‘acts of righteousness’ before men?

I’ll be honest, I was a little hesitant to put my charitable gifts on the list because of this verse:

“Be careful not to do your ‘acts of righteousness’ before men, to be seen by them. If you do, you will have no reward from your Father in heaven. “So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men. I tell you the truth, they have received their reward in full. (Matthew 6:1-2 NIV)

Nevertheless, I included the amount because first I don’t see it as something that I necessarily want to boast about.  I would like to see that amount increase (and plan to make some changes in 2010).  Secondly, I think we do a disservice to our people when we make giving exclusively a private action.  The problem in Mt. 6:1-2 is not disclosure, but boasting and bragging.  Since this was not my intend I decided to include my giving information.  If there is any benefit to including that information it is so that people might praise their father in heaven and become more like their Father in heaven.

“You are the salt of the earth. But if the salt loses its saltiness, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled by men. “You are the light of the world. A city on a hill cannot be hidden. Neither do people light a lamp and put it under a bowl. Instead they put it on its stand, and it gives light to everyone in the house. In the same way, let your light shine before men, that they may see your good deeds and praise your Father in heaven. (Matthew 5:13-16 NIV)

How does your budget compare to the recommended budget percentages?  Do you think there are budget categories that are too high or too low? Do you think we should make it a habit to make our giving practices more public.

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