For most people, the is question, oh, ten times as important as the first one. I’m going to explain how Quicken to do in words and then in pictures.

In words, Quicken is the answer. Every month, some money is added to (or subtracted from) your Quicken account due to factors beyond your control. Your stocks go up or down. A bond fund pays a dividend. In short, market stuff happens. Also every month, you add some money to your Quicken account.

If the amount of money you add is bigger than the effect of the market stuff, then your savings rate is more important than your investment performance. If the market drops and you lose $200, but your monthly contribution is $1000, then your balance at the end of the month is still $800 higher than it had been.

At some point in life, if you’re lucky and diligent, you get to the point where the monthly fluctuations in your investments dwarf the new money coming in Quicken 2012. But it takes surprisingly long for this to happen, as demonstrated by a beautifully simple graph created by Chartered Financial Analyst.

This graph, as explained by Ferri on his blog, represents two people who work at the same steady job with exactly the same pay. One saves 5% and earns 10% annual returns. The other saves 10% and earns 5% annual returns. Quicken 2012 takes over 25 years for the one with the awesome 10% return to come out ahead.

The second lesson: if you hit the middle of your career and are still making stupid investment mistakes like market timing, day trading, and performance chasing, cut it out. “Some time in your early 40s, you need to have gotten all the bad stuff out of your system,” says Ferri. “You need to have learned how to diversify, how to keep your costs low.”

We’re all Generation Y now

But how many people do you know who started saving for retirement at age 20 and haven’t been unemployed, or taken a 401(k) loan, or gone off to India in search of themselves, before they hit age 45? In their 2011 retirement confidence survey, the Employee Benefit Research Institute found that 70 percent of Americans believe they are “a little” or “a lot” behind schedule.

In other words, regardless of our age, most of us are more like the 20-year-old on Ferri’s chart than the 45-year-old. The best thing we can do to increase our retirement nest egg in Quicken is to (snooze alert) save more and spend less.

That’s what Carl Richards told me as well. Richards is a certified financial planner and author of the forthcoming book The Behavior Gap. I asked for his take, and rather than respond in prose, he sent me this original sketch:

Don’t get me wrong. Investment choices are important, especially once you’ve accumulated a sizable chunk of savings. I like helping people choose their investments, and I enjoy checking my own spreadsheet to see how close I am to my goals and whether I need to rebalance. Investing is fun, scary, and mysterious; saving more money, well, that’s boring at best, and painful at worst.

The silver lining of saving more

Last question: is it better for your 401(k) balance to go up because you’re saving more or because your investments are performing well? Or does it matter?

It matters. Improving your balance by saving more from Quicken is better. Once you retire, you’ll be using your savings to pay expenses. The lower your expenses before retirement, the easier it will be to cover them from your nest egg. And when your savings rate goes up, your expenses (as a percentage of your pay) have to go down, right?

Maybe the secret of a comfortable retirement isn’t about savings rate or investment performance: it’s about redefining “comfortable.” Oh, and ignoring your brother-in-law.

Quicken 2012 new arrived: We are making changes to our automatic account aggregation capability. As a result, beginning March 19th we will be pausing all automatic account aggregation for an extended period of time. During this time, only manual account aggregation will be supported on Quicken.

Today we are excited to unveil the new Quicken 2012. As most of you know we’ve been working on this for the past year and we think you’ll find that it was worth the wait.

To highlight all the new changes, we’ve put together a short Quicken Tour video. If you prefer to read about our new changes, scroll down the page for all the details.

The first thing you may have noticed from our new homepage is that we’ve incorporated paid subscription plans for the service. I’m sure many of you are wondering why we would begin charging for a service that used to be free so I want to briefly explain.

As some of you may know there have been a handful of Personal Finance Management services that have shut down in the past couple years. To ensure that our business is viable and sustainable in the long-term, we decided to enhance the product by offering more advanced features and charging a nominal fee for access to these features. Though we are charging for premium features, we are still offering a free version of our product, which retains the core basic functionality of Quicken. Please visit our FAQ section for additional information.

So what do you get in the new Quicken? Here’s the run down of the major changes we’ve made:

New layout and design
We’ve got a fresh new look and more simplified layout. We reduced the number of tabs and added sub-tabs in the top navigation structure to make it easier to find what you’re looking for.

Bills Calendar and alerts
The new bills calendar feature enables you to see all your reoccurring bills on a monthly or weekly calendar view. Bills are color-coded by their payment status and as you make payments, we’ll automatically reconcile them for you. You can also set up alerts for upcoming bills and large bills. View the Bills Calendar tutorial.

Budgeting Wizard
Our new Budgeting Wizard takes you through a four step process to help you select the best spending categories to budget for, and the appropriate amount to budget, based on your desired monthly target savings rate. View the budgeting tutorial.

Analysis Page
The new analysis page displays the same color-coded pie chart with drill down capabilities, but now all corresponding transactions are listed on the page. You can edit transaction categories in bulk directly from the page or click over to the Cashflow tab to make additional edits. You can also see your spending broken down by merchant.

Note- The analysis page is now located within the Details section. Click on the Pie Chart icon to access your analysis.

Settings Panel
We’ve revised the settings panel so that it is now a hub for several items including configuring your alerts, managing your Accounts (i.e. deleting, renaming, importing files, etc.), setting your preferences and completing your profile information. The settings panel link remains in the upper right corner of your Quicken profile.

Ability to hide accounts
For those of you with Business Accounts, Joint Account, Children’s accounts, etc, you can now hide these accounts by visiting the Account Settings panel.

Quicken 2011: The Key to Budgeting, over the years, I’ve talked to many people who have just given up on budgeting for any number of reasons. Quicken 2011 is too complicated, others have had a bad experience with a particular budgeting system and for many, it’s just the dread of being limited in how you spend your money that scares them away from setting a budget and sticking to it.

The real trick is budgeting realistically. I think Quicken is what trips people up more often than anything else.

What does it mean to budget realistically? To set goals for yourself that are attainable and sustainable. Sure, you’d save a lot of money if you only spent $100 on groceries every month and only bought one tank of gas—that looks great on paper. But it is practical? Depending on your lifestyle, probably not. In my experience, the best ways to actually budget in a usable way are:

Leave room for the “other” stuff

Sometimes an unexpected expense comes up—or just dinner with an old friend at a restaurant across town. Whatever it may be, it’s good to leave a little

bit of your monthly budget un-assigned so you can have a little wiggle room. This will prevent you from feeling “trapped” by your budget and will reduce your risk of going over budget.

Make your budget flexible

You spent less on gas this month than usual? Great! Move that extra money over to your grocery budget because you’ll be having family over for dinner next week. Money you don’t spend doesn’t need to stay in a single category as long as it’s unspent. Use it where you need it. Adjust next month’s budget if it looks like the difference will be a long-term one.

Base your budget on you

Don’t base the amount you budget on anything other than your Quicken 2011, wants and habits. Budgeting software and systems will try to tell you what you should spend, but you’re going to be better off if you take into account what you actually do. You usually spend $100 on eating out each month? That might be a place to save—but it’s going to be hard to completely change your lifestyle on demand. Back it down to $90 next month. See if you can stick to that. But don’t set your restaurant budget to $0 because someone said that’s what every budget has to look like.