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Simpler Monthly Accounting

simpler monthly accounting

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Simpler Monthly Accounting

Buck of Buck Inspire asked if I was an accountant after reading my June Cash Flow post. The answer is no, I am not an accountant and these last 3 months were the only time I kept careful account of the monthly cash flow. However, I found that it was not that difficult and it didn’t take that much time actually.

The key to a simple monthly accounting is to have minimal active accounts. We have many accounts, but most of them are pretty static. Here are the list of our active accounts starting from the most active to least.

  • checking account. All the regular income and automatic payments go through this account.
  • one credit card. We have only one credit card and we minimize the usage as much as we can. A the end of the month, I check the credit card website and it’s not too difficult to categorize each entry.
  • PayPal. This account is only for blog related finance.
  • investment account. I check dividend income at the end of the month. I don’t trade very often so this account is usually not complicated.
  • saving account. I check interest income at the end of the month. If I have extra money in the checking I also transfer most of it here.

Most of the work was already done by the banks, PayPal, and the brokerage. All I had to do was to enter each income and expenditure into the correct category on my cash flow spreadsheet. I also have all these accounts hooked up to Personal Capital and kept track of the transactions there. For now, I like making each entry on the cash flow spreadsheet by hand. It makes the expenditure more real to me. It’s much easier to categorize them in Personal Capital, but I feel more disconnected to the spending. Does that make sense?

Anyway, I know many savvy personal finance bloggers believe in maximizing credit card rewards, but it’s not for us. If I spread out my expenditures to 5 credit cards accounts, it would be more difficult for me to track and I probably would quit tracking the cash flow. I’m sure we would spend more money as well.

What about you? How do you keep track of your monthly cash flow? 

* I slide over our cash allowance a little bit in this post as LLF pointed out in one comment below. The cash allowance is budgeted to $100/person every week and it’s for groceries, eating out, clothes, and other discretionary spending. You can read a bit more about our cash system on this post – Cash or Credit. If you look at June cash flow, you’ll see a big $700 allocated to cash allowance. I don’t know where every dollars goes, but I know it’s in the discretionary spending category and I know we didn’t go over budget. So we did cheat a bit by not keeping track of every allowance dollars spent. 😉

If you need some help keeping track of your finances, you should try using Personal Capital to manage your budget. It’s a great free budgeting tool. You can keep track of your income, expenses, and net worth, all in one place. Personal Capital is geared for investors and have many great tools. See my review of Personal Capital and how they helped me reduce what I’m paying in investment fees.


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{ 24 comments… add one }
  • No Debt MBA July 8, 2011, 5:22 am

    I use Mint as well. In addition to individual accounts, my SO and I created a joint Mint account so we could have read-only access to each other’s finances and could track joint goals and expenses. It’s an elegant tool. Excel or Quicken would certainly be more powerful but Mint is just convenient and easy at this point.

    • retirebyforty July 8, 2011, 10:45 am

      I like Mint, it’s pretty simple and it’s free. 🙂
      You can access it from any computer and that’s really convenient.

  • LLF July 8, 2011, 5:28 am

    Just wondering what you mean by minimal credicard usage? Do you mean to buy unnecessary stuff or buy everything with cash instead? I looked at your June cash flow and notice the $700 cash allowance. That’s quite a bit of cash.
    I usuaully pay for everything I can with CC and keep track of it daily, like I would with cash. This way I can earn rewards and have the proptection of a CC. I pay it off every month. See my posthere

    • retirebyforty July 8, 2011, 10:49 am

      I meant both – minimize spending and use cash instead.I went to see your post and I see that using credit card works for you. I added a paragraph at the end to elaborate our cash allowance system. Thanks for pointing out the hole. Most regular readers know about my cash allowance system, but I should make sure to point new readers to my previous posts as well.

