Financial Awakening:

The Practical Power of Money

Seminar

 

Quicken Quick Start Tutorial

 

 

 

II.      Set-up of Personal Information

 

Click  2. About You in the top left corner.  This is where you input personal information.  Simply answer the questions with the following information:

 

 

Congratulations!  You have just completed the About You section of the input process.  Now it is time to Set Your Goals.

 

Click     Next Step     in bottom right corner.

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Now it is time to Set Your Goals.

 

Click inside each     box to indicate that you want Quicken to help you:

 

                           Manage my checkbook and bills.

               Know where my money is going.

               Save more money.

               Track all of my investments in one place.

                           Get out of debt.

               Make tax preparation easier.

               Retire when I want.

               Know my net worth.

 

Click     Next Step     in bottom right corner.

 

 


III.  Cash Flow Accounts

 

It is now time to Add Accounts.  We start with Cash Flow accounts.

 

Click “Cash Flow” under item “4. Add Accounts”

 

Click the Checking     Add Account    box.

 

The Fall’s bank at Bank of America – Kansas.  Input this as their institution by typing “Bank” and then selecting Bank of America – all other states from the drop down menu.  (Once you start typing, all institutions available to Quicken will appear in the box.  Simply scroll down until you find Bank of America – All other states.  Highlight this selection and click on it.)

 

Click     Next     in bottom right corner.

Name this Account.

This is a Joint Checking Account, so type Joint Checking in the space available.

 

Click     Next     in bottom right corner.

 

Normally, you would want to select Online in order to download your financial information from the Internet.  However, for purposes of this case study, we will make this a manual account.  Click the button beside Manual account.

 

Click     Next     in bottom right corner.

 

Input the ending Statement Date of May 25, 2004 and the Ending Balance of $1,500.

 

Click     Done     in bottom right corner.

 

Notice that the Joint Checking account now appears under the Spending & Savings Accounts category of Spending.

 

NOTE:  If you have made a mistake in the date or amount entered, do not worry.  Leave it as is for now.  We will correct it in Session IV.

 

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It is now time to add a Savings Account.

 

To open Quicken again, simply Click the Quicken icon on your screen.  Quicken will ask if you want to finish set-up now.  Click      Yes     and you will be back where you left your last session.

 

Click the Savings     Add Account    box.

 

Follow the same steps as the Checking account.  This time input $2,000 as the balance as of May 25, 2004 for the Joint Savings account.

 

Select “Exit Setup” box at the bottom left of the screen.  Quicken will ask if you are sure you want to leave Quicken Guided Setup.  Click “Yes”.

 

Quicken will take you to the Quicken Home page.  Under the Cash Flow Center at the left of the screen, you will see the Joint Checking and Joint Savings accounts listed.  Click on “Joint Checking” and Quicken will take you to the Joint Checking Register.

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

Look again at the Cash Flow Center at the left of the screen.  This time click on “Joint Savings” and Quicken will take you to the Joint Savings Register.

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

NOTE:  If you have made a mistake in the date or amount entered, do not worry.  Leave it as is for now.  We will correct it in Session IV.

 

Turn in both the Joint Checking Register and Joint Savings Register reports. (Hand-ins 1-1 & 1-2)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the first session of Quicken.

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To open Quicken again, simply Click the Quicken icon on your screen.  Quicken will ask if you want to finish “Guided Setup”.  Select Yes.  If Quicken does not ask you if you want to finish “Guided Setup”, it will take you to the Quicken Home page.  Here, select “Setup” in the bar at the top of the page.

 

It is now time to add a Quicken Credit Card Account.

 

Click “Cash Flow” under item “4. Add Accounts”

 

Click the Quicken Credit Card     Add Account    box.

 

Quicken Credit Card is pre-selected, so  Click     Next     in bottom right corner.

 

Normally, you would want to select Online in order to download your financial information from the Internet.  However, for purposes of this case study, we will make this a manual account.  Click the button beside Manual.

 

Click     Next     in bottom right corner.

 

Name this account Quicken Credit Card by typing Quicken Credit Card in the box that already says Credit Card.

 

Click     Next     in bottom right corner.

 

Enter the ending Statement Date of May 31, 2004 and the balance of $3,500.

 

Click     Next     in bottom right corner.

 

Enter the Credit Limit of $5,000.

 

Click     Done     in bottom right corner.

 

NOTE:  If you have made a mistake in the date or amount entered, do not worry.  Leave it as is for now.  We will correct it in Session IV.

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Since the Falls have one more credit card with a balance, we will input it following the same instructions as the Quicken Credit Card account.  Only this time

 

Click the Other Credit Card     Add Account    box.

 

This account is with the financial institution of Bank of America – Kansas and we will use the Manual input.  Select “Bank of America – All other states” from the drop down menu. We will call this credit card “Bank of America Credit Card”.  The balance on this account as of May 31, 2004 is $2,500.  The credit limit on this account is also $5,000.

 

NOTE:  If you have made a mistake in the date or amount entered, do not worry.  Leave it as is for now.  We will correct it in Session IV.

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You should now see your Joint Checking and Joint Savings accounts listed under Spending & Savings Accounts, and the Bank of America Credit Card and Quicken Credit Card accounts listed under Credit Card Accounts.  Verify your amounts are accurate.

 

Click     Edit     button to the right of the $1,500 Ending Balance for Joint Checking.

Now, lets add the following information about our Joint Checking account:

 

            Interest Rate                 0%

            Account Number            123456789

            Contact Name               Nancy Jones

            Phone                           555-123-6789

 

Click     OK     button at bottom when done.

 

Having this information is useful for future inquiries.

 

Lets add the following information about our Joint Savings account:

 

            Interest Rate                 1.5%

            Account Number            234567890

            Contact Name               Nancy Jones

            Phone                           555-123-6789

 

Click     OK     button at bottom when done.

 

Lets add the following information about our Bank of America Credit Card account:

 

            Interest Rate                 12.5%

            Account Number            987654321

            Contact Name               Nancy Jones

            Phone                           555-123-6789

Click     OK     button at bottom when done.

 

 

 

 

 

Lets add the following information about our Quicken Credit Card account:

 

            Interest Rate                 8%

            Account Number            876543210

            Contact Name               Mike Smith

            Phone                           555-123-9876

 

Click     OK     button at bottom when done.

 

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It is now time to add a Cash Account.

 

Click the Cash     Add Account    box.

We will leave this account name as Cash Account.  Simply Click     Next     in bottom right corner.

 

Input the cash balance of $75 as of May 31, 2004.  Click     Done     in bottom right corner.

 


IV.          Checkbook and Savings Registers

 

 

If you made a mistake in the amount or date entry, you can correct it here.  Let’s practice correcting an error.

 

Click on the “Exit Setup” box at the bottom left of the screen.  Quicken will take you to the Quicken Home page.  At the left of the screen, you will see the Cash Flow Center.

 

Click on the name Joint Checking under the Cash Flow Center and Quicken will take you to the Joint Checking account bank register.  Look at the top green bar.  This indicates the account that is highlighted.  In this case it should say “Joint Checking”.  Simply Click on the date.  The date is now highlighted.  You may see “May 25, 2004.”  Input the correct date of May 31, 2004 and hit the Tab Key on the keyboard.  (Although the Tab Key and Enter Key are interchangeable, we will use only the Tab Key for now.  In a minute, we will examine the use of the Enter Key.)  This takes you to the Num  column, representing the checking number input.  Since this is a beginning balance, there is no check number in this field.  Click on the arrow key (pointing down) in that field.  This shows you the available entries that you can select.  We will work with these entries at a later date.  For now, this field should remain blank, because this is the opening balance in our checkbook.

 

Hit the Tab Key on the keyboard.  This takes you to the Description of the entry.  Here you should see “Opening Balance”.  Hit the Tab Key again and the amount becomes highlighted.  When an area is highlighted, you can type in that field to make a change.  Change the amount from your original entry of $1,500 to $500, by typing over the amount.  Hit the Tab Key.  (Remember, the Tab Key and Enter Key are interchangeable, but for now we are only using the Tab Key.)  This now takes you to the “Xfer Acct” section of the register input screen, representing the transfer account where this entry originated.  You should see “[Joint Checking]” in this field.  Click on the arrow key (pointing down) in that field.  This shows you the available entries that you can select.  We will work with these entries at a later date.  For now, we will leave this entry as is.

