Managing Your Money

by Al Levit

Glendale, CA (Sept. 8, 1998) -- A few weeks ago I spent a couple of days writing about the basis for Cash-King Investing that we laid out in Step 2 and Step 3. The response I received to those columns about personal debt and a personal flow ratio indicated that many of you share the passion of the Cash-King managers to keep tight control of personal finances. At the same time, I also received several emails with a more basic theme. The most concise simply said, "I would like to learn how to manage my money. Please show me."

To a certain extent, this question is covered elsewhere in the Motley Fool, particularly in the Fools and Their Money area. However, it also true that the primary tool that THIS Fool uses to keep his family finances in order is made by none other than Microsoft (Nasdaq: MSFT), which is arguably the number one Cash-King company. Moreover, Microsoft has just released a new version of its personal finance software, Money 99.

Therefore, although we have done book reviews in this column before, today marks the start of the Cash-King Portfolio's first software review. Before I begin, however, I need to note that personal finance is one area in which Microsoft is NOT the leader. The number one personal finance software package has historically been Quicken, which is made by Intuit (Nasdaq: INTU). I converted from Quicken to Money about three years ago because I got some incorrect advice from a clerk in a software store. (I was told that Quicken was not a 32-bit program at the time, and that wasn't true.) At that time I found Money about on par with Quicken, and so I have used Money ever since.

Both Money and Quicken have gone through so many upgrades that it is unlikely that either program will leave most users dissatisfied. I will have a few more words to say about this at the end of this review, but for now, please understand that deciding to use either program is much more important that deciding which program to use. On the other hand, Money and Quicken both have a "Basic" and a "Financial Suite" package available. The MS Money "Financial Suite" package costs about $30 more, but the rebate is $15 higher. As I will note in Part 2, some of my favorite parts of Money are only available on the Financial Suite, and the extra $15 is well worth it to me.

To begin with, however, it's important to talk about getting started for people who have never used either package. For someone in this category, the initial set-up can be an intimidating task. Fortunately, it is not nearly as intimidating as it used to be. You basically have to describe all of your financial "accounts" to the program, and the program's wizards give you a lot of help in describing the accounts. For example, the program will ask:

  • Is this a bank account?
  • What is the name of the bank?
  • Is this a checking account?
  • Do you have any other accounts at this bank? Etc.

This is not hard, but it can take some time, especially when you start describing all of the stocks in your brokerage account(s). From that point on, you start recording transactions as they occur, and Money (or Quicken) will start to build a history of your financial life. One of the true beauties of these programs is that they allow you to put your expenses into "categories" so that you have an idea of where your money is going. This may sound like a dreadful chore, but the programs have some wonderful ways to make it easier. (For example, if you paid a bill to a Ralph's Groceries last week and called the category "Groceries," the program will assume a bill to Ralph's Groceries is for the category "Groceries" again this week unless you tell it otherwise.)

Even more helpful, though, is the way that input drudgery has been eliminated through the miracle of electronic processing. Most major banks and many brokerages have the ability to have their financial information read directly into either Money or Quicken. If you sign up for this feature, and it will probably cost you around $10 a month, then you will realize the following benefits:

  • You will be able to balance your checkbook monthly, to the penny, in less than two minutes.
  • Most expenses will be categorized instantly without your having to do anything about it.
  • You will always know exactly how you stand with your checking account, credit card balances, and portfolio.
  • You will spend a lot less time paying bills.
Even more important, within about one month's time you will be able to quickly generate a report that shows how you have spent your money over the past month. It only takes a few minutes to generate this report the first time, and a few seconds to generate the report later as more data becomes available. As a result, after about three months you will have a very good picture of where your money is going, and you'll be in a much better position to do something about it if you find that you are spending more that you are earning.

Money has a lot of other neat stuff in it, and you will probably use some of the time you've saved from the drudgery of bill paying to explore that side of the program. In fact, I consider some of those items -- like the budgeting feature -- absolutely essential for a Cash-King investor (and perhaps for any Fool, regardless of whether she follows Cash-King investing). I'm going to cover a couple of those parts of Money 99 in Part 2 tomorrow. This will include both the budgeter and my particular favorite -- a forecast to show whether your assets will make it through your lifetime.

Until then, Fool on!


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09/08/98 Close

Stock  Change    Bid 
 AXP   +6 3/8   80.00 
 CHV   +2 1/8   80.00 
 CSCO  +5 3/8   94.63 
 KO    +1 3/8   63.50 
 GPS   +7 7/16  60.94 
 EK    +  1/4   81.25 
 XON   +1 5/16  67.38 
 GM    +2 7/16  58.75 
 INTC  +3 21/32 81.91 
 MSFT  +5 11/32 101.97 
 PFE   +5 5/16  100.69 
 SGP   +4 5/8   95.88 
 TROW  +  5/8   28.88 
              Day      Month       Year       History 
 C-K          5.15%     7.09%      5.53%       5.53%  
 S&P 500      5.09%     6.89%      1.74%       1.74%  
 Nasdaq       6.02%    10.78%     (0.33%)     (0.33%) 
 Cash-King Stocks 
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   24 Microsoft     78.27    101.97    30.28% 
     2/3/98   22 Pfizer        82.30    100.69    22.34% 
     5/1/98   37 Gap Inc.      51.09     60.94    19.27% 
    6/23/98   23 Cisco Syst    86.35     94.63     9.59% 
    8/21/98   22 Schering P    95.99     95.88    -0.12% 
    2/13/98   22 Intel         84.67     81.91    -3.27% 
    2/27/98   27 Coca-Cola     69.11     63.50    -8.11% 
     2/6/98   56 T. Rowe Pr    33.67     28.88   -14.25% 
    5/26/98   18 AmExpress    104.07     80.00   -23.13% 
 Foolish Four Stocks 
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko    63.15     81.25    28.67% 
    3/12/98   20 Exxon         64.34     67.38     4.73% 
    3/12/98   15 Chevron       83.34     80.00    -4.01% 
    3/12/98   17 General Mo    72.41     58.75   -18.86% 
 Cash-King Stocks 
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   24 Microsoft   1878.45   2447.25   $568.80 
     2/3/98   22 Pfizer      1810.58   2215.13   $404.55 
     5/1/98   37 Gap Inc.    1890.33   2254.69   $364.36 
    6/23/98   23 Cisco Syst  1985.95   2176.38   $190.43 
    8/21/98   22 Schering P   2111.7   2109.25    -$2.45 
    2/13/98   22 Intel       1862.83   1801.94   -$60.89 
    2/27/98   27 Coca-Cola   1865.89   1714.50  -$151.39 
     2/6/98   56 T. Rowe Pr  1885.70   1617.00  -$268.70 
    5/26/98   18 AmExpress   1873.20   1440.00  -$433.20 
 Foolish Four Stocks 
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko  1262.95   1625.00   $362.05 
    3/12/98   20 Exxon       1286.70   1347.50    $60.80 
    3/12/98   15 Chevron     1250.14   1200.00   -$50.14 
    3/12/98   17 General Mo  1230.89    998.75  -$232.14 
                               CASH     $48.07 
                              TOTAL  $22995.45 
 *Please note: On 8/4/98 $2,000 cash was added to the
portfolio for future investment. This will be reflected
in the numbers as soon as possible.

*The year for the S&P and Nasdaq will be as of 02/03/98