• Philip Stratton

Lesson 007: You Need A System

Choice is good, right? Like most questions in life, the answer is "it depends". Having choice is usually seen as a positive thing. It allows us to exercise free will. We like to associate it with FREEDOM! But having too many options to choose from can be counterproductive and can prevent you from making forward progress. The term analysis paralysis is used to describe the situation where you are faced with so many choices you just can't bring yourself to select one for fear that you'll regret the choice you've made. As the options increase, the differences between them often decrease and several of the options become seen as viable. In these cases, simply take the advice of a friend or colleague and just go with it (like the linked article I selected above - it's just the first that popped up in a search. It might not be the best, but it serves the intended purpose just fine).


There are a lot of budget programs and systems available. So much so, it can be difficult to choose which is the "best" one to use. Popular ones include Quicken, Every Dollar, You Need A Budget (YNAB), and my program of choice - Moneydance. There are scores more computer programs and hundreds of mobile apps you could choose from.


But don't be confused. Moneydance (or any of the aforementioned programs) is not the system. The system I follow is what's called an envelope system and Moneydance is the tool I am currently using that helps me implement my system. The system is your philosophy and approach for directing your finances, not the tool you use. The tool helps you develop a process for your system. Many people/companies that develop a system will also develop a tool that aids in implementing their system. But a good system shouldn't require a specific tool. The tools you decide upon can be analog (checkbook register, ledger paper, physical envelopes), or digital (computer programs and/or mobile apps). The important thing is that the tool helps you meet the goals you've determined your system is meant to accomplish.


Some things your system should do for you are:

  • track money flowing in: paychecks, Venmo reimbursements, gig work, gifts, etc.

  • track money flowing out: debit card swipes, Venmo payments, online purchases, and checks written (a foreign concept to many)

  • categorize income and spending: broad categories (food) or more detailed (food: groceries; food: restaurants; food: fast food; food: desserts)

  • remind you of upcoming expenses

  • earmark money for future expenses

  • incorporate credit card tracking when applicable (more on credit cards in a future post)

  • easily verify your records match your bank's records

A primary way we accomplish some of these tasks is to get a receipt for all of our purchases, make a quick annotation of the purpose/category of the items when not obvious (Walmart receipts are impossible to read!), and input them into Moneydance routinely so they don't pile up. When a receipt isn't offered, we have Petty Cash slips like these handy to capture the information.


So first define your goals, next determine how you'll prioritize your spending to direct funds towards the goals you've established, then choose a system that makes sense to you and includes a process that you can follow, and finally select a tool that implements your system.


Like a food diet, a training program, or any other undertaking that requires substantial effort and dedication, having a well-defined system will help you with the accountability and structure needed to sustain the long-term commitment. The rewards are worth it. You can do it!



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