QuickBooks can be a valuable tool for tracking personal and family finances, not just those of businesses. Many people track their business income and expenses extremely carefully, but then pay less attention to tracking their personal finances. Sure most people have a general understanding of their monthly expenses and income, they have a feel for how much debt they are carrying and they also know how much and where they are investing. However, wouldn't it be nice to know exactly where you stand at all times?
Set up accounts to be tracked:
Decide which accounts you want to track and are also which are worthwhile tracking. Obvious choices are: all checking and savings accounts, all credit cards, all investment accounts and all loans (mortgage, lines of credit etc). Many of these accounts will offer the ability to download the activity directly into QuickBooks, which will save you lots of data entry time. Make sure you track all the transactions that occur in each account. Also, it is important to breakdown your loan payments into principal and interest. Lastly, make sure to reconcile or balance each account to the most recent statement when you receive it.
What tracking this level of detail will do for you and your family
Tracking your personal finances with this level of detail will cause you to ACTUALLY care about your finances. Another great benefit of tracking things this closely is you can use QuickBooks to help you get a handle on your cash flow. Not only how much money do you have in the bank at this moment, but also a snapshot of money that will be coming in an out in the next few days and weeks. You should automate as much of your banking as possible. This includes: setting up paychecks to be directly deposited, monthly recurring bills being should be set up for automatic withdrawals and also funding to your investments automatically. Figure out how to maximize your financial life based on your budget and then automate as much as possible. The big things in life will be taking care of themselves.
Why track your personal finances?
Many people argue that they don't want to track their personal finances this closely. They are fine with knowing that they have a roof over their head, the bills are getting paid and they are investing for retirement. I will argue that it's not good enough to have a feel for your personal financial situation. It is nice to know exactly where all your money is coming from and going to, right down to the penny. How can you identify overspending if you are not tracking it? How much did your basement remodel cost? How much are you spending each month going out to eat? Could you reduce an expense and invest that money elsewhere?
Tracking your personal finances in QuickBooks has many advantages. I think most importantly it makes you pay attention to and care about your finances.
Want to give me some pushback or agree with me to a certain extent? Feel free to comment.
For questions on getting your personal finances set up in QuickBooks feel free to email me.