This entry describes one way in which household finances can be managed with the support of digital technology. The story starts in 1981 when two newly-weds decided to direct all their incomes into a joint account and to move monthly allowances for personal expenditure from the joint account into their respective personal accounts. For the next ten years they developed an approach to budgeting for the year ahead and monitoring it on a monthly basis. This was before the era of on-line bank accounts, and money management involved scrutinising paper bank and credit card statements. So, most of the work was done on paper, by hand, and, initially at least, in a piecemeal fashion without any standard layouts.
One of the partners had gained experience of spreadsheets at work; so, after acquiring an Atari computer around 1987, they obtained a copy of the EZ-Calc spreadsheet software for Atari and started using it to create and manage their yearly budgets. The experience they had already gained in managing their accounts enabled them to list their standard items of expenditure down the side of the spreadsheet, with the months of a single year along the top.
Of course, the line items in bank and credit card statements did not necessarily align to the standard items of expenditure in the budget spreadsheet; so, in order to update the spreadsheet with actual expenditure, it was necessary to identify which items in the budget sheet each of the statement lines were referring to. This is something that the couple had already been doing to a degree; however, the use of the spreadsheet introduced a need for a greater level of rigour in this exercise. For, in order to ensure that the end of month figure on the bank statement matched the end of month figure on the spreadsheet, all the amounts on the bank and credit card statements had to be correctly allocated to one or more expenditure categories in the spreadsheet.
During this initial foray into spreadsheets, the couple’s responsibilities became more delineated. One took responsibility for looking after the budget sheet, and the other took responsibility for the statements and for allocating the line items in the statements to the items of expenditure listed in the budget. By about 1992, they had established a regular routine whereby each month, after the partner responsible for allocating the statement line items had completed the work, the two would sit down together in their joint study where the Atari was located, and one would call out the total expenditure in a particular budget category and the other would replace the budget figure with the actual figure in the relevant spreadsheet cell. At the end of this exercise a check would be made to ensure that the end of month figure in the bank account statement and in the spreadsheet were the same. If they did not tally, then further checks were made to establish the error and fix it. Finally, the couple reviewed the month-end figures for the remainder of the year, discussed any expenditure cuts or additions, and made any agreed changes to the future budget. Afterwards, a copy of the updated budget spreadsheet was printed out for the partner responsible for the statements.
In 1993, the partner responsible for the budget spreadsheet changed his computer at work from a Macintosh SE to a Compaq PC laptop. In the same year the couple moved to a bigger house in which they each had their own study and the Atari was moved into one of the children’s bedrooms. These two events – conversion to a PC and the move of the Atari – prompted a change from using EZ-Calc for the budget spreadsheet to using Excel on the PC laptop. The portability of the laptop enabled the couple to conduct their monthly discussion in the study of the partner responsible for the statements.
Up until the year 2000, the bank used by the couple had no online banking service and all statements were sent out in paper form. The allocation work was all done on these physical documents. However, a few years into the new millennia the couple started to use the bank’s online banking service and eventually chose not to receive paper statements in favour of downloading them. Having got used to this approach, the couple devised a spreadsheet to facilitate the allocation process; the statement information was copied and pasted into the extreme left columns of the spreadsheet and all the budget items of expenditure were placed into the subsequent columns along the top of the spreadsheet. In that way the cash amount of a line in the bank statement could be allocated to one or more columns of expenditure categories. A checking column was included next to the column showing the cash amount, and this was programmed to say OK if the total amount in a particular row in the expenditure columns was the same as the cash amount of that line in the bank statement. If the amount was different the checking cell would say ERROR. At the bottom of the spreadsheet the sum of all the values in each expenditure column was automatically added up, and it was these figures that the partner owning the statements was able to call out to the partner owning the budget spreadsheet.
This was the last major change that the couple has implemented. There have been a few developments since then but they have not made a material difference to the way they manage their finances. For example, the credit card statement is now also available electronically, however the allocations for that are still undertaken by hand on paper; and, since about 2015, both partners have been accessing the joint bank account via an app on their phones and iPads – but this has only afforded a more immediate awareness of particular transactions and the overall position of the account.
In 2015 the couple moved again, and in their current house have established the practice of conducting their monthly update sessions in the more comfortable setting of the lounge. They both have their laptops on their knees, and continue to operate their well-practiced routine. The Excel spreadsheet now has 26 worksheets – one for each of the last 26 years. It works for them for the moment, but, as past experience has shown, it may have to change to adapt to changes in technology or circumstances.
More details about the mechanics of the arrangements described above are provided in subsequent entries. These will cover: annual budgeting and items of expenditure, credit card expenditure, and in-outs and other exceptions.