Many of my financial coaching clients and students ask me about the best accounting software packages to create a budget and keep track of their expenses, such as Quicken or Microsoft Money.  They’re shocked when I say that I don’t recommend either of them.

Now don’t get me wrong, I’m a big advocate of having a good handle on your expenses.  The trouble is most people don’t use their “money time” wisely – and often focus their attention on the wrong things.

Budgeting isn’t about dumping a whole bunch of numbers into a computer and then wasting time juggling those figures.  Yes, you absolutely need to gather the critical budget information for a few months to see what your spending patterns have been. But you can use pen and paper or a basic Excel spreadsheet to track these numbers.

The key is to do something useful with the information you have been gathering so diligently and to figure out what the numbers mean.  Most importantly, are you living within your means or not?  How can you tell?  Well, an easy reality-check is to look at your debts. If your debts are going down year-after-year – and not up — then this is a good sign that you are living within your means.

Then ask yourself: Am I setting enough money aside for important life goals – travel, retirement, kid’s education, charitable works, making a difference in the world.  If you aren’t sure how much you need to save now to reach each of your goals, then have your financial advisor run some projections for you.

If you have a plan in place for saving and investing wisely, if you’re living within your means, if you are working towards your life’s purpose — your dreams — your goals, then it really doesn’t matter how much money you spend in each budget category.  Knowing how and where you spend your money is essential — before you put a financial plan in place. But after that – it’s just useless information.

Monitor your budget by looking at the pace of your debt reduction, the quality of your life on a day-to-day basis, and your progress towards attaining your life goals.  Nothing else really matters. (But if you still insist on buying Quicken, well then, just go ahead and do it.) – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.