 

Hit the Tab Key on the keyboard.  This takes us to the “Memo” area of the input, just like the “Memo” area of a checkbook.  Type in “Beginning Balance” in this field.

 

Now hit the Tab Key.  The    Enter   selection is how highlighted.  Continue to hit the Tab Key to see how it moves you to the other selections.  At any time, as you move through the selections, you can make a change to any of these fields, now or in the future.

 

After you have used the Tab Key to move through the selections, enter your cursor toward the top of the register and practice using the Enter Key.  You will find that it moves you in the same manner as the Tab Key.  However, once you get to the last input field, the “Memo” field, when you hit the Enter Key, the program thinks you are done with the entries.  It may say, “You are recording a transfer back into the same account.  Save it anyway?”  The “Yes” button is highlighted.  You can either hit the Enter Key or Click   Yes   on the screen.  Quicken will then prompt you “Are you sure you want to modify this account’s opening balance?”  Select “Yes”.  Quicken then takes you to the next line in the check register.

 

Once you hit Enter in a transaction input section in quicken, you will hear a cash register ‘ca-ching’ sound.  This tells you your entry has been ‘posted’ or recorded in Quicken.

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

At this time we want to make a change to the Joint Savings account.  When you click on “Joint Savings” in the column on the left, notice the green bar at the top changes from “Joint Checking” to “Savings:  Joint Savings”.  This lets you know you are in the Joint Savings account register.  Go through the same procedures that you completed for the Joint Checking account and change the Joint Savings account to the correct date of May 31, 2004 (from May 25, 2004) and the correct amount of $1,200. 

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

We also want to print the credit card registers.  Under Cash Flow Center on the left-hand side of the Home Page screen, click on Bank of America.  Now at the top bar you will see Credit:  Bank of America Credit Card.  You are now in the Bank of America register.

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

Now select Quicken Credit Card under the Cash Flow Center at the right.  Now you see Credit:  Quicken Credit Card to let you know you are in the Quicken Credit Card Register.

 

Click on the Report button at the top right of the register.  Select Register Report from the drop down box.  Select the Print box at the top left of the report.  Close this report by clicking the “x” button at the top right of the report.

 

Turn in the Joint Checking Register, Joint Savings Register, Bank of America Register and Quicken Credit Card Register reports.

(Hand-ins 2-1 through 2-4)

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the second session of Quicken.

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V.      Add Investment Accounts

 

Now it is time to add investment accounts.  You are now familiar with moving around the Quicken home page into the checkbook and savings registers.  You are also familiar with entering checking and savings account balances.  Entering investment accounts works the same way.  Let’s get started.

 

From the Quicken Home page, you have been working in the Cash Flow Center area at the left of the screen.  The next area down is Investing Center.

 

Click on Investing Center.  Here you see three separate areas:  Investment Alerts, Investment & Retirement Accounts, and Watch List.  We want to add investment accounts, so we will work in the Investment & Retirement Accounts area.  In this area you will see the buttons to select to Add Account, Edit Accounts, Show Reports, and Go to Full Portfolio.

 

Click the   Add Account    box.  Next it asks for the financial institution.  The Falls use Vanguard, so type “Vanguard” in the highlighted box.  You will notice that as soon as you type the “V” Van Kampen Funds, Inc. and Vanguard Group appear in the box.  Highlight “Vanguard Group” or continue typing the name.  Click     Next     in bottom right corner.

 

Normally, you would want to select Online in order to download your financial information from the Internet.  However, for purposes of this case study, we will make this a manual account.  Click the button beside Manual.

 

Click     Next     in bottom right corner.  Quicken now asks for the type of investment account you want to add.  This is a standard brokerage account.  Since “Standard Brokerage” is pre-selected, simply Click     Next     in bottom right corner.

 

The next screen asks for the name of the account.  Type “Vanguard Brokerage” in the highlighted box.  Click     Next     in bottom right corner.

 

In order to enter the statement date, Click on the box (representing a calendar) beside the date.  This brings up a calendar.  The Fall's statement date is June 8, 2004, so Click on June 8 on the calendar.  The program will automatically input the date in the field for you.  Jerry has no cash, but has $2,000 in a Money Market account with Vanguard.  Click on the Money Market field and input $2,000.  Hit the Tab Key.  You should notice the Total Cash Balance at the bottom of the page change from 0 to 2,000.

 

Click     Next     in bottom right corner.

 

Now Quicken asks for the “securities” (investments…stocks, bonds, mutual funds, etc.) in the account.  Although you can “look up” these investment symbols on the Internet, for purposes of this case study, we will do manual inputs.

 

Click in the “Ticker” field and enter the following ticker symbols.  Hit the Tab Key and then enter the “Security Name” for the following stocks and one mutual fund.  The Tab Key will take you to the next selection:

 

                        Ticker                         Security Name

                        GE                               General Electric

                        PG                               Procter and Gamble

                        PNC                            PNC Bank

                        MSFT                          Microsoft

                        VFINX                        Vanguard 500 Index (this is a mutual fund)

 

 

Click     Next     in bottom right corner.  Quicken will then ask if you want to connect to the Internet.  Select “Don’t Connect” and Click  (If you don’t see this message – don’t worry.)

 

   Next     in bottom right corner. 

 

The next screen is the “Current Holding Information”.  You should select “stock” for each holding, except VFINX, which is a “mutual fund”.  You then simply need to input the number of shares by hitting the Tab Key between entries:

 

Ticker                Number of Shares

                        GE                               50

                        PG                               15

                        PNC                            10

                        MSFT                          48

                        VFINX                        25

 

Click     Next     in bottom right corner.

 

Quicken takes you to a summary screen.  (If you notice errors, Click     Back     or Click     Edit    and make the necessary correction.) 

 

Click     Done     in bottom right corner.

 

Quicken now takes you to a new screen.  The gray bar at the top tells you this is the “Vanguard Brokerage” account.  You will see the summary for the Fall's brokerage account.  Vanguard automatically inputs the values of the stocks and mutual funds for you, if you are connected to the Internet. 

 

Notice the “As of” date at the top right of the screen.  Click on the box (representing a calendar) to the right of the date.  This is where you can examine your performance as of any date, since the original purchase, by simply selecting the appropriate date on the calendar.

 

Now notice the blue highlighted box near the top left – entitled “Show”. Click on the drop down arrow on the right.  Now Click on the first selection, “Value”.  Quicken automatically inputs the price per share, the number of shares, and total market value of the stocks and mutual funds, if you are connected to the Internet.  The “Cost Basis”, however, is missing.  The “Cost Basis” is the amount paid for the securities.  This is because we entered only the number of shares the Falls already own.  We did not make a “purchase” of these shares in Quicken.

 

In order to add the cost basis of our securities, we will start with the first security, General Electric.  Click on the Enter button under the Cost Basis column for GE.  Click     Enter Missing Transaction..     in the bottom left corner.  Notice that the next screen states Buy Shares Bought at the top blue bar.  Click on the arrow to the right of the blue highlighted box titled Buy - Shares Bought.  Here you will see all the different types of transactions that can be chosen.  Since we are entering the amount we paid for the shares we purchased, we will leave the Buy – Shares Bought title highlighted.  Simply Click either the arrow button again, or the Buy – Shares Bought title to select it.

 

Hit the Tab Key and the program takes you to the Transaction date field.  Input the date of March 8, 2004.  Hit the Tab Key again, and it takes you to the Number of Shares field.  Input “50” as the number of shares.  Hit the Tab Key and input $29 as the price paid per share.  Hit the Tab Key again.  Notice that the Total cost is automatically calculated for you at $1450.  Now input $50 for the Commission and hit the Tab Key.  Notice that Quicken adds the commission amount to the amount paid for the stock.  The Total cost is now $1500.  Click     Enter/Done     in the bottom right corner. 

