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Home >> Accounts >> Checking Accounts
Using a Checking Account to Budget
How can I use my checking account to keep track of my monthly expenses for budgeting purposes? Are there any tools you can suggest?
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 Start with a list of spending categories that you want to track. You can use broad categories or refine them a little more. For example, you can use one category covering all your utilities, or you can break utilities down into telephone and cell phone, electricity, heating fuel, cable television, trash and rubbish removal, etc. Just don't refine your categories more than you need to or you'll risk getting an attack of "paralysis through analysis", but don't make "Miscellaneous" a big catch-all, or your budget will be meaningless.
If you still make most of your payments by check and you receive checks or check images in your bank statement, you can use the memo line on the check to assign one of those spending categories. You can camouflage your system a bit by assigning each category a number and writing the category number instead of its name. Then, when you get your bank statement, you can use a simple spreadsheet to record the category and amount from each check or image. You can adapt that method to debit card purchases if you put a category code on each sales slip and hold the slips until you pull out the spread sheet at statement time.
Working with your bank statement and spreadsheet each month is also a terrific way to ensure that you review each statement promptly for errors or unauthorized transactions.
If you have a home computer you can use any popular personal financial software (PFS) package. Three that come to mind are Microsoft Money Plus (a/k/a Microsoft Money), Quicken, and MoneyDance, to track spending by recording each account transaction with one of the categories supplied by the program or one that you assign. The beauty of these programs is that they do a lot of the math for you, including the basic math of adding deposits and deducting checks and other payments to arrive at an account balance. They can also provide reports on your spending in standard list or graphic formats, such as pie charts.
PFS packages also allow you to track spending in multiple accounts, including credit card accounts, using those same categories. Don't forget that if you use cash for lots of your purchases, you won't have a record of where those funds go unless you regularly get receipts and use your category coding system for them, too.
Published on BankingQuestions.com 1/09/09
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