Personal Financial Software: What You Need to Know

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Great! You’ve made the decision to purchase a personal financial software package to track your finances. But, before you go to your local office supply store to buy one, there are some decisions that you need to make regarding what you want the program to do for you. The more planning you do up front, the more money and aggravation you will save yourself. Know the answers to the following questions:

1) Do I need to track revenues and expenses for a home-based or larger business? If you have a home-based business, some of the more common personal financial software programs can help you keep your business finances separate from your personal finances. However, if you have a larger business, you may want to consider one of the business financial software packages, like QuickBooks, MYOB, or Simply Accounting. These programs are designed specifically for businesses and can save time versus trying to adapt your personal financial software to meet your business needs.

2) Do I need to track my net worth or simply my inflows and outflows of cash? For some, it will be enough to simply be able to categorize the money going into the bank accounts and the money coming out. Eventually, though, in order to build wealth, you will need to know how much your assets exceed your liabilities by- the standard definition of net worth.

3) Do I need to know the current value of my investment portfolio? If your investments are placed with several different investment companies, it can be helpful to centralize your total portfolio in one spot and to have up-to-date valuation information. Not all software programs can download up-to-the-minute stock market information, so if you need this functionality, you will have to make sure that you choose one that has it.

4) Do I need to keep track of foreign currency accounts or investment portfolios? If you have bank accounts or investments that are denominated in foreign currencies, you may need to keep track of their value in your home currency. For example, if you live in the U.S. and have a bank account in London denominated in pounds sterling, the value will change depending on fluctuations in the exchange rate between the dollar and the pound. Some programs can download current currency rates.

5) Do I need a software program that will track my actual spending to my budgeted spending? One of the most popular reasons to purchase personal financial software is to get a grip on spending and make sure that budgets are being followed. Most popular programs have that functionality, but some do not.

6) Do I need a software program that will print checks? It can be a time-saver to be able to print checks for bills directly from your software program. If your program has this functionality, it will record your payment at the same time it prints the check, thereby saving you a step. Printing your checks from a software program can also make you look more professional, which is especially important if you run a home-based small business.

7) Do I need help with planning my savings goals, such as retirement savings and college funds? Some programs ask you a variety of questions about your financial goals and will then be able to project the amount of money you will need to put away on a regular basis to meet those goals or will be able to project how much money you will have based on your current savings plan.

8) Do I need help with prioritizing debt reduction? If one of your main goals is to pay down your debts but you’re not sure which ones make sense to pay down first, some of the popular software packages can help you prioritize and can show you how you are progressing with respect to your debt reduction goals.

9) Do I want a software program that will automatically download transactions from my bank account from the Internet? Many of the popular software programs can connect to your bank accounts online and directly import your banking transactions. This can be a huge time-saver if you have a lot of transactions. It will be important to know which programs are able to download from which banks.

10) Do I need to be warned when my bills are coming due? You know the electricity bill is due on the 15th. It’s even marked on your calendar, but somehow, you forgot anyway and now it’s going to cost you another $30 in late fees! Some personal financial software programs can help you avoid that situation by flashing a warning of impending due bills when you start up. This feature alone could save you more than the cost of the program.

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