Monday, May 7, 2007


So I have begun to reach my goal of mastering Microsoft Money 2006 Edition in order to track our purchases and finances. It is a very cool program and it is pretty easy to get the basics set up. I currently have all our bank accounts entered and there's a nice little pie chart that shows the distribution of expenses. You can set an expense or asset with the use of categories. For example, there is a category for Hobbies/Leisure and I have two sub-categories under this right now: one for Comics and the other for Sewing (for Pam, not me). Another is Automobile with the sub-categories gasoline, maintenance, payments, etc... Categories are a very nice and necessary feature. More on categories later. Here's an example of a typical pie chart that I found.

However, I have encountered an issue which is solved here, but I have yet to implement it. Any time that money is taken out of an account, Money treats it as an expense. This is fine normally except with the situations of transfers between accounts and credit card payments. For example, if I transfer $1200 from my savings to my chequing account, it thinks I spent $1200 and wants me to categorize it, even though the money hasn't really gone anywhere. The same idea happens with credit card payments. Ideally you would like the credit card as an account and everything you put on it (DVDs, comics, and of course junior bacon cheeseburgers) to be tracked as an expense. The issue lies when you pay the credit card from your bank account. Again money is leaving your account so Money wants to know why. You could put it in the Credit Card Payment category. Do you see the problem with that approach? Money tracks the $10 you spent at Wendy's on the CC, but also considers the $10 for the CC payment as an expense so it looks like you actually spent $20.

Apparently there is an easy fix to this with special categories that cover transfers. Thus bank transfers between accounts and transfers of monies onto a credit card are not counted as either income or expenses. I had tried this during my first run with Money but I must have did something wrong as it messed up my balances within the program to a ridiculous degree. So I deleted all my accounts, including the credit card one I had there originally and started fresh. I have yet to put the credit card back on as I wanted to figure out the transfer problem first. As well, when I redid all my bank accounts there were many more default categories than I had initially. I have zero clue as to why this is.

In short, I am still learning the ins and outs of this program and it should be fun to figure out what useful information I can extract from our spending habits. If you're interested in using a software program to track your monetary endeavours that has more bells and whistles than a simple spreadsheet, think about Microsoft Money. A free alternative called GnuCash can be found here.

1 comment:

schaef said...

I find that every analysis of my finances arrives at the same answer, which is that I don't make enough money. At least for living in the Calgary area.

/and the secret ingredient is... love?!