 

Note:  If you don’t have internet access so the price is entered automatically, the price for GE at 7-1-04 was $31.98 per share.  The following prices can be entered manually, if your computer doesn’t automatically download the price information.

 

In the “Enter Missing Transaction Screen” Select “Done”

 

Now you should enter the following information for the remaining securities, using $25 as the commission for each transaction (remember to select Enter under the Cost Basis column):

 

 

 

 

 

 

                        No. of Shares             Purchase            Purchase                    Cost

Ticker             Purchased                  Price                Date                           

PG                               15                    $90                  February 2, 2000            54.20

PNC                            10                    $45                  April 16, 2002                      52.51

MSFT                          48                    $35                  June 2, 2000                28.48

VFINX                        15                    $110                May 8, 2001                105.41

 

 

 

Because Vanguard Index 500 (VFINX) was purchased with two separate transactions, when Quicken takes you to the Enter Missing Transaction screen, simply Click     Enter Missing Transaction..     in the bottom left corner and continue to enter the second transaction:

 

VFINX                        10                    $95                  August 12, 2002

 

Quicken takes you back to the Holdings screen.  The blue highlighted bar at the top should say Value.  If not, Click the arrow key to the right and Click on Value.  Now you will see the amount of Gain/Loss on each security in dollar terms and percentage terms for the total number of shares owned.  The first columns of Gain/Loss represents the change since the purchase date, the next set represents the changes for the current day.  The Day Change amount represents the change in price of one share of the security for the current day.

 

Go to Reports at the top bar.  You have a whole host of options here - select Investing in the drop down box.  Then select Portfolio Value.  In the Date Range – Select Customize Date.  Accept the entry in the “from” field and enter 7-1-04 in the “to field”. Print this report by selecting Print at the top left of the screen.  (Don’t worry about saving this report when prompted by Quicken).

 

 Close this screen by clicking the “x” at the top of the screen.

 

            Turn in the Portfolio Value report. (Hand-in 3-1)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the input the Fall’s Investment Accounts and completed the third session of Quicken.

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VI.     Add Retirement Accounts

 

Now that you know how to add investment accounts, we will expand that knowledge to include retirement accounts.

 

Go to the Quicken Home page.  Click on the Investing Center tab in the left column.  This will open to the Investing Center page.  Click on the first tab at the top titled Today’s Data.  Under Investment & Retirement Accounts in the middle of the page, you should see the total value of the Vanguard Brokerage account that you previously input.  At the bottom of the Investment & Retirement Accounts box, you will see four boxes.  Click the last one titled    Go to full portfolio    .  This screen shows each of the securities (stocks, mutual funds) that the Falls own.  Notice that by clicking the “Go to full portfolio” tab, you have opened the Portfolio tab (look at the top gray bar).

 

Now it is time to enter the Fall’s retirement accounts.  Click on the Today’s Data tab at the top in the gray bar.  This takes you back to where we started.  Under the Investment & Retirement Accounts area, Click the   Add Account    box.

 

The input for retirement accounts is the same as the investment accounts.  Next it asks for the financial institution.  The Falls use A.G. Edwards for their retirement accounts, so type “A.G. Edwards” in the highlighted box.  You will notice that as soon as you type the “A” A.G. Edwards appears in the box.  Highlight “A.G. Edwards” or continue typing the name.

Click     Next     in bottom right corner.

 

Quicken now asks for the type of investment account you want to add.  Since this is a Roth IRA (individual retirement account), Click the    IRA or Keogh     button.  Now Click     Next     in bottom right corner. 

 

The next screen asks for the name of the account.  Type “A.G. Edwards Roth IRA-Jerry” in the highlighted box.

Click     Next     in bottom right corner.   Normally, you would want to select Online in order to download your financial information from the Internet.  However, for purposes of this case study, we will make this a manual account.  Click the button beside Manual.

 

 “Myself” is pre-selected as the owner of the account, which is correct, so now we must select the type of account.  Click on the arrow beside Pick an IRA Type and select “Roth IRA”.  Click     Next     in bottom right corner.

 

In order to enter the statement date, Click on the box (representing a calendar) beside the date.  This brings up a calendar.  Jerry’s statement date is May 31, 2004.  In order to select May 31, 2004, you must Click on the arrow pointing to the left that appears at the top of the calendar, beside the calendar month.  This takes you back to the previous month.  You can continue to click this arrow until you get to the month needed.  The arrow to the right takes you forward in months, while the arrow to the left takes you backwards in months.  Find the month of May, and Click and on the 31st.  The program will automatically input the date in the field for you.  Jerry has no Cash and no Money Market Fund in his Roth IRA, so you are finished with the input on this screen.  Simply  Click     Next     in bottom right corner.

 

Now Quicken asks for the “securities” (investments…stocks, bonds, mutual funds, etc.) in the account.  Although you can “look up” these investment symbols on the Internet, for purposes of this case study, we will do manual inputs.

 

Jerry has all of his Roth IRA invested in the American Balanced Fund.  Click in the “Ticker” field and enter the ticker symbol “ABALX”.  Hit the Tab Key and enter the Security Name as “American Balanced Fund”.  If you are connected to the Internet, you can Click the    Ticker Symbol Lookup     at the bottom left of the input screen.  This will take you to Quicken’s Symbol Lookup screen.  Click on “Mutual Fund”.  Next, input the mutual fund name of “American Balanced Fund” and Click     Search  .  This is how to find a ticker symbol using Quicken’s Ticker Symbol Lookup.    You can follow the on-screen instructions to cut and paste the security symbol back into Quicken if you like.  Close this page by clicking the red X at the top right of the screen.  Now you are back to the Quicken Account Set-up Screen.

 

Click     Next     in bottom right corner.  The next screen may ask if you want to connect to the Internet. (Don’t worry if you don’t see this message).  Select “Don’t Connect” and Click     Next     in bottom right corner. 

 

The next screen is the “Current Holding Information”.  You notice that the category of mutual fund is pre-selected.  Input “400” shares and select “Mutual Fund”.

 

Click     Next     in bottom right corner.  You can now review the summary of your input.  Click     Done     in bottom right corner.  The familiar “ca-ching” reminds you that Quicken has recorded your information.

 

You should now be at Summary tab of the A.G. Edwards Roth IRA screen.  This title and tab can be seen at the top of the gray bar.

 

We must now enter the Cost Basis, the original purchase price, of the American Balanced Fund.  Click on the Enter button under the Cost Basis column.  Click     Enter Missing Transaction..     in the bottom left corner.  Notice that the next screen states Buy – Shares Bought at the top blue bar.  Click on the arrow to the right of the blue highlighted box titled Buy - Shares Bought.  Here you will see all the different types of transactions that can be chosen.  Since we are entering the amount we paid for the shares we purchased, we will leave the Buy – Shares Bought title highlighted.  Simply Click either the arrow button again, or the Buy – Shares Bought title to select it.

 

Hit the Tab Key and the program takes you to the Transaction date field.  Input the date of April 15, 2002.  Hit the Tab Key again, and it takes you to the Number of Shares field.  Input 400 as the number of shares.  Hit the Tab Key and input $10 as the price paid per share.  Notice that the Total cost is automatically calculated for you at $4000.  Hit the Tab Key and input $50 for the Commission and hit the Tab Key.  Notice that Quicken adds this to the amount paid for the stock and now the Total cost is $4050.  Click     Enter/Done     in the bottom right corner. 

 

Quicken will take you to the Enter Missing Transaction screen.  Verify the input is accurate.  Click     Done     in the bottom right corner.

 

You are now back at the Summary tab of the A.G. Edwards Roth IRA account.  Notice the Gain/Loss amount.  This amount represents the total gain in the American Balanced Fund, since the purchase date of April 15, 2002.  The next column represents this amount in percentage terms.  The next column represents today’s Gain/Loss in dollars for the entire 400 shares.  The next column is the Gain/Loss in dollars for one share, and the last column represents today’s change in percentage terms for one share.

