How does Quicken work? what's the point of using it?

[magnate]

Just got quicken as I want to undertand where my money is going, I just want to understand the basics: is the point of reconciling simply to make sure that your bank isn't cheating you? it seems like a time consuming paranoid task, my bank provides a statement which clearly indicates all my transactions, what's the point of spending hours making sure that they've done it correctly? Or is there more to it?

[Aleta]

I have a post that I just wrote asking about the difference in the different programs. You're doing Quicken because you want to see where your're saving and spending. You need to know where you are. They also offer a budget there.

[rduell]

Reconciling is the same thing as balancing your checkbook. It's to make sure that you haven't inadvertently left out a transaction so that you have more or less money than your checkbook says or that the bank hasn't made a mistake. A must to do every month.

[tinapbeana]

the nice thing about any software, whether it's quicken or otherwise, is that it allows you to see your transactions in a different light. for instance, you might look at your bank statement and see 10 checks for $45 each, but once you've put them in your software you might realize that those 10 transactions are to the grocery store and they account for 25% of your income for the month.

it's a different way of looking at the same information, and some find it more helpful than others.

[poundwise]

I'm not sure that the original question is a Quicken question or just one about handling your personal account(s). Pardon me if I have misunderstood but whether or not you have Quicken, or any other personal finance software, you need to reconcile (balance and verify) your account.

I know some people just check with bank (online, by phone, or in person) when they need to know how much money they have. That's crazy! You ought to know your own balance, or be able to calculate it rather simply, at any given time yourself.

When you reconcile then, you are simply checking and verifying that what you have is what the bank has in terms of transactions and balance. More often than not, this will help you catch mistakes that you have made, not the bank, however, there are some instances where the bank, or a merchant (debit card transaction), or another company with access to your account (bank drafts) will make a mistake and you, obviously, need to know that too.

[boefixepa]

The basic format of quicken is a computerized check registar. So reconciling it is the same as taking your bank statement and your paper registar and making sure they match. If you are not accustom to doing this......well get use to it. Doing the reconciliation and balacing your check book is NOT the same thing as a budget. Don't get the two confused. Look at the categories and such. Quicken does not MAKE you assign each transaction a category, but you NEED to do this to see the Budget and how it work. Good luck, you may need a tutorial or a manual to figure out how to use the software to your best advantage.

[FrugalIII]

I've been using Quicken since 1995 and absolutely love it. I was recently divorced at the time and way over my head financially. Due largely to the tracking provided by Quicken, I took control of my finances and within a reasonably short period of time, was back on track saving and investing for the future. I can't say enough about how much I like Quicken. I want from almost 0 net worth to more than $350k in net worth while raising four kids and paying for a house. All on a very modest income. Now, except for a small mortgage and car payment, I'm totally debt free and have close to $100k invested in the stock market. I believe that if it were not for Quicken, I'd never have accomplished all that.

[Little L]

I've been using Quicken for many years too. I mostly used it to record transactions and for ease of reconciling. BTW, reconciling takes me 5 - 7 minutes (and I use my debit card for everything!), not hours as your post mentioned.

I began using it for budgeting. I've since abandoned this as I don't particularly care for Quickens budget features. I created an Excel s/s that suits me better.

It is an excellent tool for tracking balances and reconcling. I wouldn't be without it.

[markusk]

I've been using Quicken since 2002 and I really appreciate how it allows me to figure out where my money is going. As others have stated, you can also see your expenses within each category and check that against your monthly allocated budget for that category -- but you must designate each expense with a category.

Reconciling WAS a tedious process until I set up "download transactions" for all of my accounts (checking, savings, creditcards, etc). I use my one creditcard for all purchases (and pay everything off at the end of the month). I download each account once-a-day or every-other-day, which gives me an update of all of my purchases. This way, I don't have to manually enter each and every transaction (which was initially fun, but time consuming). Also if an unauthorized craditcard transaction is made, I will know it the day it is charged to my card.

Using the "download transactions" feature will generate a "c" for "clear" in the "cleared status" row in the Register for each transaction. Later, when you receive the bank statement and reconcile the account, everything should match (converting the "c" to "R"). Reconciling this way takes only 1-2 minutes maximum. Reconciling also tell you which checks you wrote have not been deposited/cashed.

Anyway, hope I understood the original question and my attempt to answer wasn't too confusing....

[StressLess]

Reconciling, or balancing, your checkbook is a must, as other people have said. There are always a few things I've forgotten, or I transposed a number or something. And for me it's a lot easier to do it in Quicken than on paper.

What I like is being able to run reports to see where our money's going. Sometimes it's a real eye-opener.

I keep reading about people using cash envelopes, where they say they just stop buying groceries when the grocery money is gone. That's good as far as it goes, but what have they learned about grocery shopping that might help them the next month? Using Quicken, I was able to figure out that going to Aldi regularly helped me stay within my monthly budget. Someone who just spent cash til it was gone might resign themselves to eating ramen noodles and mac and cheese at the end of every month, or start to depend on a food bank. Knowledge is power.

[Aleta]

I have a problem with transferring the money. If I transfer money on one day, Quicken automatically puts the new transfer deposit into the other account on the same day. Is their another name or transaction name or should you just say deposit. Has anyone else had that problem?

[MonkeyMama]

Hmmm, I reconcile all my accounts every few days in seconds/minutes. Not exactly time consuming. Just downloads all the data from all my banks, matches is to what I input, and wala - done. Hardly time consuming. For the stuff I don't input, most if it is pretty recurring and it knows what it is and where it goes - not much work on my end.

Then I Can print out a bunch of reports and I can see exactly where all my money has gone in minutes (vs. hours of spreadhseet tracking).

I don't really understand your transfer problem. ???

If you haven't tried donloading data though - that may be your problem. Though I have 2 banks that are not compatible with quicken - I have to enter the interest every month. I don't reconcile it though. I do it by eye but not an official reconciliation - it is obviously in check with the right amount - accounts that have little activity. I just check the ending balances match and leave it be. But the checkbook needs reconciling so I know what is outstanding, and everything needs to be watched to make sure there are no errors. But for any accounts where your balance equals the bank balance there is really no need to do the whole reconciliation process. If it matches it is reconciled...

I think the thing is when you get started you will have a lot of thinking about how to structure things and you will have lots of input. But once everything is set up it becomes much more automated. I am going on a year, just threw my hand check register out the window, and takes me minutes to pay all my bills and see where we stand - I just love it.

[Aleta]

Thank you. Maybe that's my problem. I don't have everything downloaded.

[Little L]

Aleta,
That how Quicken handles transfers... it moves money from one account into another... whichever you selected in the 'category' box.

What are you trying to do?

[Aleta]

Sometimes, the transfers occurs on different days. A bank can transfer money out of my account and it will appear on one day and it might not appear for two days in the other account.

[Little L]

Oh, are you talking transfers that you d/l from your bank? I thought you were referring to manually doing a transfer in Quicken.

I don't d/l so I can't help you. Sorry.