  • Denise @ The Single Saver July 8, 2011, 7:34 am

    You are right… keeping it simple helps! I don’t personally have a system (like Mint) for keeping track of my finances. I just make a point to regularly check my accounts online. I pretty much am obsessed with these so i can tell you at any given time what my balances should be. LOL!

    • retirebyforty July 10, 2011, 12:35 pm

      That’s what I did before I took my 3 months off. It works pretty well for me, but I want to see exactly how much extra we need to live on one paycheck. I also have a pretty easy post to write once a month. 😉

  • Jeff @ Sustainable life blog July 8, 2011, 9:13 am

    I’d have to say you’re right – the KISS Principle in action yet again – I try to be as simple as possible, but i’m not. Right now, I’ve got 4 credit cards (though I only regularly use 1), and a handful of savings accounts at different banks. This helps me stop from spending my savings because I have to wait 2 days for the transfer.

  • Andy Hough July 8, 2011, 9:21 am

    I just put everything manually into a spreadsheet. It doesn’t take too much time and I actually like the process so this system works for me.

  • Krantcents July 8, 2011, 1:52 pm

    It is a whole easier if you have been doing it a long time! I don’t put together a report, but I do check for exceptions in my expenses. I get a pretty good feel just by looking at a couple key numbers. I

  • Robert @ The College Investor July 8, 2011, 9:59 pm

    I’m a Quicken guy. I use it for all my finances, and it updates automatically which is great. I use Quickbooks for my business, which is also pretty straight forward.

  • SB(One Cent At A Time) July 9, 2011, 5:35 am

    I use Yodlee, as big corporates use Yodlee, not mint. Why don’t you start diverting your ‘free’ checking account money to interest checking account? many online banks and local credit union do have interest paying checking accounts.

    • retirebyforty July 9, 2011, 9:56 am

      I haven’t heard of Yodlee, I’ll have to check it out. We don’t have much money in the checking account anyway and we don’t meet the 12 debit card use/month requirement. I don’t think it’s worth the time to get just a few dollars a month.

  • Justin @ Money Is The Root July 9, 2011, 8:53 am

    Ive tried a lot of automation in my finances to simplify accounting for my expenses…it’s a catch 22 because I still feel like I have to do a lot of monitoring.

  • Niki July 9, 2011, 10:40 am

    I am super old school with my Microsoft Money. I know it is old but I love it.

    We have probably a few too many checking/savings accounts, but we stay on top of them. I like to have our savings separated for designated spending.

  • Kellen July 10, 2011, 7:29 am

    I use Mint, and so far it works for me because I’ve never been good at consistently entering my expenses into a spreadsheet. I understand what you mean about feeling disconnected though, because there is definitely a mental benefit from writing each cost down yourself, and really seeing how each purchase increases your total expense for the month.

  • Buck Inspire July 10, 2011, 3:45 pm

    Hey RB40! Thanks for taking a closer look at your accounting. I think I need to simplify a bit. My money is all over the place. I use online checking and Mint, too. However, I need to drill down a bit more. I am tracking, but not going the extra step of detailing every in and outflow. Need to buckle down. Thanks!

    • retirebyforty July 10, 2011, 10:40 pm

      You should try it for a month and see how it goes. It might be easier than you think.

  • Moneycone July 10, 2011, 5:46 pm

    I love your KISS money-style RB40! Not to mention keeping fewer accounts makes things a lot easier come tax time!

    • retirebyforty July 10, 2011, 10:38 pm

      It’s pretty simple month to month, but it’s still pretty crazy comes April. I still have quite a few investment accounts to deal with. At least it’s easy to figure out the monthly cash flow.

  • youngandthrifty July 11, 2011, 12:02 am

    I actually love my Mint app. I log into it every day even though I know that if fraud were to occur the banks in Canada would not cover it since its a third party application.

    Anyway, I like to use it because it really helps me keep track of my cash flow.

    • retirebyforty July 11, 2011, 8:28 pm

      I log into Mint everyday also, but lately it seems to be having a lot of problem with my UBS account.

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