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If you’ve tried budgeting before and failed, you’re in good company. In fact, I’d argue it takes most people 3-6 months to learn how to track expenses, stick to a budget, and plan achievable goals for the future.
In other words, no one is born knowing how to track expenses and budget. It’s something that you have to learn, and it takes trial and error.
I’ve tried just about every method out there from budgeting apps to a pen and paper to cash envelopes. While there are many different ways to manage your money, one thing is true about all of these methods: you have to track your expenses or your budget will never work.
Why Should You Track Your Expenses?
Keeping track of expenses is important for so many reasons. First of all, it’s impossible to budget your money if you don’t know where it’s going each month.
Tracking your expenses also gives you insight into some of your behaviors around money. For example, you might notice you spend more money on the weekends or tend to order take out on Thursdays when you don’t feel like cooking anymore.
Tracking your expenses gives you good information. It shows you where you excel when it comes to money and places you can improve. It also lets you know your priorities. All you need to do is see where you spend the most money to find out what is most important to you.
3 Steps to Track Expenses
If you’re ready to become a champion spending tracker, there are three steps you need to take. First, create a budget. Then, decide how you will track your spending (with an app, spreadsheet, etc.) Lastly, schedule weekly check-ins to keep yourself on track.
1. Create a Budget
People usually cringe when they hear the word budget because it sounds like a fun suck. After all, don’t people who budget live boring lives? Not so!
The first step to creating your first budget is to set goals for your spending. For example, is it your goal to spend less than $50 a month on takeout? Write it down.
Then, after your first few months of using a spending tracker, you can measure your goal with your reality. If you come up short, that’s ok. That’s why it’s so important to track your spending. We usually spend more than we think on certain categories. Tracking that can help cure some bad financial habits.
2. Decide on a Spending Tracker
Once you have a basic budget in place and a list of your spending goals to go along with it, it’s time to start tracking. There are many different spending trackers out there. Here are a few of the most common ways to track what you spend.
Best Budgeting Apps for Personal Expense Tracking
In the modern, digital age, budgeting apps are taking the market by storm. It seems every time you turn around, there is another one out there. Below are some of the best budgeting apps we’ve tried and like.
First and foremost, Personal Capital is an investment advisory firm. This means Personal Capital employs financial advisors to help their clients with their investment choices. In order to work with them as an advisory client, you have to invest a minimum of $100,000 with them.
However, even if you don’t have $100,000, Personal Capital offers free budget tracking software. Connect all of your accounts to their free platform, and you can see your net worth, track your spending, and more. You’ll get emails every week telling you how your portfolio is doing.
Keep in mind that the overall goal of Personal Capital is to eventually acquire clients, and offering free tracking software is one way to spread awareness of their services. However, before you sign on the dotted line as a client, take the time to compare their fees with other brokerage firms to make sure you find one that’s the best fit for you.
Personal Capital At a Glance:
Personal Capital is an investment advisory firm. This means Personal Capital employs financial advisors to help their clients with their investment choices. In order to work with them as an advisory client, you have to invest a minimum of $100,000 with them. However, even if you don’t have $100,000, Personal Capital offers free tracking software. Connect all of your accounts to their free platform, and you can see your net worth, track your spending, and more. You’ll get emails telling you how your portfolio is doing.Show Hide more
- Free to use
- Combines investments and checking and savings balances to give a comprehensive financial picture
- At times has trouble syncing
- Customer service has mixed reviews
People who want to have a comprehensive tool to track spending and net worth without paying a fee.
Tiller is similar to an expense tracker worksheet that you would create yourself, except it’s so much more sophisticated than that.
Tiller pulls information from your bank accounts and then automatically populates a spreadsheet for you. You still get the same great spreadsheet magic that you love except Tiller does all the heavy lifting and data entry for you. You can try Tiller free for 30 days, and then it is $59/year to keep.
Tiller at a Glance:
Tiller is similar to an expense tracker worksheet that you would create yourself, except it's much more sophisticated. Tiller pulls information from your bank accounts and then automatically populates a Google spreadsheet for you. So, you still get the same great spreadsheet magic that you love except Tiller does all the heavy lifting and data entry for you. You can try Tiller free for 30 days, and then it is $59/year to keep.
- 30-day free trial
- Built for the cloud
- Real life human support available
- Higher fees than competitors
- No mobile app
People who love spreadsheets and want to speed up the time it takes to create them; people who enjoy keeping data and records of their spending.
YNAB stands for You Need a Budget. YNAB offers a comprehensive online budgeting software that is based on the principle that everyone should budget one month ahead. YNAB does come with a monthly fee, but you can try it for free for 34 days.
