Your Money Where a Mouse Is

If calculators, slips of paper, pencils, and file folders seem too tedious for building a budget, your home computer can be an easy and powerful tool.

With the right software, it's easy to figure out whether, and where, you're spending too much or scrimping needlessly. Making the switch to personal-finance software takes a little extra effort at first. But if you keep at it, the rewards can stack up.

The two leading programs just released new versions: Quicken 98 (Windows-based and Macintosh computers) and Microsoft Money 98 (Windows). Both sell for about $30 (more for Quicken Deluxe).

Quicken still sets the standard, but Money 98 is catching up.

The most important part of budgeting is keeping track of what you spend, and both programs make this easy.

Each time you write a check, you also enter the transaction in the computer (it's like writing a check on-screen). The program then asks you to pick a category for that expense.

For example: A payment to the electric company probably goes to "utilities"; a gift to Aunt Sarah would go to "gifts," and so on.

Those categories correspond to those in your budget, and the software gives you a couple of choices in setting them up.

You can go with the categories already supplied, or you can create your own, making them more complicated or more simple.

So if you want to track how much more you spend gasoline for your spouse's Ford Explorer compared with your Honda Civic, you can do it.

Got a credit-card bill for many purchases? No problem. The programs allow you to split the transaction and assign each payment to a separate category.

Granted, it's extra work entering each item in your checkbook, then repeating the process on your computer. But time spent up front will save time when you do taxes or prepare your budget and want to know how much you spent on, for example, eating out or going to the movies.

The real advantage of these programs is the information they put at your fingertips.

If you want to know how much of your entertainment dollar goes to popcorn and soda, these programs deliver the dramatic news at the click of a button.

And knowing what you spend is often the first step is changing how you spend.

In fact, whenever your spending seems out of whack in a category, you can create a customized report that shows exactly where the money went.

After a few weeks of entering expenses, it's time to build a budget.

The quickest way is the "auto-budgeting," feature in both programs. It averages monthly spending for each category based on your expenses.

That's your benchmark for money coming in, and going out. Now, fine-tune the numbers.

Do you really want to spend so much on shoes? Does child care need a boost? Adjust the numbers until they fit your needs. Then, save the budget. From now on, you can call up graphs that show how well you're keeping to your spending plan.

And a few clicks of the mouse will call up mortgage rates, schedule payments, and calculate net worth.

* E-mail Laurent Belsie, the Monitor's computer columnist, at lbelsie@ix.netcom.com