Obviously, if you’re reading this blog you care at least a little bit about your personal financial situation.  You may already be working on improving your organization and situation or you might be preparing to make the move to better money management.  Either way, you undoubtedly recognize the fact that there’s going to be some bookkeeping, data management and record keeping involved.

You have two choices here.  

You can bust out a pencil, an eraser, a ledger and one of those cool green visors that bean counters wore back in the day.  I recommend long sleeves with the little garter thing to complete the look.  This is the “kicking it old school” approach to personal finance record-keeping.  You literally do the books.  Paper books.  It may be a throwback system, but it really does work if you have some kind of aversion to using a computer (which would beg the question as to why you’re reading this on a computer).

The second choice, which is the one you’re probably going to make, is to use your computer to help you make sense of the accounts, bills, spending, etc. that influence your financial life.  This is the recommended route, even if it doesn’t involve wearing a green visor.

So, if you’re going to run your finances on your PC, you’re going to need good software.  Being a motivated, frugal person, you might be wondering if you can get by with some cheap or free programming instead of sinking your cash into the latest edition of Quicken.

There are completely free options out there.  With a little searching on various freeware and shareware sites, you’ll find literally hundreds of completely free personal finance tools.  We’re talking about everything from handy-dandy interest calculators to budgeting tools to monthly bill-trackers.  These little programming gems won’t cost you one red cent.

Avoid them.

Here’s the problem.  Most of the freeware applications are limited in scope.  They might handle one or two things well, but they won’t even touch on other essentials.  That leaves you with holes in your system or forces you to look for more freeware to fill the gap.  You either end up with too little firepower or so many individual weapons that things become messy and insanely inefficient.  Trust me, data sharing across freeware programs isn’t always easy.

That brings us to a second option.  Open source personal finance software.  If you’re not up to speed on the open source movement, here’s a brief introduction.  Developers create a framework for a program that rivals the stuff released by the big boys (paid options).  Volunteer developers and community members tweak and adjust the code to produce a great final product.  People use Gimp to edit photos instead of Photoshop.  They rely on Kompozer to create web pages.  They use Open Office instead of giving Bill Gates their credit card number for a copy of Microsoft Office.

Open source can be great and there are options available in the realm of personal finance.  Look at About’s rundown of personal finance programs in this realm.  You might find something you like.  The nice thing about open source options is that they’re designed to be competitive with the “real deal”.  The downside is that they can be temporarily buggy, may require regular updates and that development and progress is contingent upon an active community of participant developers.

Open source is great when you want to save a few bucks to eliminate the obscene words on Great Aunt Gertrude’s t-shirt in that holiday photo.  You download Gimp instead of buying Photoshop.  However, we’re not talking about lightweight stuff here.  This is your money.  You may not feel all the comfortable pouring your time and money in setting up a workable home finance system into an open source program.  Feel free to experiment, but it feels a wee bit risky to me.

That’s especially true when you consider how good many of the paid programs are.  These babies integrate everything, allow you to experiment with your data, produce cool little charts and graphs and are generally capable of doing almost anythig you could possibly do to manage your money effectively.  When you think about the value they offer, they’re one heckuva deal, too.

So, even though the spirit of saving money and living frugally would seem to point to using open source programs or freeware, this is one of those cases where it’s probably worth prying open our wallet for the good stuff.  You can check out a list of 10 great personal finance software packages here, to get started.

If you’re not willing to pony up for something that will become invaluable as you improve your personal finances, I strongly encourage you to buy #2 pencils and a really big ledger book.  Oh, and a green visor.