Track Your Expenses

What Is an Expense Tracker?

Track your expenses to avoid headaches
Track your expenses to avoid headaches

An expense tracker is your savior and sanity check. Why? Because it helps a person, or a business track expenses. What this means is that it tracks what we spend cash on and whether it makes sense. Oftentimes, there are a lot of surprises. I know this from personal experience. 

Why Is an Expense Tracker Important?

Whether you are using it to track personal or business expenses it is critical for two reasons in my opinion:

  • Know your expense trends – where or on what do you spend the most money?
  • Budgeting – many businesses need to budget and rely on prior months or year expenses to predict what might happen next year. 

An expense tracker is critical if you want to learn how to manage your expenses and be more aware of your spending. It is easy to spend more than you realize on items that you do not need if you do not pay attention to where your cash goes. 

How Will a Tracker Help My Spending Habits?

The first step as mentioned above is to track the expenses so you can become aware of the unnecessary items that you may spend on. The next step is to control where you want to spend more. For example, the Meals expense category is higher than you expected. The next step is to see if that’s due to eating out or grocery shopping. If eating out is off higher, you may want to allocate a weekly eating out budget and see how that works for you. If you are a business and your meals and entertainment or job supplies expense section is off the charts, you may want to see what drives it. Do you need to buy job supplies in bulk to reduce the cost? Do you purchase more than the job requires and the remaining items go to waste? 

What Is the Best Expense Tracker?

The short answer is whatever works best for you. Our skills and needs are all different. I work with a lot of small businesses that use a notebook to track their expenses. Others like myself use an excel tracker or an accounting software. Larger corporations have a more complex expense tracking system. The question is what format will give you the summary and insights that click with you?

My advice is that if you are a small business and you are not highly complex, an excel tracker will do the job better than any app. This works well if you are thinking of using it to track your personal expenses. Just make sure it includes summaries and charts and it is actually feeding you quality information.

The Best Expense Tracker For Me

In my case, this expense tracker works best. I am a visual learner, so I need two things in my trackers:

  • A summary of monthly expenses
  • Colorful charts to point out what and where my larger expenses are. 

This type of expense tracker is ideal if you want to:

  • Track expenses with rainbow categories 
  • Monthly expense trends
  • Yearly totals
  • Use it as a budget
  • have charts and summaries as you are a visual learner

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Additional articles on how to account for business expenses are here and here.

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