 

It is now time to enter Rita’s Roth IRA.  Look at the Quicken Home area at the left of the screen.  Select Investing Center.  Click     Add Account     in the Investment & Retirement Accounts area.  Follow the same instructions as the input for Jerry’s IRA.  (Return to the beginning of this Section, Section VI). The only difference is the ownership of this account.  Instead of maintaining the pre-selected “Myself” option, you will choose the “My Spouse” option.  Additionally, name the account “A.G. Edwards Roth IRA-Rita”.  All dates and amounts are the same as Jerry’s.  Remember to enter the Cost Basis for Rita’s account as well.

 

Now if you look at the Quicken Home area to the left, you will see both Roth IRAs listed under the Investing Center area.   Click  Investing Center and you will see the detailed information under the Investment & Retirement Accounts area.

 

Congratulations!  You have just completed the input for retirement accounts.

 

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VII.   Set-up Vehicle and Vehicle Loan

 

Now it is time to enter debt.  We will start with the Fall’s Vehicles.  Under Quicken Home , Click  Property & Debt (on the left-hand side of your screen).  Under the Property & Debt Accounts area Click     Add Account .  Select Vehicle and Click     Next   . 

 

Name the account “Jerry’s Car” and enter the following information:  Make “Honda”, Model “Accord”, Year “2000”.  Click     Next   .

 

The vehicle was acquired June 18, 2000 for $15,800 and is now worth $9,500.  Input this information.  Click     Next   .

 

There is a loan on this vehicle, so select “Yes – create a liability account for me” and  Click     Done   .

 

Input the following information regarding the loan.  The loan was taken out on June 18, 2000 for $10,000 for five years with a compounding period of monthly and a payment period of monthly.  There is no balloon payment.  The current balance is $4,000 as of June 15,2004.  The payment amount is $205.26 due on June 30, 2004 at an interest rate of 8.5%.  Click     Done   .

 

The next screen, Edit Loan Payment, allows you to input information in order for Quicken to pay the loan.  We will not do this for purposes of this case study.  Instead, simply Click     Cancel   .

 

Quicken takes you to the Register tab for Jerry’s Car.  You can see the opening balance is the purchase price of $15,800.  In order to make the current balance the same as the current value of $9,500, Quicken makes a balance adjustment of $6,300, which brings the current balance (value) down to $9,500.

 

Look at the Quicken Home area under Property & Debt.  Click on Jerry’s Car Loan.  Quicken will take you to the Register tab for the Liability:  Jerry’s Car Loan.  Here you see the beginning balance of the loan, $10,000, the reduction of $6,000 representing payments to date, and the ending balance of $4,000 still owed on the loan.

 

Click Property & Debt under the Quicken Home area.  This takes you to the Property & Debt Center where you can see Jerry’s assets and liabilities.

 

Now it is time to enter Rita’s vehicle and vehicle loan.  Click   Add Account under the Property & Debt Accounts area.  Select Vehicle and enter the following information for Rita’s van, in the same manner as Jerry’s car.  Rita has a 2002 Honda Odyssey that she purchased April 28, 2002 for $25,000.  Its current value is $20,000.  Rita took out a loan on April 28, 2002 for $18,000.  The original loan term was 4 years.  The loan compounds monthly and her payments are also monthly.  There is no balloon payment.  Rita currently owes $6,000 as of June 10, 2004.  The next  monthly payment is due on July 10, 2004.  The interest rate on the loan is 9%.   Click “Calculate” and Quicken should show the payment as $447.93.

 

Click     Done   .

 

The next screen, Edit Loan Payment, allows you to input information in order for Quicken to pay the loan.  We will not do this for purposes of this case study.  Instead, simply Click     Cancel   .

 

Quicken takes you to the Register for Rita’s Van.  Here you can see the opening balance of $25,000, representing the purchase price of the van.  In order to make the current balance the same as the current value of $20,000, Quicken makes a balance adjustment of $5,000.

 

Under Quicken Home Click Property & Debt.  Here you can see the Subtotal value of the Property (Assets) of $29,500 and the Subtotal value of the Debt (Liabilities) of $10,000, for a net Total value of $19,500.

 

Print the Net Worth report by selecting Reports from the top bar.  Select Net Worth & Balances from the drop down box.  Next, select Net Worth.   In the date range, select “Customize Date” and “to” 07-01-04 then click on Print in the top left corner of the report.  Close the report by clicking the “x” in the top right corner.

 

Turn in the Net Worth report. (Hand-in 4-1)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the fourth session of Quicken.

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VIII.          Paycheck Set-up

 

It is important to learn how to set-up your paycheck in Quicken.  Your paycheck can be split to track W-2 income, state and federal tax withholdings, 401(k) contributions, insurance and medical deductions, among others.  After an easy one-time set-up, future transactions may be automatically entered as a single transaction if you receive a regular monthly salary. 

 

From the Quicken Home page Click on Setup found at the top of the activity bar.  In the left bar under Add Accounts select Paycheck.  Next, Click   Add Paycheck .  Then follow the guided instructions and enter the paycheck information to track all earnings and deductions for Jerry:

 

                        Jerry

Company Name   Stone Street Middle School

Paid                             Every month

Account                       Joint Checking

Date                             June 1, 2004

 

Select “Enter without prompting”, so that Quicken will automatically enter the paycheck information in the register for you.

 

Earnings

Salary per paycheck            $5416.67

 

Pre-tax Deductions

401(k)

Name Account             Leave the name of Employee Contribution Transfer

Account                       Select <Add New Account>  From the Drop Down menu list

Financial institution            Select This account is not held at a financial institution use

Select Investment 401(k)

Name account “Jerry’s 401(k)”

401(k) contribution            $250

Employer match   $312

 

Taxes

Select the Edit button to right of each entry item

Federal Tax                  $634

State Tax                      $126

Social Security            $336

Medicare                      $ 78

Disability                      $ 25

 

After-tax Deductions:

Other After-tax Deductions

Name “Life Insurance”

Category:  “Insurance” - Life insurance $150  (click on arrow to find Insurance – Life Insurance under expenses)

 

After these entries, the screen should show Jerry’s net paycheck as $3,817.67.  If you don’t see this number, go back and review your entries and made any necessary corrections.

 

Click   Done in the top right corner.

 

For purposes of this case study, we will not enter year-to-date information.  However, this is good information to have in reality.  The paycheck information just entered will automatically appear in the appropriate categories every month.

 

Click Exit Set-up at the bottom of the screen.

 

Since we have input Jerry’s 401(k) retirement account, we need to update this account in the Investing Center.  Go to the Quicken Home Page and under the Investing Center select Jerry 401(k).  Quicken will then ask you to tell it about the account (we will do this later).  Click “Cancel”.  Quicken will ask if you are sure you want to cancel.  Select “Yes”.

 

Quicken takes you to Jerry’s 401(k) account information screen.  Select Enter Transactions at the top of the screen.  Since Jerry has purchased all the shares already held in his 401(k) over the past five years, we will enter his current balance as one purchase. 

 

Enter Transaction:            “Add –Shares Added”.  This will simply add the current shares to Jerry’s 401(k) account, without “buying” them with his cash.

 

Transaction Date:    June 10,2004

Select Security Name from drop down box:            American Balanced Fund

No. of shares:               1425

Price paid per share :  $13.50

Date Acquired:            May 31, 2004

 

Click Enter/Done.

 

Now select the Edit Account Details box at the bottom of the screen and input the following:

 

Employer:                     Stone Street Middle School

Employer Status:  Current

From Paycheck:            Stone Street Middle School

Contributions:               $250

Matching:                     Yes

Matching Amount:            $312

% Vested:                    100%

 

An employer ‘matches’ an employee’s 401k contributions by contributing a percentage of the amount the employee contributes.  In this case, the Retirement information in Financial Life Plan – Part 1 indicates that the employer contributes $1.25 for each $1.00 the employee contributes.  However, the employer does not allow the employee to have all of the employer’s contribution, until they have been employed for a period of time.  One of the most common ways to entice an employee to stay with the company is to require the employee to “vest” in the retirement  plan.  Many times the “vesting schedule” states the employee can keep 20% of the amount the employer contributed after one year, 40% after two years, etc.  After five years of employment the employee is “fully vested” and can take the entire amount contributed by the employer, and any gains/losses, when they leave the company.  Contributions made by the employee and any gains/losses from the investments, are always the employee’s and can be taken with them whenever they leave the company.

