Simplify your record-keeping

The new year is a perfect time to organize your finances and simplify your bookkeeping. That said, any record-keeping method for your finances needs to be easy to use.

•Paper and pencil is a time-honored way of keeping records and doesn’t require any special expertise. Ledger paper with columns and rows is the most basic way to track your income and spending, and the simplest. At the very least, your categories should include housing, utilities, food, clothing, auto, insurance, entertainment, medical, incidentals and savings, with your budget for each at the top of the column. Tally your expenses at the end of each month and each quarter to make sure you’re on track.

•Computer software is another easy way to track your finances. If you don’t already have a computer, January is a good time to consider buying one, as retailers need to move the stock that didn’t sell over the holidays. You could find incentives such as free or reduced-cost installation of extra memory or software.

If you already have a computer but have never used it for keeping your financial records, there are a number of programs that can handle your work efficiently.

•MSN Money, and the companion book, “Microsoft Money 2005 for Dummies,” leads you step-by-step to organize your finances, set up a check register and reconcile your account each month, and print checks. You can estimate your taxes and track investments as well.

•With Quicken (by Intuit) entering your checks and reconciling your account on a monthly basis is a snap once the program is set up. Keep track of your bills and automatic bank deductions, and pull reports in text, graph or chart form to show your spending.

Note: Don’t be lured into doing your banking online. Stay in control of your finances by staying hands-on. Use the programs as a check register and to reconcile your account, generate reports about your spending, and if you wish, print out your checks.

Whether you use the paper-and-pencil method or a computer software program, the purpose of a record-keeping system is to determine if you’re on track with your spending and saving. Keep it simple.