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Thursday, September 24, 2009

Budgeting: Part 9: Data Entry Tips

"Whenever there is a hard job to be done I assign it to a lazy man;
he is sure to find an easy way of doing it."


- Walter Chrysler


My tips for entering your household budget data involve a combination of basic paper managements techniques and a few novel money hacks.

Group similar tasks together. It's extremely inefficient to start up your budgeting software just to enter one or two receipts. Similarly, it's unproductive to sort through papers looking for specific receipts to reconcile an account. Instead, wait until you have a block of time and then enter all your recent receipts at once.

Visit each receipt once. Be organized. Keep all new receipts in one place, and then move them to a different location or shred them as soon as you've entered them. This way you won't waste time looking for a receipt or determining whether you've already entered it.

Batch similar items together in the checkout line. If you have a few odd items in your cart, put them on the conveyor belt last. This will ensure that the odd items appear at the end of the receipt. For example, if I'm buying groceries at the grocery store and also purchase a couple of household items, I make sure the household items are scanned last. This makes entering category splits much faster because you don't have to visually scan through all the lines on your receipts looking for odd items. Note that this hack is somewhat similar to ringing up two separate bills for the two categories, but doesn't inconvenience the clerk or the people behind you in line.

Use sales tax to quickly calculate your category subtotals. This trick can save you a huge amount of time, but it will only work if your locale has different sale tax rates for different items and your retailer breaks out the rates on your receipt. Here's how it works. Suppose your locale taxes most things at 6%, but taxes groceries at 4%. Now let's also suppose you went to Wal-Mart and purchased about 25 grocery items and 25 household items for a total of $97.30. It would take a really long time to find and add up all the groceries (or the household items) to get accurate spending information. However, with the sales tax hack, it can be done in seconds. Look at the bottom of the receipt. It will say something like: "4% tax: $1.37". This was the tax on the groceries. Simply multiply $1.37 by 26. That is the amount of your groceries plus tax! The remainder of the spending is household items. In Quicken, all I have to do is enter the total amount of the receipt, hit split, type "gr" to highlight "groceries" as the first category, then type $1.37 * 26 for the amount, then type "ho" to highlight "household" as the remaining category, and I'm all done. After you've done it this way a few times, it should take you only about 15 seconds to accurately categorize groceries versus household items on a receipt.

(Additional note: If you live in the United States, Wikipedia has a very comprehensive entry on all the sales tax rates and categories for each state.)

Use a distinct category for uncategorized transactions. There are times when you deliberately aren't going to categorize something. Maybe you lost a receipt or you don't remember what an item was or you're balancing your cash account with an uncategorized entry. In these cases, it's faster to create and use an explicit category. If you don't enter a category, then most budgeting software will display popups and other warnings. These warnings slow down your data entry. On the other hand, you don't really want to turn off these warnings off because they are valuable to have if you truly forget to enter a category. The solution is to use an explicit "Not Categorized" category for these entries. This also has additional benefits with budget reports, because unfortunately a lot of budgeting software treats uncategorized items in a special way and doesn't provide consistency with other categories.