 

Click on the “Quicken Home” button.

 

Congratulations!  You have just completed the entry of a paycheck.

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IX.          Living Expenses

 

From the Quicken Home page Click on Setup found at the top of the activity bar.  In the left bar under 4. Add Accounts select Bills.  Normally you would want to use Quicken Bill Pay, but for purposes of this case study, Click   Add Bills Manually .  Then follow the guided instructions and enter the following monthly bills (unless otherwise noted) for Jerry and Rita.  Simply click on the box for each expense and you will enter the amounts in the next screen:

 

§         Mortgage            $575.86

§         Home insurance          33.33

§         Electricity              125.00

§         Groceries              225.00

§         Videos - Other          25.00

§         Telephone                45.00

§         Personal Care - Other90.00

§         Fuel – Other          95.00

           

 

Click the Next box.

 

Enter the amount of each bill under the Amount column.  Also enter the Next Date as July 1, 2004.  All bills will be paid monthly from the Joint Checking account as of the 15th of the current month.  Simply click on the appropriate box to enter the data.

 

Now Exit Setup.

 

Jerry and Rita are panicked about Emily starting college within the next year and are saving $163.93/month toward her college expenses.  To see how they calculated this amount and entered this information, retrace their Quicken input steps as follows;

 

From Quicken Home, select Planning from the top bar

Then “Savings Goals

 

Click on “New” at the  top left of the first screen

“Goal Name” – Enter “Emily’s College Fund”

“Goal Amount” – Enter $10,000

“Finish Date” – Enter 6/1/2009 – Emily’s projected graduation date

 

In the “start” field at the lower left hand corner enter; “6/1/04”

Now click on “Contribute” on the top bar.

And in the “From Account” field, select “Joint checking” from the drop down menu.

 

The monthly savings goal is calculated by Quicken and should show as $166.66

 

Click OK

 

Now select

 

“Report” and “Print”.  This register report reflects the transfer they have automatically setup each month from their checking account into their savings account.

 

Take a moment to click on the “Withdraw” button at the top of the screen.  When Emily’s college expenses are paid, the payments can actually be entered here. 

 

Click on the RED X box at the top right hand corner of the screen.

 

Hand in the Register Report for the Fall’s Savings Goal.

(Hand-in 5-1)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the fifth session of Quicken.

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X.          Reconciliation

 

It is time to reconcile a bank account.  However, we need to input some checks that have been written first.

 

From Quicken Home in the Cash Flow Center, Select Joint Checking.  Enter the following checks by tabbing to each field.  After information is entered, hit the Enter Key to accept it into the register.

 

 Date               Check No.      Payee                          Amt            Category         Memo

6/2/04              100                  Sue Barber              15.00            Personal Care Haircut

6/5/04              101                  Publix                           65.00            Groceries         None

6/5/04              102                  Texaco                         28.00            Auto – fuel       None

6/7/04              Deposit            Cash Received                      125.00            Gift Rec’d   Rita Bday

6/10/04            103                  Publix                           55.00            Groceries         None

 

Notice that when Texaco was input as the Payee, the program pre-selected Auto-fuel.  Likewise, once a payee is entered, such as Publix, the category is pre-selected from that point forward.  You can, however, change the category if needed.

 

Now we can reconcile the bank account.  In the Joint Checking area (that we currently have open), select Reconcile under the Register tab.  Input the ending balance off the statement (as of 6/8/04 as $4,209.67.  There are no service charges or interest income.  Select OK.

 

Looking at the (imaginary) bank statement, all of the payments and checks showing have cleared, except check #103, because it was written after our bank statement date.  Click on “Mark All” at the bottom of the reconcile report.  Now simply unclick the items that have not yet cleared the bank.

 

Notice the deposits made after June 8 have not yet cleared.  Make sure you “Unclick” the green check-mark next to these deposits if you have used the “Mark-All” approach noted above.

 

You should see the Difference at the bottom of the screen as $0.00.  This means you have successfully reconciled the Joint Checking account.  Click Finished.

 

Quicken asks if you would like a Reconciliation Report.  Select Yes.  Title the report “June Reconciliation”.  Since we reconciled as of 6/8/04, use this date.  Select All Transactions and click Print.

 

Congratulations!  You have just completed the reconciliation process.  Now it is time to print some reports.

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XI.  Printing

 

·        Cash Flow Report

Now you are ready to Print a Cash Flow Report.  From the Quicken Home Page click on “Reports” in the top bar.  Choose “Cash Flow”.  When the drop down box appears, select “Cash Flow” again.  In the “Date Range” as  box select “Custom Date” and enter “From 6/1/04 to 6/30/04”.  Leave the  “Column” as “Don’t subtotal”.

 

Print the report by right clicking anywhere on the report and selecting Print.  Since you can recreate this report at any time, there is no need to save it.  Close this screen.

 

·        Net Worth Report

From the Quicken Home Page click on “Reports” in the top bar.  Choose “Net Worth and Balance”.  When the drop down box appears, select “Net Worth”.  Leave Date Range as “Earliest to date” and Interval as “None”.

 

Print the report by right clicking anywhere on the report and selecting Print.  Close this screen.

 

Exercise

1.      What does the “Overall Total” represent on the Cash Flow report?

 

 

2.      Assets are items you own.  List the 3 categories of Assets from the Net Worth Report and state why these category distinctions may be important.

 

 

 

3.      Liabilities are items you owe.  List the 2 categories of Liabilities from the Net Worth report and explain their significance.

 

 

 

4.      Give a brief explanation of what the “Overall Total” represents on the Net Worth report.  Can you think of something that may not be reflected here?

 

 

 

 

 

 

 

 

 

 

5.      Go to the Investing Center and click on the Portfolio tab.  Transfer the following items for one of the investments in the spaces provided below.  Make sure you select the date as 7-1-04.

 

o       Stock or Security      _______________

·        Quote/price      ________________

·        Shares        ________________

·        Market Value      ________________

·        Cost Basis          ________________

·        Gain/Loss       ________________

·        Gain/Loss (%)      ________________

 

 

Why is it important that the first 4 items be accurate?

 

 

Turn in the June Reconciliation, Cash Flow and Net Worth reports and your answers.  (Hand-ins 6-1 through 6-7)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the sixth session of Quicken.

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XII.  Budget

 

It is now time to create a budget using the Fall’s historical financial input.

 

From the top bar of the Quicken Home page, click the Cash Flow from the top bar and select Budget.  Select the Setup tab.  Here we will create a Manual budget.  Click the Setup tab, Create Budget and name it Fall Family Budget #1 and select OK. 

 

Quicken will tell you that you have to “Choose Categories”.  Click OK.

 

Quicken then  takes you to the “Income” budget items.  Click the Choose Categories button at the bottom left of the screen.  We only have one income item, “Salary”.  Click on “Salary” and then Click OK.

 

Now Click the Expense Tab at the top.  Click the Choose Categories button at the bottom left of the screen.  Here we must click on each item to select it for our budget.  Although in reality we would have many more budget items, for purposes of the case study, we will only select the following (by clicking on the budget item).

 

·        Auto:Fuel

·        Clothing

·        Groceries

·        Household

·        Insurance - Life Insurance

·        Personal Care

·        Utilities - Cable TV

·        Utilities - Garbage

·        Utilities - Gas & Electric

·        Utilities - Internet

·        Utilities - Telephone

·        Utilities - Water

 

Click OK.

 

The following is a brief introduction on how to enter dollar information for the categories above.  For each of the above items you will see a gray area on the right-hand side of the screen, where you will use the following directions;

 

Under 1. Method on the right side of the screen, select Average amount.

