In the last several months, I received at least four email asking me how I can manage my personal finance in Excel and whether I can share my Excel models. I guess it is because most of my illustrations at PFBlog, including the regular monthly balance sheet update, are done in Excel formats. However, most of my personal finance management is conducted through Microsoft Money 2005 Deluxe, and I believe everyone who cares about his own finance should use specialized personal finance software like Money or Quicken instead of relying on home-made spreadsheets.
Here is why:
First, our personal finance is becoming more complicated. At the very minimal, we are talking about more than 10 accounts: 1-2 checking account, 1-2 saving account, 3-4 credit card account, 401(k), 1-2 IRA, 1-2 brokerage, and/or mortgage. Personally, I am managing more than 70 accounts in my Money file. It would be very painful, if not impossible, to even attempt to track all these accounts solely based on spreadsheets.
Second, modern personal finance softwares provide many advanced features to manage your finances. For one, many software can automatically retrieve your transactions from your banks and credit card companies, saving you lots of time to enter your individual spendings. Your software can also remind you of upcoming bill payments, tabulate your net worth and monthly spending, and allow you to set up and manage your budget. If you have investments, your software can help you to track individual positions, update the latest prices, and even analyze tax consequences of your portfolio.
Third, those software packages usually come with nice value-add features and perks. Microsoft Money 2005 Deluxe, for example, includes Lifetime Planner, which can generate a useful long-term financial plan. It also bundles a one-year Experian Credit Report and Credit Monitoring service. The Premium version even includes free oline tax preparation and e-filing from H&R Block, making it even more a steal.
The good thing is: you can get all these features without paying a fortune. Right now, Amazon sells Microsoft Money 2005 Deluxe for $27.99 after $20 rebate. Quicken 2005 Deluxe currently sells at $55.99 but discount and rebates are available from time to time too. (If you still feel the price is too steep, think about what if you miss a credit card payment -- you will be easily set down $35.)
All in all, it's about saving time and money. Everyone who is serious about managing personal financial issues can benefit from using these software. You will save your time by managing your finance in a more structured way, and you can save your money by avoiding some common mistakes. Act now and start to take control of your finances.