I started doing personal finances (especially taxes) on a venerable Heath H89 I picked up back in 1980. I graduated to Macintax in ’85 using a borrowed Mac 512. I started online banking in about ’89 with CheckFree software, eventually migrated to “Managing Your Money,” and then to Quicken (who probably absorbed CheckFree’s consumer services). After that, I bounced between Macs and PCs using various versions of Quicken.
My desktop is now a Macintosh but I continue to use PC Quicken. I tried to break free last month, and failed.
Despite having to migrate every few years, I’ve achieved a few things pretty consistently with my financial software. It isn’t everything everyone wants. I do enough to keep me atop finances and tax reporting requirements.
Here’s what I try to achieve, usually with success:
- Keep multiple copies of recent transactions so I can unravel ID theft, fraud, and errors. These days I download bank and card transactions, plus copies of the corresponding PDF monthly statements. The statements provide a record of what the banks claim to be doing. Auto-download gives me a second, more flexible list of computer-readable transactions.
- Monitor transactions. I generally try to categorize the downloaded transactions, especially tax-relevant ones, so that I look at the individual transactions. This sometimes reveals “surprise” recurring payments we didn’t know we’d signed up for. We’ve had significant credit card fraud only once, and the bank contacted us before we saw the bad transactions.
- Reconcile bank balances. There is something comforting about having the bank or credit card company report the same balance as your own records. Quicken handles these reconciliations fairly well. It catches occasional errors in my records, or in institution downloads. Maybe I have the wrong version of Quicken (Deluxe, Arch Deluxe, I forget which), but I’ve never successfully reconciled an investment account. I don’t do a lot of investment transactions, so I check them by hand.
- Track tax-relevant and business expenses. Categorization and reporting makes this straightforward.
And here’s what I’ve found:
- Abandoned financial software doesn’t just drop dead, especially if it’s running on your desktop. You get some warning. For example, the company will stop issuing updates or upgrades. I usually know when a piece of software is fragile in that way, so I can plan ahead for its demise. When it’s time for a major OS upgrade, I look at my financial software and ensure it will survive the upgrade. If the software is too fragile, I save my transaction history and migrate.
- It’s best to change financial software just after the fiscal year changes. I need a complete year of records from which to do tax reporting. The same goes for my payroll service. I’ve had to migrate payroll services mid-year (when Intuit bought my service) and I don’t recommend it. If you migrate with the fiscal year, you limit the number of transactions you need to import into the new software. Even the best migration leaves loose ends you have to fix by hand. Fewer transactions yield fewer loose ends.
- Decent financial software should give you a way of exporting all your transactions to a gigantic table or spreadsheet. Quicken PC has generously provided this through its reporting system. I’ve exported everything 2 or 3 times over the years, and my archive includes some truly ancient spreadsheet files. I’ve looked up weird transaction details from years past, and the spreadsheet files make it practical. You might not be able to import everything into new banking software, but at least you can look up older things in your spreadsheets.
- The IRS claims that you only need 3 years worth of records for most issues they’re likely to ask about. Personally, I keep soft copies for as long as the bits don’t rot. I keep paper tax forms and retirement account records forever (more or less), I toss ephemeral paper records after about 4 years. I will survive if I lose computer-based transaction records I won’t need for tax season.
- I like the “control” I have over automatic payments produced from Quicken, but such payments are fragile. If I migrate between Quicken platforms (Mac-PC-Mac-PC), or between banking programs, I lose those automatic payments. So I only do a handful through Quicken. The payments may also count towards some sort of monthly quota of free bill pay transactions.
- Quickbooks is not home finance software. My accountant requires me to use it for my business. Even though a capable version runs on a Macintosh, I don’t use it for home finance. Banks like to charge a fee to connect to Quicken, and they charge a lot more to talk to Quickbooks. I also can’t get it to do Quicken-style bill paying.
I’ve been using some version of PC Quicken for about 12 years. I update every 3-4 years or when some essential feature goes obsolete. I’ve tried Quicken’s unsuccessful attempts at Mac software, and found it best to keep using PC Quicken running on VMWare.
My current Quicken file has about 12 years worth of data. I used to try to keep the ‘net worth’ calculation accurate, but lost interest after a while. When I tried migrating to iBank, I migrated everything from last year and this year, and had the liberating experience of expunging a lot of obsolete accounts and categories. I suppose I could do that with my “real” Quicken file. Maybe next week.