Raise your hand if you like working with your checkbook. Yeah, that’s what I thought.

If you’re still using a paper checkbook, you are missing out on about 8 billion benefits to going the “digital” route, so to speak. But the most important one is this: no more math slip-ups. I used to work at a bank, and I can’t tell you how many times I had to spend 45 minutes going through someone’s paper checkbook only to find that they forgot to carry a one or just completely forgot how to do basic math. It’s mind-boggling.

And it happens to everybody. I know it did for me quite frequently. Think about it: you’re in a rush, you quickly jot down the price of something and subtract it out. It’s easy to miss something when you’re running out the door. Or even better, you do the great trick of writing in the amount so you’ll do the math later, right? What’s that? You have a calculator? Great! But guess what? All it takes is one missed button and you’re screwed!

Besides the automatic adding and subtracting, going digital also gives you a much neater checkbook to work with (for those of us with supremely awful handwriting – yup, I got a “C” in penmanship in the 7th grade!), and you can also group your transactions and analyze your spending and saving much better, what with graphs and charts and all that fun stuff. Keeping a budget is easier because you can punch in your benchmarks and see the progress as it’s happening!

“But wait!” you scream, even though I can’t hear you. “I don’t want to spend $100 on Microsoft Money or the latest version of Quicken!” Me neither. So we need to build a system that can handle our finances online. Here is what I needed my system to do:

• Not cost a dime. I don’t have that kind of money.
• Allow me to manually enter in transactions. Services that pull in your account information automatically are great, and there are plenty of them. But if you automate the “keeping track” part of your finances, you leave yourself open to giant mistakes. They’re not perfect on their own. You need to be able to enter in your receipts and balance the checkbook manually.
• Be upgrade-proof. Buying Microsoft Money is a great investment – until the next version comes out. This system is free all the way through. You can’t be burned by new versions here.
• Be accessible anywhere. If you only have a desktop PC, you need to be able to grab your account information anywhere, since you can’t carry your desktop everywhere. If you have a laptop, you have an extreme advantage.
• Provide reporting features. The best part of having those cool, expensive programs is the way you can look at overviews of your finances and see where your money is going and how much of it. This system has it, for free.
• No internet access needed, however. If you know you are going somewhere where you don’t have internet, you need to be able to keep updating your finances on your computer.
• Be safe. Security is a concern with everything you do involving your money. This system does not require you to reveal any account numbers.

So, after much thought and testing, here’s what I deem to be the best and safest money management system. It’s nearly foolproof, and you can relax knowing your money is being tracked safely. So here are the 7 easy steps you need to take to set yourself up!

#1. Open your Google Docs.

If you have a Google account already, all you need to do is log in. If you don’t, sign up for one – it’s easy and it’s quick.

#2. Open up a new document from a template.

#3. Click on “Personal Finance” on the left side, underneath “Narrow by category”.

#4. Use the “Checkbook Register” template.

#5. Edit the template to fit your account.

This is how the template looks right after you load it. Click on the title at the top and change it to the name of your account (“Checking Account”, “Mastercard Credit Card”, etc.). Then notice how the examples are laid out – you can fill in a category for each transaction, and use it just like a regular paper checkbook. The only difference is that the math is done for you already. Edit the top line of the register to match your current balance, and you can start entering in transactions immediately! It will automatically be saved.

#6. Set up your accounts with Mint.

Go to Mint and click on the “Sign Up” link at the top of the page, then follow the instructions to add your different accounts and it will pull in your information. Worried about security? First, Mint has been open and running since 2006 and there have been no complaints of any security breaches. On top of that, even if someone were to hack into your account, all they would be able to see is your transactions. You are not giving your account information (account numbers, etc.). You are only giving information to track expenses and deposits.

Setting up your accounts can take a little bit of time, especially initially as Mint pulls in your information.

#7. Enjoy Mint’s extensive reporting features.

When you log into Mint, you will see an overview of your finances. Here you can see how much money has cleared your accounts, a quick look at your budget (which you can edit to fit your needs) and how far along you are in meeting that budget (below). You can also look at your transactions and edit how an expense is categorized, if you would like.

Click on the “Trends” tab, and you will see different ways you can look at how your money is being spent:

As you can see, you can change the timeline to see different reporting, if you would like.

Above: you can even compare your shopping to trends in your local area.

Mint also has a “Ways To Save” tab. This is what keeps Mint a free service. Here, Mint analyzes your spending and recommends different accounts and credit cards that would be better for you – maybe a credit card with a rewards program or a savings account with a higher interest rate, for example.

Mint also has email alerts, which automatically let you know when your credit card payments are due, or if your balances are starting to get low. You can set them up however you would like. Very handy!

“So how do I access this stuff from anywhere?”

Glad you asked! Google Docs and Mint are both hosted on their own servers and not on your computer. In layman’s terms, this means you can access them from anywhere with an internet connection. If you have a laptop, you can take these things wherever you want. At a hotel? Hop down to the public computer in the lobby and enter in your expenses from the day. It’s that simple.

No internet connection for the week? If you have a laptop, you can download your Google Docs checkbook as a spreadsheet and keep entering in transactions offline. Then you can upload the document back into your Google Docs account when you get home. You won’t get your reports and graphs until you get an internet connection, but if you’re on vacation, you’ve got better things to do than sit in your hotel room and look at your spending!

If you don’t like Mint, there are several other services like it that are just as free and have their own unique features, such as Thrive and Wesabe. Choose the one that’s right for you.

What do you think? Do you have your own money management system that you prefer over this one? Share it with us in the comments!

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