 Under 2. Budget for Period select Monthly.  In order for the program to accept the entries we are making,  we must highlight the item then enter the budget amount (in the Amount box to the right).  Once the amount is entered, we must click the Apply button for the program to accept it.  Enter the following amounts:

 

 

 

You must Click on the Income Tab to enter the salary. 

·        Salary                                                $5417

·        _401 Employer Contrib.            $ 312

 

Click on the Expense Tab to enter the following expenses:

 

·        Clothing                                    $100

·        Personal Care                                    $150

·        Auto:Fuel                                    $100

·        Groceries                                    $200

·        Household                                    $1000

·        Insurance - Life Insurance            $163

·        Utilities - Cable TV                        $75

·        Utilities - Gas & Electric            $125

·        Utilities - Telephone                        $45

·        Utilities - Water                        $23

 

Click on the Savings Tab and enter the following items;

·        Emily’s College Fund      $166

·        Jerry’s 401(k)            $562

 

Under normal conditions, you would input absolutely all of your living expenses separately.  However, for purposes of this case study, we will simply use “Household” to capture all the Fall’s remaining living expenses.

 

 

Note:

By Choosing the “Automatic” option in the Budget Setup section, Quicken brings into the budget all the actual transactions you have entered.  You’ll have the chance to practice with this option when you setup your own finances in Quicken.

 

 

Once all entries are complete, select the Summary tab.  Click the Reports button at the top right and select Budget Report from the drop down box.  In the Date Range select Custom Date:  June 1, 2004 to June 30, 2004.

 

In the upper right hand corner, Click Customize. Click on the Categories tab and unclick all accounts listed under “Bank”, “Credit”, and “Cash” in the “Type” column.

 

Click OK.

 

Now Select the “Advanced” tab, and under “Transfers” select “Exclude Internal”.

Under “Categories” select “Include All”.

 

Note: Whenever you print a Quicken Budget, check to make sure the settings outlined above are active in the report you print by following those instructions.

 

Select OK

 

Note:  The reason it is important to customize this report is to;

 

1.      Make sure you have not omitted some actual expenses in the budget report.

 

 

2.      Make sure you account for cash flow that is directed toward asset or liability accounts.  For example, the portion of a car loan payment that reduces what you owe, or monies you save at work in your 401(k) account.

 

 

3.      Give you the opportunity to match up your budgeted categories with your actual accounts so the variance numbers are meaningful.  For example, if you entered your car gas as “Gas” in the budget and under “Automobile: Gas” in your check register, the variance amount for each of these line items will be wrong until you make your budget category assignment agree with your actual expense category.

 

Print the budget by clicking on Print at the top left of the report. Click the button at top right to Save Report and call it June Budget.  Select the Cash Flow Center as the center to save the report.  Click OK.  Close the report by clicking the “x” in the top right corner.

 

Exercise:

 

Answer the following questions as you review the Budget Report;

1.      What does “Overall Total” in the “Budget” column indicate. 

 

Can you think of any items in the Budget column that may be missing?

 

2.      Why is the “Overall Total” in the Actual column in error? 

 

 

            Where in Quicken would the entries in this column normally be entered? 

 

 

 

 

 

 

 

 

           

Make Changes to the Budget

 

At some point throughout the year, you may need to adjust the budget.  Let’s go back to the budget and enter amounts for additional items.

 

From Quicken Home select Cash Flow at the top bar.  Select Budget.  Click the Income Tab.  In order to add additional income budget items, click the Choose categories box at the bottom left.    Select “Gift Received” and Click OK.  Now enter the budgeted monthly amount of $20 for gift received and Click Apply.

 

Click on the Expense Tab.  In order to add additional expense budget items, click the Choose categories box at the bottom left.    Select “Bank Charge” and Click OK.  Now enter the budgeted monthly amount of $10 for the bank charge and Click Apply.

 

Finally, make 2 more changes to your budget.

 

1.      Add Interest Income of $10 per month to the budget.

2.      Add Charity of $25 per month to the budget.

 

Click on the Summary tab and select the Reports button and select Budget Report in the drop down box.  Select Custom Date in the Date Range and type in 6-1-04 to 6-30-04. 

Customize your Budget Report following the 2 changes outlined earlier.

 

Print the budget (landscape) by clicking on Print at the top left of the report. Click the button at top right to Save Report and call it June Budget.  Select the Cash Flow Center as the center to save the report.  Quicken will ask if you want to replace the current budget.  Click the Replace box. 

 

Close the report by clicking the “x” in the top right corner.

 

 

Turn in the printed budgets and your answers. (Hand-ins 7-1 through 7-9)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the seventh session of Quicken.

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XIII.  Housing Exercise

 

Now that you are familiar with the basics of the Quicken program and input, it is time for you to expand those skills.  Here are some exercises that will give you practice for financial transactions you will soon encounter in your life, if you haven’t already.

 

  1. Using the “housing” information provided in the Financial Life Plan – Part I, in addition to the following assumptions, let’s input the Fall’s home and mortgage information into Quicken.

 

From Quicken Home select “Setup” and the “Property and Debt”

Under “House” , select “Add Account”

Enter the following information in the input screens you see;

 

·        Name:  Jerry & Rita’s House

·        Original purchase date is June 10, 2002.

·        Original purchase price is $85,000.

·        Current Value estimate is $105,000.

·        Yes – Create a Liability Account

·        Opening Date of Loan is 6-10-02

·        Original loan amount is $76,500.

·        Original mortgage is a 20 year mortgage.

·        Compounding period is daily.

·        The payment period is monthly.

·        There is no balloon payment. (This is a large payment that pays off the loan before the smaller monthly payments would have.)

·        Current balance is as 6-13-04 is $72,676.

·        Interest Rate is 6.875%.

·        Monthly principal and interest payment is $587.38 due the 10th of July.

·        In the “payment” section of the next screen, select “Edit”.

·        Homeowners insurance is paid with the mortgage payment.

·        In the Category section type in “Insurance” and click on the arrow.

·        Select: “Home Insurance”; in the amount enter $40.

·        In the “Category Section, type in “Real Estate Taxes” and you’ll see a screen asking you if you want to create a new category.  Say “yes”

·        In the “Setup Category” Screen,  place your cursor in the “tax line item” and select “Schedule A – Real Estate Taxes”, then click OK.

·        The real estate taxes paid with each payment are $100.

·        Back at the Split Transaction Screen, select OK.

·        The mortgage payee is the American Mortgage Company.

·        The next payment is the 7-10-04.

·        The category for interest is “Mortgage Int:Bank”

·        Set up the payment as a “Scheduled Transaction” by selecting “Payment Method” in the “Transaction” box.

·        Select  “Scheduled Transactions”

·        For the “Register Entry” select “Automatically Enter”.

·        Pay from Joint Checking.

·        Pay 10 days in advance.

·        Now “Exit Setup”

 

These last steps tell Quicken to automatically enter the monthly mortgage payment into the Joint Checking account register 10 days prior to the due date.  Because this is only an entry and not a payment, the check must still be written to the mortgage company.

 

  1. Go to  the Register for the Fall’s House asset by double clicking on  “Jerry and Rita’s House” under the “Property and Debt” section on the left-hand side of the screen.  Once you see the Register,  change the date on the “Balance Adjustment” entry to 6-30-04. 

 

Click Done

 

Select “Report”  and Select “Register Report”. Print the report and title it “Fall’s House Register.”

 

  1. Explain the $20,000 increase in the House Register.  What does this amount represent? 

 

  1. What does the balance of $105,000 represent?

 

 

 

To estimate the “listing price” of the home divide $105,000 by .94 – what is the listing price they would need to end up receiving $105,000?

 

 

 

  1. Print the Register for the Fall’s home mortgage by finding the loan on Quicken Home and following the same procedures outlined above.  Print the report for the current month and title the report as “Fall’s Mortgage Loan Register”.

 

  1. Explain the “Balance Adjustment” to this account.  What does this amount represent?

 

  1. Print a Net Worth report as of 6-30-04.

 

  1. If Jerry and Rita wanted to take out a 100% Home Equity Loan, how much would the bank end up lending them?  What, typically, would the banker want to see before finishing this loan?

