Where is my money going?

Those who cannot remember the past are condemned to repeat it – George Santayana

When I began this blog, one of the things I wanted to discuss was managing money i.e. budgets, investments, frugality etc. This will be one of my first articles towards that end with more to come in the future.

When I first got out of college, I took a year off to try to find work before I returned to graduate school. At this point, I was in credit card debt. The first credit card I ever got extended me $5,000! First of all, I had no business being handed a credit card equal to that amount as I was earning about $6,000 annually (from tutoring and working in the dorms). However, I was the one who mismanaged credit and handled the card as free money. When I was broke, I would pay for things using the card and buy stuff that I could honestly have done without. I got drunk with purchasing power and over time, I got other cards and bought more stuff. Therefore it was inevitable that when I got out of college with no income, I would end up being very broke. I knew I had to fix my leaking boat before it sank and I drowned with it. This was the point where I began to figure out what personal finance was and how to be the navigator of my financial journey.

The first thing I had to learn was: Where was my money going? This is usually the first step that most personal finance managers will tell you to do. Even though I had an idea that I was spending a lot on clothes and food and electronics, I needed to know what percentage was being spent where. This would help me figure out where money was being spent (or wasted) and the first things I would probably need to trim when I wanted to manage my finances properly.

I started with Microsoft Money that a relative had purchased, but it wasn’t free and I believe at this time Microsoft has actually stopped selling this program. In more recent time, numerous free online tools can be used for this same purpose. There are three that I have experience with Mint, MoneyStrands and Thrive

My favorite so far has been Mint for functionality and interface, but I’ll leave you to check out some reviews to decide for yourself (Mint Review, MoneyStrands Review, Thrive Review)

So what do these sites do? First, they consolidate most your financial information into one site i.e. checking accounts, savings accounts, CDs, credit card accounts and investments accounts as well. Secondly, they each have a feature that is able to show you graphically where all your money is going i.e. groceries, rent, food etc. You can basically pull up a pie chart in Mint that will show you proportions of where your money went for a certain month. This works very well if like me you have multiple accounts because it allows you to keep track of  how much was spent on gas overall whether it’s on a credit card or a debit card. Here’s a screen shot of my spending in August 2008 just to give you an idea of how this feature works (As you can tell I wasn’t very smart with eating out)

One of the worries that people have is about the security of having to enter bank information into a third-party site. I will tell you that I have been using Mint since May 2008 and I haven’t had any issues. If however you’re still worried, then there are other options such as Microsoft Excel and paper and calculator. In the end, your peace of mind is the most important factor to consider.
Overall, this is where you can figure out how much you’re spending on fast food per month, or how much gas you spent last month in comparison to the two previous months or how much you spent at Christmas last year and so on. This first step will help in setting up a clearer view of your financial picture as the next step is preparation of a budget.


10 responses to this post.

  1. This was a really useful piece of information.


  2. Posted by Yewande on August 20, 2009 at 1:35 am

    okay so i tried to use mint, but my bank aint on there, but ima try the other ones. this is gonna be hard–im a recovering shopaholic.


  3. Thanks for checking out http://www.moneyStrands.com. I wanted to add that for those worried about entering bank information to a third party site, we also offer the ability to manually load your data. You can do this through a CSV, QFX or OFX file. Its also a great option for those who can’t find their bank on the site as @Yewande experienced.


  4. Posted by Olu on August 21, 2009 at 3:17 pm

    Thanks for pointing that out Lucia, I completely forgot. In addition to that, I can also attest to moneystrands’ customer service as Lucia has answered a lot of questions for me (a la http://twitter.com/moneyStrands).


  5. […] to manage finances September 5, 2009 Olu Leave a comment Go to comments In a previous article, I mentioned how to use online sites to see and keep track of how your money is spent. Another way […]


  6. […] 2009 Olu Leave a comment Go to comments Aside from the free personal finance managers mentioned here, there are also some other online finance tools that I use that can be of value to […]


  7. […] consume that much coffee, but if these numbers are way lower than the amount you spend on coffee (Check out these useful tools) it might be time to […]


  8. I’ve used Mint and Thrive, but wasn’t sure if I should go ahead with a third money-managing website..I’d heard of Money Strands, but didn’t try it out.


    • Posted by Olu on October 20, 2009 at 5:42 pm

      I’m kind of a sucker for interfaces, so of all three thrive is my least favorite when it comes to that. I wasn’t sing money strands as much because of it’s issues with updating my ING accounts. It now seems to have taken care of that problem. It is still relatively slower than Mint when it comes to updating my accounts though. So all in all, all three individually have something to offer that the other three do not.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: