Tuesday, September 29, 2009

Electronic Check Ledger

It has been some time since I have used my account ledger to keep track of the money in my checking account.

Some of you may not even know what it is -- it's that paper book with a bunch of lines on it that usually comes with the checks from the bank.  Unfortunately, not keeping track of your credits and debts may cause you to accidentally overdraw and write checks you may not have enough money in the account for.  This is especially important if you have multiple accounts where you transfer money to and from.

I have come up with a solution that helps me keep track of both my finances as well as keeps a history of my historical spending.  I can even do some minor forecasting to see where potential bottlenecks/shortfall could be.  I now keep track of my finances with electronically on Excel.   I completely understand there are numerous software out there that can and will do the same thing (e.g. Quicken, Quickbooks, etc), but nothing is better than free.

I essentially created an Excel worksheet that contains the formula "=B531-C531+D530" for the Balance column.  This simple formula takes any credits, subtracts the debits from it, and then add it to the previous balance.  This method has worked very effectively for me, especially keeping track of both checks I have written, ATM withdrawals, electronic transfers, and payments.  I can also very quickly see if I need to transfer money from my investment account back to my checking account ahead of time if there is a potential shortfall.

Sometimes I do get overzealous with my forecasting and cut it close several times, but overall it's been a great tool.

1 comment:

  1. i came upon your blog via your wife's food blog. thanks for this nifty formula!