 

 

Turn in the Fall’s House Register report, the Fall’s Mortgage Loan Register report and the Net Worth report.

 (Hand-ins 8-1 through 8-4)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the eighth session of Quicken.

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XIV.  Quicken Planner

 

Note:  The following is a brief overview that you will need to understand as you finish the Fall’s Case Study as well as begin using Quicken to manage your own finances.  References made to “your finances” will apply to both the Falls and yourself.

 

Using all of Quicken to Manage your Personal Finances

 

Most Quicken users never venture past using the program to pay their bills and summarize their tax information.  The program, however, can actually be used to put you in control of your finances and minimize the amount of time you have to spend managing them.  In order to “graduate” from a basic use of Quicken to this more advanced application, we’ll now explore how to use the Quicken Planner.

 

Think of personal financial management like a triangle – with 3 corners.

 

  1. Financial transactions – the day-to-day details.  You’ve already learned how to use the checking, savings, and credit card registers to enter this information in Quicken.  You’ve setup a paycheck, and even entered loan data into Quicken as well.

 

 

  1. Financial options – the choices you are faced with.  Hundreds of financial choices can impact whether or not you are constantly stressed-out about money or actually understand it and allow it to serve the life you want to live.  The Quicken Planner allows you to take your actual financial information and evaluate these options.

 

 

  1. Financial changes – aligning your behavior with your intentions.  The Quicken Budget allows you to take what you’ve discovered using the Planner and integrate it into your day-to-day choices.  Each day you’re able to see whether your actual money choices are in line with what you really want by looking at your Budget.

 

You’ve already gained experience with #1 and #3.  This section you’ll be learning how to use #2- Quicken’s Planner.

 

Keep in mind that Quicken’s 3 components don’t always “talk” to each other very well, so you have to make sure that the information you’ve entered in your day-to-day transactions - #1 – is consistent with  #2 – taking that actual information and planning with it.  Finally, #3 – your budget – has to be updated with the choices you’ve made using the Planner, # 2.  You also may need to make actual changes in your day-to-day transactions - #1 – as a result of what you choose with #2 – the Planner.

 

Even though it seems a bit confusing now, in no time at all you’ll be an ‘advanced’ Quicken user and have the skills to keep all these 3 corners of your personal financial management triangle connected!

The first step you’ll take is to print the following financial reports

 

  1. Financial Net Worth Report – Current Month.
  2. Budget Report – Current Year.

 

As you input your financial information into the Planner, place a check mark by the items on these reports, so you make sure you don’t miss any information, or inadvertently enter some things twice.  Use the “Budget” Column for items of income and expense as you enter your information into the Planner.

 

Save these reports – mark them as “Initial Planner Input”

 

Click on Planning at the top bar and select Planning Assumptions.  Select Living Expenses in the left column.  On the orange Living Expenses line, click on Edit.  Select Category Detail and then click on the Details box.  If you scroll down through these expenses, you will see the expenses you’ve actually entered into Quicken.  Under normal circumstances, you would examine each item on your Net Worth and Cash Flow reports and enter any missing information here.  For purposes of this case study, Cancel out of this screen and now select Rough estimate.  Click on the Yearly Living Expenses box and enter $36,000.  Select Done.  Close the Planning Assumptions screen by clicking on the red X in the top right corner of the screen.

 

Select Planning at the top bar again.  Now choose “What If” Event Scenarios.  Here we will enter any missing information, in order to run “What If” scenarios.  Under normal input, you may not have as much missing information.  However, we shortened the input process many times.  As a result, we have additional missing information that we must now input.

 

Select About You and enter the following:

 

 

 

Select Done.

 

 

 

 

Select Salary and enter the following for Jerry:

 

 

Click OK.

 

Click Done.

 

Continue selecting each item, regardless of whether or not it is checked and entering all the information you know about the Falls, based upon the information in the Financial Life Plan.  The following represents information you may not see in the Planner:

 

 

 

Now calculate what the Fall’s payment would be if they paid off their Quicken Credit card over 5 years.  Print out this schedule, and label it – “Quicken Credit Card Repayment.”

 

Once you have these two monthly payment amounts, return to the Planning Assumptions section of Quicken.

 

 

Select Continue.

 

Quicken takes you to a chart indicating that the Fall’s plan is working.  It appears, based upon the income and expenses enter, Jerry will be able to retire at age 65.

 

Print the Account Balances Graph by selecting Print in the top left of the “What If” screen.  Close the graph by clicking the “x” in the top right corner.

Label the Graph “Fall Family – AS IS”

 

Turn in the Fall’s Account Balances Graph.

            Turn in the Fall’s Quicken Credit Card Loan Schedule

 

          (Hand-ins 9-1 through 9-3)

 

Also print out a Planning Assumption Report, from the “Planning Assumption” section of the Planner.  Staple or paper clip this report to your Net Worth and Budget Reports which you used to make sure you were entering everything into the Planner.  When your Professor returns your Plan Results Graph, staple all these reports together.  This is the starting point for the Falls and we want to make sure we keep a record of it.

 

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the ninth session of Quicken.

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XV.  “What If” Scenarios

 

Now you are ready to enter “What If” scenarios.  This feature allows us to compare our current financial circumstances to alternative choices.

 

Application of the “What If” scenarios in Quicken can prove very valuable throughout your lifetime.  Utilizing these scenarios is an excellent way to see the results of a decision, before you actually commit to it.  Therefore, you are able to make well-informed choices, by examining the impact of those choices on your current and future financial situation.

Your Instructor will teach you how to process your What-If Reports during a class session.

 

Note to Professor:  The Fall Family Scenario Summary is located  on page 39-M in the Hand-In Section of Your Case Study Notebook.

Exercise #1

Before we run a “What If” scenario, let’s first see how the Fall family’s current financial situation supports his retirement at age 65.

 

·        Go to Planning and select Retirement Planner from the drop down box.  Here Quicken says that it can tell you whether or not you can retire when you want, based upon your current financial situation.  Click Next at the bottom right of the screen.

 

The About you information is accurate, and we will assume that there are no changes to the information input previously.  Continue through the “Can I retire when I want to?” section without making any changes.  Simply read each section as you continue to familiarize yourself with the alternatives you could implement.  Stop when you get to the bar graph titled “Can I retire when I want to?”

 

  1. What are the results of the Fall family’s current situation?

 

  1.  Can Jerry retire at age 65 under their current financial situation?

 

  1. Click Print at the top left of the screen to print out the Account Balances Graph.  Double click on the first two years of the bar graph and Print the Plan Summary Reports for 2004 and 2005.

 

  1. Label the graph printed in 3 above Scenario #1 – Initial Plan and record it in your Scenario Summary Log for the Fall family.  Indicate the retirement age and income assumptions for this scenario in that chart. Follow the instructions provided by your instructor for labeling and organizing your “What If Analysis” results.

Turn in the Account Balances Graph and the Plan Summary Report for 2004 and 2005 as well as the answers to your questions.

 (Hand-in 10-1 through 10-6)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the tenth session of Quicken.

 

Exercise #2

 

Jerry has recently begun to realize how quickly time goes by and how quickly his children are growing up.  He is feeling guilty for not spending more quality time with his children while they are young.  Jerry has contemplated reducing his work hours.  Jerry wonders if he would be jeopardizing his financial future, if he spent fewer hours working and more hours with his family.  Jerry would like to reduce his working hours starting this school year, September 1, 2004, and continue for the next 16 years until the children are out of high school.

 

Jerry has determined that his employer will allow him to reduce his working hours in order to spend more time with his family.  However, in order to do this, he must take a $10,000 reduction in pay, from $65,000 to $55,000 annually.

 

  1. Determine whether or not Jerry can retire at age 65, with a $10,000 reduction in pay starting September 1, 2004 and continuing for the next 22 years (until September 1 2026). 

 

(Go to Planning and select “What If Event Scenarios” from the drop down box.)  In order to change Jerry’s salary, select “salary” from the menu on the left side of the screen.  To change the end date of the current salary, highlight the end date in item 2. and select Edit.  Click the drop down arrow for “When does salary end?”  Now you must arrow up and click on “Specific date”.  Now you can input the end date of 9/1/04.

