How to Manage Your Money Wisely: Better Software Makes it Worse

Written by Jesse Mecham  |  on

So you want to know how to manage your money wisely…

In these technological days, the logical option seems to be to seek out the best software to do the job. Unfortunately, this “best” software is sometimes extremely high priced. As money management software becomes more sophisticated, it forgets the important aspect of your original aspiration: HOW TO

The problem with money management software these days is that it tries to manage your money for you. How it does this is beyond me. My programming skills are limited to say the least.

Does the software manage your money wisely? Maybe. But how do you know?

For instance, I took a look at Microsoft Money the other day. This money management software is sophisticated! You get graphs, charts, variances, etc…The problem with MS Money isn’t the ads that are stealthily layered into the program (although I find that almost offensive), nor is it the major amount of disk space it takes up on one’s hard drive. The problem with MS Money is that it’s too sophisticated. How will you learn to manage your money wisely if the software just does it all for you? You won’t.

Quicken is definitely a step up from MS Money, but it still lacks (I should say it doesn’t lack to really be on target) something pretty major, something that will keep you from your goal of learning to wisely manage your money.

And the irony is that the better the software gets at learning how to manage your money, the worse you become at it.

If you want to learn how to manage your money wisely then you are going to have to learn how to write down what you spend. Period. End of discussion. That’s the boring truth my friend.

Yesterday I was talking with a good friend actually. He just enrolled in a personal finance class in college. I jokingly told him I could give him the best advice about personal finance in one sentence: Spend less than you earn.

The only problem with this tip is that it doesn’t sell university classes, great books, or audio cassettes. It’s just too boring! Spend less than you earn (now buy my book, the struggling author might say). Nah, a really good personal finace coach will teach you how to wisely manage your money by re-wrapping the “advice your grandmother gave you” (Dave Ramsey) and delivering it in a new, fun, exciting way.

So, coming back around to the topic. How does one spend less than they earn? You must record every single itty bitty purchase you make. That’s the secret to financial success. You write down everything you spend and then you make sure it’s on target with how much you’re making. (By on target, I mean well under what you make).

Now I hear someone yelling: “But MS Money writes it down for me. If I am to track it myself, that means I’ll just be adding an extra step to the process of how I manage my money.” Don’t you see? That’s exactly the problem! MS Money, Quicken, Mvelopes, take away the writing down aspect of your money management process. This is where it becomes weak.

When you write down what you spend, you make a mental connection with that purchase. Even if you use your debit card and have everything recorded for you by your bank (which I do), you still need to write down every purchase you spend (I do, in the YNAB system). This process of writing things down will help you manage your money better than any fancy, sophisticated, expensive software. You must write it down yourself. You will become attached to your purchases. You will become more aware of your money. You will naturally manage your money wisely. You will see where it goes. Your money’s path will become a part of you. You will begin to spend less than you earn. And at that moment, you will be on your way to personal financial success.

Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?