To track your tax deductions, make a list of the deductions you want to track. To do so, pull out last year's tax return. Note which lines you filled in. (Perhaps mortgage interest, property taxes, state income taxes, and charitable contributions?) This method works because there's a darn good chance that the tax deductions you claimed last year will also be the tax deductions you'll claim in the future.

I cover the Quicken categories, which you use to track your tax deductions, a little later in this chapter.

At our house, we (my wife, Sue, and I, your humble author) use Quicken to monitor our spending on the mundane little necessities of life: groceries, clothing, dog food, cable television, and, well ... you get the picture. To keep track of how much we spend on various items, we also use the Quicken categories.

Your list of spending categories, by the way, shouldn't be an exhaustive list of superfine pigeonholes, such as Friday-night Mexican food, Fast food for lunch, and so on. To track your spending on eating out, one category named something like Meals or Grub usually is easiest.

In fact, I'm going to go out on a limb. You can probably start with a dozen categories, more or less:

If you want to, and over time, you can expand this list. Heck, you can create dozens and dozens of categories. My experience, though, is that you'll probably use only a handful of categories.

You can use Quicken to print checks. This little trick provides a couple of benefits: It's really fast if you have several checks to print, and your printed checks look very neat and darn professional.

To print checks, you need to do just two things. First, look through the check supply information that comes with Quicken, and pick a check form that suits your style. Then order the form. (The check forms that come with remittance advices — or check stubs — work well for businesses.)

Preprinted check forms aren't cheap. If you're using Quicken at home with personal-style checks (such as those that go in your wallet), using computer checks may not be cost effective. Even if you're using Quicken for a business, and you're used to buying those outrageously expensive business-style checks, you'll still find computer checks a bit more expensive.

I'm pretty much a cheapskate, so I don't use printed checks at home (although I do use them in my business). I should admit, however, that I also don't write very many checks.

One other comment here about printing checks: If you're going to pay bills electronically, you don't need to print checks with Quicken. Oh, sure, you can print checks if you want. But you won't want to. Paying a bill electronically is easier and cheaper than paying a bill with a Quicken-printed check.

A general comment about printing other forms: If you run a business, and the business needs to produce invoices, you can use Quicken Home & Business and Quicken Rental Property Manager (two business-y flavors of Quicken) to produce invoice forms, too.

You must decide which bank accounts and credit cards you want to track. In most cases, you want to track each bank account you use and any credit card on which you carry a balance.

You may also want to track other assets and liabilities. Assets are just things you own: investments, cars, a house, and so on. Liabilities are things you owe: margin loans from your broker, car loans, a mortgage, and so on.

Shoot, I suppose that you could even track the things your neighbor owns — or perhaps just those things you especially covet. I'm not sure that this is a very good idea, though. (Maybe a healthier approach is to track just those things that you've borrowed from your neighbor.)

Your computer's computational horsepower makes it the ideal tool for doing complicated calculations. So maybe you're not surprised that Quicken comes with five powerful calculators that let you make smarter borrowing choices, better mortgage-refinancing decisions, more accurate savings and investment calculations, and extremely helpful retirement and college savings calculations. I believe that these financial planning tools are the most valuable features that Quicken offers. I'm just sorry that I have to wait until Chapter 10 to talk about them.

If you want, you can tell Quicken that it should do the work of paying some person or merchant electronically. In other words, at the same time that you describe some check to Quicken — you do so by entering stuff in a window — you can say to Quicken, "I not only want you to record this check for me, I also want you to pay it for me."

If your bank supports online banking, you may also be able to move money between your accounts and get up-to-date statements electronically. Ask your bank for details about this service if you're interested.

To perform this sort of online banking, you need to have an Internet connection, and you need to do a little bit of paperwork. But the Quicken Online Banking features can save you scads of time. And the features are easy to use. Basically, all you do is use Quicken in the usual way — which is what I talk about in the chapters that follow — and then click a couple of extra buttons.

To set up an additional checking, savings, or money market account, you give the account a name and then its balance as of a set date. Here's how:

In Quicken, you work with one account at a time. The logic is simple: You record income and expenses for a particular account — a specific checking account, savings account, and so on. That makes sense, right?

Here's the next thing you want to know about using these accounts: In general, you work with an individual account by using the register window, as shown in Figure 2-5. I talk about using the register window a lot more in the chapters that follow, but in a nutshell, you enter account transactions in the register. Entering transactions in a register is the basic, Quicken record-keeping task.

Here's the next thing you need to know about working with a particular Quicken account. You use the Accounts bar, which appears along the left edge in the Quicken program window (see Figure 2-5) to tell Quicken which account you want to work with in a register window.

To use the Quicken Accounts bar, you click its hyperlinks. In other words, select the account you want by clicking the account name. Quicken displays the register window for that account.

Figure 2-5. The Register window.

You surely didn't buy Quicken so that you could spend all day Saturday sitting at your computer instead of taking the kids to the zoo. I realize this and want to make Quicken easier for you to use. To do so, I figure I should tell you which Quicken features you can ignore if you're feeling a bit overwhelmed. Subcategories are among those things I think that you can ignore.

"Subcategories?" you ask. "Yikes! What are they?"

Subcategories are categories within categories. If you look at the Taxes expense category in Table 2-1, for example, you'll notice a bunch of categories that follow the Tax category and are slightly indented: Fed (federal tax), Medicare (Medicare tax), Other (miscellaneous taxes), Property, SDI (state disability insurance), Soc Sec (Social Security tax), and State (state tax).

When you use subcategories, you can subcategorize a transaction that pays, for example, taxes; you can further break down this category into subcategories such as federal income tax, Medicare tax, and Social Security tax. If you want to see a list of the ways you've spent your money, Quicken summarizes your spending both by category and, within a category, by subcategory. On a Quicken report, then, you can see this level of detail:

No doubt about it: Subcategories are useful tools. But they make working with Quicken a little more complicated and a little more difficult. As a practical matter, you usually don't need them as you start off. If later on you want to track a spending category in fine, granular detail, you can go ape on the subcategory thing then, okay? For these reasons, I'm not going to get into subcategories here.

If you get excited about the topic of subcategories later — after you have the hang of Quicken — you can peruse the Quicken documentation for more information.

Category groups, which were known as supercategories in a previous version of Quicken, combine categories into sets that you can use in reports and in your budgeting. Sure, they're sort of cool, but you don't need to worry about them if you're just starting with Quicken.

If you're dying to know more about category groups, you can refer to the Quicken online help. Quicken Help works like Help in other Windows programs. If you don't know Windows all that well — or at least not well enough to comfortably use Help — see Appendix A.

I have just four tips for categorizing:

You should now be ready to fix any category list problems. Basically, you need to do three things: add categories, remove categories, and change category names and descriptions.