Personal Finance Expense Tracking

In my last blog post I talked a little bit about the idea of budgeting vs expense tracking. So, now I would like to expand those thoughts a bit and talk about HOW we can track our expenses. There are several very common ways to do it. Each method has its own pros and cons.  I will try to sort them out for you to help you decide which is best for you.

   The options, those are often the problem rather than the solution. If you have ever tried to decide what kind of toothpaste to use in the supermarket and ended up staring at 10,000 different kinds, then you understand. While there are not quite THAT many options here, there are still a lot! Last time I searched, "budget app" in the app store I finally gave up counting at 130! Too many choices or just lack of understanding of the choices themselves, often leads to not choosing it at all or the wrong choice for you. Rember, the right choice for you is not necessarily the right one for your next-door neighbor. Often, after the lack of choice comes feelings of failure and discouragement. And… sometimes… actual failure.

Occasionally… a lack of expense tracking leads to outright catastrophe. When this happens, it might be time to seek a financial coach... Preferably BEFORE this happens!

Let’s dive in….

Most people use, one or more of the following methods. The subtle differences in the way each of us use these tools is nearly as unique as YOU are.

Here are some of your options:

Option	Pro	Con
Paper check register	Transaction accuracy Some find it easier to remember handwritten items Error checking with monthly reconciliation Simple	Old fashion Takes more time than other methods Difficult to categorize expenses Requires accurate, manual math
Spreadsheet	Mathematical accuracy Easy categorization Easy to see the BIG picture Portable, use on almost any modern device Automation Easier financial analysis Easy to collaborate with financial professionals	Complex Spreadsheets can be, “fussy” Major changes can be cause for total re-organization Still requires manual entry of data
Online App	Automated with bank transactions At your fingertips Very convenient Time saving Investment tracking Good for goal setting	Not automated with ALL banks. Not automated with ALL brokerage firms Not good at showing BIG picture on cell phone screen Automation can CAUSE confusion Automation can create a, “so what” attitude. NOT real time accurate Privacy & security concerns
Monthly Statement Review	Useful for error checking when paired with other expense tracking Easily integrated with other spreadsheets	Frequency is usually to spread out. Difficult to categorize when used alone
Simple Daily Balance Check   Is this you???	Can be useful for gut feeling intuitive decision making Helps monitor account transactions for fraudulent activity	Not good for categorizing expenses Does not integrate well with a budget Does not account for future spending Often ends up being the default method of tracking when no other method is chosen

If the last one on this list is your default method of, “tracking” expenses and you rarely use any other method, you may be the perfect candidate for financial coaching.

For me, spreadsheets are the best. What is your best method?

Join me again next time to discuss how these tracking methods can be used creatively together to help you achieve financial clarity.