Mastering Expense Tracking: A Comprehensive Guide
There are many different methodologies, tools, tips, and tricks for tracking expenses, and it ultimately depends on your lifestyle and how actively and accurately you want to track them. This is information I’ve pulled from other sources and compiled into a few paragraphs. Why should anyone be concerned with tracking expenses? Simply put, it is easy to spend money when you are not paying attention to how much. Healthy long term financial vision takes a lot of planning and discipline, and tracking your expenses helps you ensure that you’re staying the course.
What expenses should I track?
Everything that cost money.
Tracking your spending on a regular basis can give you an accurate picture of where your money is going and where you’d like it to go instead.
How do I create a budget?
A budget can help you accurately identify all the bills you need to pay in the future. Prior to planning and plugging in numbers, make sure to list out all your monthly expenses.
How do I track daily expenses?
Most people know the importance of keeping business receipts in case they’re audited. The problem with paper receipts is that it’s easy to lose such an important document. By immediately uploading these into an expense tracker app, you save space and time instead of having to dig through a shoebox full of receipts come tax time.
Many of these expense tracker apps do more than receipt tracking. You can monitor your credit, send invoices, create a budget, reconcile accounts, track the performance of investments, and create mileage records. Most of these apps are free or very low cost.
We reviewed 30 different expense tracker apps to determine the best options available. Each app should have the ability to sync and categorize account transactions, be reasonable in price, and offer reporting tools to better leverage your personal and business financial health.
The Best Expense Tracker Apps for 2023
- Best Overall: Mint
- Best for Small Businesses: QuickBooks Accounting
- Best for Investors: Personal Capital
- Best for Receipt Saving: Expensify
- Best for Reimbursement and Mileage: Everlance
- Best Free Option: NerdWallet
Here are 3 easy steps to help you start tracking expenses:
- Record as you go
- Track after the fact
- Automate the process
How do you categorize expenses?
Begin by grouping your expenses. Some personal finance websites and credit cards automatically tag your purchases in categories like “department store” or “automotive.” You might find that those impulse buys at Target are costing you a lot. Or maybe you’ll realize you’re paying for recurring subscription services that you could do without.
Then, sorting those expenses into needs and wants can help you organize your budget and prioritize spending, especially if you need to trim costs to make room for savings or debt repayment.
Needs:
These are the expenses you cannot avoid. If you use the 50/30/20 budget, these should account for 50% of your spending. Necessities often include the following:
- Housing: Mortgage or rent; homeowners or renters’ insurance; property tax (if not already in the mortgage payment).
- Transportation: Car payment, gas, maintenance, and auto insurance; public transportation.
- Health care: Health insurance; out-of-pocket medical costs.
- Life insurance.
- Utilities: Electricity and natural gas; water; sanitation/garbage; internet; cell phone and/or landline.
- Groceries, toiletries, haircuts, and other essentials.
- Childcare.
- Student loan payments; other minimum loan payments; child support or alimony payments.
Wants:
These expenses may be harder to account for in a budget, as they don’t always come with a set monthly fee. If you use the 50/30/20 budget, wants can account for up to 30% of your spending.
- Clothing, jewelry, etc.
- Dining out, special meals in (steaks for the grill, etc.).
- Alcohol.
- Movies, concerts, and event tickets.
- Gym or club memberships.
- Travel expenses (airline tickets, hotels, rental cars, etc.).
- Cable or streaming packages.
- Self-care treats like spa visits and pedicures.
- Home decor.
Savings and debt repayment:
This is the money you’re putting toward your retirement, emergency fund and other savings, and using to pay down high-interest credit cards and other “toxic” debt like payday loans. It also includes anything over the minimum payment on your “good debts” such as your student loans and mortgage. In the 50/30/20 budget, this should account for 20% of your income.
- Emergency fund.
- Savings account.
- 401(k).
- Individual retirement accounts.
- Other investments.
- Credit card payments (see budget tip below).
- Extra payments on mortgage.
- Extra payments on student loans.
