If you are responsibly managing your finances, odds are that you are keeping track of your expenses in one way or another. Are you using the best option available? This is a great question to ask; one which I hope to explore in this article.
What’s the Best Way to Track Expenses?
It was just a few months ago that I was taking a trip out west with some friends from college. One of my good friends pulled out his small notebook with receipts and started writing down the expenses from the last two days in his notebook.
I was quite surprised to say the least. Not because he doesn’t strike me as financially responsible – he does indeed. What surprised me was his dedication and how much work was involved in his method of keeping track of his finances. At the same point, who can blame him.
Keeping track of your expenses by writing them down in a journal or notebook has been a viable and responsible way of keeping track of your expenses for a long time. The benefits are obvious: you are not only able to keep track of every expense, but can (at any time in the month) know how much you have spent that month.
If you are using this method, you most likely keep a rough running total of how much you have already spent in your head. The only down side to this approach is that it is possible to forget to write something down. If you forget your journal when you go out to eat, will you remember to write down the expenses when you return home?
Credit Card Statements
Another viable option is to use the credit card statements each month to calculate how much you spend. This is a great way to minimize that time spent on keeping track of expenses throughout the month.
You can easily figure out how much you spent on different categories with an hour or two of calculations each month. This allows you to also reap the benefits of credit cards. For example, the many credit cards offer great rewards (5% off rotating categories throughout the year) and has no annual fee.
Someone buying the same items with cash would be losing out on the opportunity of this 5%. The only downside to this approach to track your expenses is that you can often lose track of how much you have already spent in the month. However, if you are disciplined enough, it can be worth it.
The other thing to keep in mind is that your credit card statement could have mistakes, so you need to be able to determine whether it is accurate based on your memory. If you have a horrible memory, this probably isn’t the method for you without some extra measure to double check the accuracy of your statement.
I know of several people that are receipt freaks! They get a receipt at every place they go and keep every single one. At the end of each month, they use these to figure out how much they spent for the month.
This gets rid of the risk that accompanies using just credit card statements and also keeps them from having to write the expenses in a journal. The downside to this method is that it requires keeping track of all those receipts.
You can easily create a system to file these, but some of the receipts fade over time. There are also instances where it is impossible to get a receipt.
Best Way to Track Spending: Online Services
The last major option available to keep track of your all your expenses is to use an online service that does it all for you. An example of this is Personal Capital.
These services bring in all of your electronic expenses and are able to produce user-friendly services like pie charts. This gets rid of all the necessary calculations or receipt-keeping. In this day and age, something like Personal Capital seems to make a lot of sense. One of the best things that I like about Personal Capital is that it is absolutely free and they plan to keep it that way.
Within seconds of logging into your personal capital account, you can quickly see your spending and income over the past 30 days. (Personal Capital is also a great free tool of keeping an eye on your investment portfolio.)
What do you think? Are you willing to give up the security or tradition of the more traditional ways of tracking your expenses each month? How do you track your expenses?
While, Mint is sort of like the defacto tool for expense tracking; I recently discovered I can track expenses via CurdBee too. Best part of using CurdBee for tracking expenses is I can quickly convert the expenses I want to reimburse from a client in to an invoice.
That certainly sounds like it has a lot of benefits. I haven’t heard of Curdbee before.
I have a Mint account, but I don’t use it that often anymore. I’m using a combination of bank statement and credit card statement to track spending these days. I put them all down on a spreadsheet and see where all the money goes. It’s more work than Mint, but I like contemplating what I can do to improve.
I do the same thing. I like being able to do the math to see where I have succeeded and where I have failed. It keeps me engaged. But, I can definitely see why other people would want to use mint. It offers a great free service.
Mint.com won’t tap into my credit card 🙁
I use my credit card statements and an excel spreadsheet. It’s not automatic like mint.com, but it does the trick with only a little extra work. I actually start with the budget and track from there.
I have used an Excel spreadsheet and receipts for quite some time. We tried Microsoft Money software too; old habit die hard though.
There are very few places that you can’t get a receipt from. (LIke maybe a vending machine?) If that happens though and you use the receipt method, it’s pretty easy to just write yourself a note in place of the receipt. I keep my receipts stuck on a spindle, and then input them into Quicken and my spreadsheet. (I also check them against my statements.)
I use Mint and a spreadsheet to track expenses and budget each paycheck. I like the fact that all of my transactions from Min will be easily portable into Turbo Tax come tax time.
i just use an excel to keep track of all my expenses. i don’t need to micro-manage it, but a simple track of when and where the money is going and when and where the money is coming from is all i need.
We use Quicken and love it. We find it organizes things really well and is relatively easy to use. It really makes tax time easier when you have these kinds of detailed records.
That sounds like a great plan. I know several people who use Quicken.
I do not have Mint account. I’m still not sure if it is worth having one. I’m still uncomfortable giving all my security information to a web site. Seems dangerous…
No Mint for me. I do track my spending though, just not through online accounts.
I use mint.com and a monthly overview excel sheet that allows me to see a year at a glance.
I used to save receipts but I learned that it was useless. If it tracks on my bank statement and mint.com, I don’t need another copy.
Mint.com will alert me when I’ve overspent in a certain area or warn me when I’m close. The excel sheet is so I can see how close I am (or how far) to attaining the goals we set back in January.
Great job Corey. I hope you go far with this site!
Thanks Denz for the detailed response and the support.
I’m using an Excel Spread sheet in a combination with bank statement and credit card statements to track my spending.
I use excel to do a spreadsheet each payday and I use a version of the envelope system. This way I don’t have to keep track of individual reciepts.
For example: I budget $125 per payday for gas. On payday I go to the gas station add $125 to my gift card and then fill up my tank. I use the money on this card until next payday. I do the same for food.
For categories like clothes and entertainment I use cash. I put the entertainment/blow money cash into my coin purse and the money for clothes into an envelope. I just spend these until they are gone.
No need to keep up with every detail.
I am willing to committ. I have done this for 4 years.
Personal Finance Management tools like mint, yodlee moneycenter have worked the best for me. Originally I was concerned about the security level on these sites, but later learnt that they use the same encryption standards as banks.
Been practicing jotting down every expense once I get off the house. The likes of mint.com is a good way to track expenses specially when you usually charge your expenses to your credit card. Less hassle and no need to pull your notebook for that expense