Can Quicken make you Frugal?

I admit it. I love Quicken. But it wasn’t always this way. I was dragged, kicking and screaming, into the world of personal finance software about 10 years ago. I didn’t really want to try it, but was shamed into it. It’s not that I didn’t want to track my expenses or investments, it’s just that I wanted to keep doing it that way I always had – in a checkbook, or on paper. I’ve been called a WILIWIK (pronounced willee-wick) on more than one occasion. Ever heard of one? It stands for: What I Like Is What I Know. That’s me, all over.

When I agreed to try it out, it was agreed that I would give it a year. If I didn’t like it after a year, I could give it up and it would not be mentioned again. But, of course, when the year was up, Quicken had become my good friend.

You see, it’s not just that it helped me balance my checkbook, reconcile my credit card charges, or track the balances in some of my investment accounts. It forced me to see what I was really doing with my money. It made me accountable to myself, and there was no denying where my money had gone at the end of each month or each year. I used to have a false sense of pride about my money management skills. The checkbook was always balanced, the credit card charges reconciled. No late fees, no overdue payments. But when I looked at some of the reports Quicken could produce for me, I did not like what I saw. There were some totals that could not possibly have been my spending – I am much too frugal for that! But, in the end, there really is no denying that I spent the money in ways I would not have approved of. Once faced with the ugly truth of where I had been spending, I had no choice but to mend my ways.

To me, the real essense of frugality is aligning my spending with my values. And as long as I live within my means, it is totally my decision what I value and how much I feel comfortable spending on it. When I talked about frugality in the past, I’ve mentioned how our hard-earned money can be thought of as our “life energy” since we traded our time to earn the cash. But two things forced me to quantify these thoughts: estimating an annual budget at the beginning of the year, and then producing annual reports from Quicken showing actual spending in each category.

Before I had spending reports in black and white, I think I was in denial about where my money was going. I might have made a vague statement to the effect that “I don’t spend much money on…” Clothes. Or Dining. Or Whatever. But the truth of the matter was often different that what I perceived. The most valuable thing Quicken does for me is producing reports of my expenses, in categories set up by me, on demand. Once a month, once a quarter, once a year, whatever. Whenever I’d like an impromptu look at my spending year-to-date in a category, it does that for me with the push of a button. At an absolute minimum, I always print a detailed report at year-end and see how I did compared to the budget I prepared at the beginning of the year. And it helps me put together an estimated budget for the next year.

Now, when I am about to spend money on something, I almost subconsciously consider its effect on my Quicken report. For example, if I have budgeted $300 for clothing and I want to buy a $100 coat, I realize that will be 1/3 of my budget for the year. So either I have to really be careful with clothing expenses for the rest of the year, or I decide to exceed the budget. Either way, the decision is mine but I had to face up to how it is affecting me. And in many ways this helps curb my discretionary spending.

So, I ask you, does Quicken (or other personal finance program) make you frugal? For me the answer is that while it may not make me frugal, it helps keep me accountable to my self-defined frugal goals.