Full disclosure: After trying many different budgeting apps, YNAB is the one that works best for me personally because I also adhere to the philosophy of starting the month with the full amount of money I need for that month.
However, it really took some time to learn how to use the software. I actually tried it once before, got frustrated, and stopped using it. Then I got an email from YNAB inviting me to try it again.
The second time I tried it, I spent more time watching the videos and understanding how it worked. That did the trick. I’ve been using it faithfully for over a year.
Also, even though YNAB isn’t free, it is ad-free. So you won’t be faced with ads for insurance or phone companies or other financial products while you’re using it. This allows you to focus on your own budget without distractions.
Mvelopes is a budgeting app that helps you track your spending through the use of digital envelopes. What makes Mvelopes so cool is that you can actually get the help of a one-on-one money coach if you choose their upgrade feature.
A basic account is $4 a month, but for $19/month, you can get a quarterly check-in from a money coach. They also have an option to pay for a monthly phone call, too. If you think accountability will help you reach your financial goals, this is the app for you.
Mint is one of the most popular budgeting software systems out there. They were one of the very first companies to help consumers digitally track their budgets, and it’s free to sign up.
Connect your accounts, categorize your spending, and then find ways to customize Mint to work for you. You can even set up reminders to notify you on your phone to pay your bills.
You can also add alerts to let you know when you’ve gone over budget. If you happen to find out you’re over your grocery budget, you know it’s time to open up the pantry and start using those cans of tuna you’ve been avoiding.
Of course, part of what makes Mint free is that they earn money from different recommendations like credit cards, life insurance, and other financial products. If you don’t mind the ads, this is a great, free product that many people have enjoyed using for years.
Mint At a Glance:
As one of the first companies to help consumers digitally track their budgets, Mint is one of the most popular budgeting software systems on the market. Connect your accounts, categorize your spending, and then find ways to customize Mint to work for you. You can even set up reminders to notify you on your phone to pay your bills. You can also set up reminders to let you know when you’ve gone over budget.Show Hide more
- Free to use
- Great reputation
- Syncs with PC and phone
- Sends you alerts to help you stay on track
- Lots of ads for insurance and other financial products can sometimes make it difficult to focus on the budget.
Anyone looking for a way to manage a budget seamlessly between a PC and a phone; someone who doesn’t mind occasional product recommendations on a free platform.
Wally is a relatively new budgeting app that’s recently hit the financial tech scene. Based on reviews of the app, Wally is still in its beta phase but with room to grow.
The way Wally works is by keeping you hyper-aware of your spending. Rather than automatically importing your credit and debit transactions, you manually enter what you spent.
Wally can, however, use GPS to see where you are when you spend money. So if you are waiting for your coffee in line at Starbucks, Wally should be able to know you’re there and suggest that vendor as the one to enter.
This system of entering in your spending after you just had the transaction keeps you aware of your day-to-day transactions. This would be excellent for someone just starting out budgeting who really needs to understand their behaviors around money in real time.
Pen and Paper
You can’t go wrong with a good, old fashioned pen and paper. This is a very low tech and inexpensive way to track your spending. I used to do this when I lived abroad and didn’t have a smartphone.
I had a little pad of paper I’d keep in my purse. When I bought something to drink or eat, I just jotted it down. After a few weeks of doing this, you can notice spending patterns. It’s also a very active way to track spending that really makes you think before you buy something. After all, if you buy it, you have to write it down so you remember!
Expense Tracker Spreadsheet
Many people love using their own expense tracker worksheets, which you can create in Excel or Google Sheets.
The reason this works is because you can really customize an expense tracker spreadsheet to your own budget and spending categories. It’s free, and now you can share a google doc spreadsheet with your spouse and track your spending together.
3. Set Weekly Check-Ins
Once you’ve found an expense tracking system that works for you, it’s important to set weekly check-ins. This can be something you put on your own schedule and stick to if you’re single or it can be something you do with your partner.
The reason weekly check-ins are so important when it comes to expense tracking is that it allows you to adjust your spending for the following week. That way, if you bought too much wine because it was on sale at the grocery store, you know that you might be having a pantry challenge the following week to make up for it.
Track Expenses: Your Budget Will Thank You
If you’ve struggled with budgeting in the past, tracking your expenses every day is likely the missing ingredient to budgeting success.
Remember, creating a budget and sticking to it doesn’t mean your life will be full of restrictions. Instead, you can feel more control over your money, learn how to allocate funds to your priorities, and cut back on the things that don’t really matter to you.
Be patient with the process, and switch up your expense trackers if the first one you tried doesn’t work for you. Try this for a few months, without fail, and tracking expenses will become a part of your daily life. Soon, you won’t know how you lived without knowing exactly where your money goes each and every day.
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