 

Now you must go to the item 1. area and click Edit.  Here you must insert a “New” salary of $55,000 from September 1, 2004 until Jerry retires.

 

Again, go to item 1. and insert a “New” salary of $65,000 to capture the period of September 1, 2004 until retirement.

 

To verify accurate input, highlight each line item in 1. and verify the corresponding information in item 2.

 

Click Done.

 

  1. Print the “Plan comparison graph” .

 

 

  1. Can Jerry take a $10,000 reduction in pay and still retire at age 65?  If not, what alternatives does Jerry have in order to spend more time with his children?

 

  1. How much will Jerry and Rita need to reduce their expenses in order for Jerry to retire at 65 with his current 55k per year salary?

 

 

Hint:  Try several entries in the “Living Expense” section of the Planner until the “Plan comparison Graph” is working.

 

  1. Print the “Plan comparison graph”.  Label this scenario #2.

 

  1. Save this “What If” as a plan.

 

It is important to remember that once you save a Plan, the assumptions you’ve entered now are saved and become the basis for any future changes you make – that’s why it’s so important that you carefully track the changes you’ve saved, and the ones you’ve discarded in your Scenario Summary Log.

 

 

Exercise #3

 

Jerry has just realized that upon retirement, his living expenses will go down.  He will no longer spend as much money on professional clothing, dry-cleaning, gasoline driving back and forth to work and other expenses associated with his profession.  He also realized that his medical expenses are likely to increase.

 

1.      Run a “What If” scenario and decrease the Fall’s living expenses by $3,000 per year  until Rita dies and increase their medical expenses by $1,000 per year, beginning at Jerry’s retirement date and ending at Rita’s death.

 

Rather than selecting Living Expenses as the Assumption to change, select Adjustments.  Click New and enter each change separately.

 

2.      Print the “Plan comparison graph”.    After reviewing this graph, pretend that Jerry and  Rita decided not to assume these expenses would occur, so Close Without Saving.  Label this scenario #3.    Log your assumptions with “did not save” in the Scenario Summary chart.

 

Turn in your printed results and your answers. 

(Hand –ins 11-1 through 11-4)

 

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the eleventh session of Quicken.

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Exercise #4

 

Interest rates on mortgage loans have been declining steadily over the past few years.  While the Fall’s current mortgage rate is 6 7/8%, they have been told they can refinance their loan and get a rate of 5%, with no changes to the current terms of the loan.  The closing costs associated with the refinance are $1,000.  Jerry would like to know if he would be better off financially if he paid off his current mortgage 5 years early, on June 10, 2017, or if he should refinance his current mortgage.

 

            Begin with your saved plan, which should match printed plan #2b.

 

  1. Run a “What If” scenario and payoff the house loan on June 10, 2017.  Print out the Plan Comparison Graph.

 

Can Jerry retire at age 65 and payoff his mortgage five years early?

 

  1. Print the results and label the report #4a.  Close without saving.

 

  1. Run a “What If” scenario to see the results of refinancing.  In this case, payoff the current loan on 9/10/04.

 

Be sure to add a one-time $1,000 expense as an Adjustment and indicate that this one time expense starts 9/10/04 and ends 9/01/05.

 

Enter the new loan information in the “future loans” section.  The new loan amount is the same as the current balance of the original loan, $75,000.  The new term will be 18 years, since the Fall’s have already paid 2 years on the original mortgage.

 

4.      Print the results and label the graph #4b.  Save this “What If” as a Plan, since the Falls plan to proceed with the refinance.

 

5.      Would the Fall’s be better off financially to payoff their house loan early or refinance their current loan?

 

 

 

 

 

 

 

 

 

 

 

 

Exercise #5

 

Jerry has decided to save more for retirement, in order to increase the likelihood of retiring early.  He has determined that he can save an additional 5% of his annual pay until he retires, starting 9-1-04.  However, he is not sure if he should add to his Vanguard Brokerage account or his 401(k) account.

 

  1. Run a “What If” scenario to see the results of saving in the Vanguard Brokerage investment account.

 

  1. Print the results and label #5a. 

 

Why do you think there is no change from the prior scenario?

 

During the process of reviewing the current planning settings for Jerry’s 401(k) account, it becomes obvious that his existing contributions are not reflected.  Before determining the impact of saving an additional amount in the 401(k) let’s enter the current information;

 

Select “Investments” in the Planning Assumptions Section

Edit

Jerry’s 401(k) – in the contributions area select  “New”

Jerry’s current contribution – based on his new salary of $55k is $250/month or approx. 5% of his salary.

 

Toward the bottom of the next screen, enter Jerry’s employer’s share – which does not depend on whether or not Jerry contributes.  The employer contributes 6.81% of Jerry’s revised pay.

 

Print out the new “Plan Comparison Graph” and label it # 5b- 5% to brokerage + correct existing 401(k) and log it into the Fall’s Scenario Summary Log.

 

“Save this What if as a Plan”

 

 

  1. Run a “What If” scenario to see the results of saving an extra 5% in the 401(k) account.  Assume Jerry’s employer does not match this additional savings and does not contribute to profit sharing.

 

Delete the 5% savings to the Brokerage account.

Increase Jerry’s contribution to his 401(k) from 5% to 10%.

 

  1. Print the results and label as #5b.  Save this “What If” as a Plan.

 

  1. Where should Jerry invest the additional savings, in the Vanguard Brokerage account, or the 401(k) account?

 

  1. Why do the results of investing in the Vanguard Brokerage account differ from the results of investing in the 401(k) account?

 

 

 

Would what we have seen happen to Jerry and Rita’s plan always happen when faced with this kind of decision?

 

 

 

Turn in the printed results and your answers.

 

(Hand-ins 12-1 through 12-6)

 

Close Quicken session by going to File and selecting Exit.

 

Congratulations!  You have just completed the twelfth session of Quicken.

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Exercise #6

 

  1. Write a “What If” scenario pertaining to the Fall family, such as a change in investment performance returns, college education expenses, part-time work for Rita, etc.

 

  1. Print the results and update your Scenario Summary Log.

 

  1. Analyze the results.

 

 

Exercise #7

 

If we actually implement changes as a result of the “What If” scenario results, we have to integrate them into the budget.  Let’s integrate a change in Jerry’s salary from $65,000 to $55,000 and the Fall family grocery expenses from $250 per month to $375.

 

1.      Go to Cash Flow and select Budget in the drop down box.  Click on the Budget tab.  Click on the Income Tab and click Salary.  Change the (monthly) amount in the gray bar to the right of the screen from $5,417 to $4583.33.  Apply this change.

 

2.      Change the grocery expense in the budget from $200 per month to $375.  To do this, you must select the Expense Tab.

 

3.      Change the Household expense from $1,000 to $2,500.  Since there are several items that have yet to be broken down in the budget – we’ll increase this account until those updates are made.

 

4.      Print the new budget by selecting Report in the top right bar.  Print the Current Month budget in landscape mode.

 

Turn in the Results and Analysis of Exercise 6 and the Budget report.

 

Hand-in 13 through 13-4

 

Close Quicken session by going to File and selecting Exit.

 

 

 

 

 

Remember the 3 corners of the personal financial management triangle?

1.     Financial transactions

2.     Financial options

3.     Financial changes

 

You have successfully completed the personal financial management cycle for the Fall Family by:

 

1.     Accurately tracking their day-to-day transactions with Quicken.

2.     Evaluating various financial decisions using Quicken’s What If Analysis tool.

3.     Integrating the desired changes into their day-to-day experience via a budget update.

 

The final phase of this Course will be the establishment of your own personal financial management cycle using what you have learned!

 

Congratulations!  You have just completed the thirteenth session of Quicken.

 

Finally – take what you’ve learned and answer Questions 1-8.  Feel free to run a “What –If” Analysis, or simply ‘shed some light’ on the questions by making reference to your texts or Internet exercises.

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