My finances have always been a pretty slapdash affair. I pay off my credit cards each month and throw what I can toward retirement, but I’ve never had any kind of structure or plan.
When 2013 began, I figured it was a good time for a dose of the personal finance medicine we regularly dish out at CreditCards.com. First step: Determine how much I’m spending every month, and on what.
I admit, the idea of monitoring the minutiae of my consumption patterns sounded painful and not at all cool. I felt myself morphing into a bespectacled fussbudget at the mere thought of it. So to the app store I went in hopes of adding some tech appeal to an otherwise drab task.
I resolved to search only for free apps, seeing as how my ultimate aim is to save money. I also shied away from programs like Mint that ask you to input your banking details. Among the apps remaining, the majority were trial versions that only let you make 20 or so entries before you have to cough up for the full version.
That left just two free apps that fit my needs: TrackMySpend by MoneySmart, the personal finance website from the Australian Securities and Investments Commission; and Xpenser, which was created by some California entrepreneurs to handle expense reports — but it suited my purposes, too. I decided to put the apps to the test against an old-fashioned notebook and pen to satisfy those of you who don’t have a smartphone or prefer to remain off the grid when it comes to finances.
The clear winner
It only took about a day for me to realize that TrackMySpend was by far the best solution. You simply download it and it’s ready to go. It’s so intuitive I’d swear it was designed by Apple instead of a financial regulator.
For each entry you make, you choose a category and subcategory, e.g., groceries and supermarket. You’ll have to get used to Aussie-isms like “petrol” and “rego” (translation: car registration), but otherwise it’s very simple. You can easily add a custom category, too. Set the date and designate whether it’s a need or a want, and you’re done.
TrackMySpend shows a running tally of your total spending on the welcome screen. An easy-access bar chart breaks down your spending by category, indicating the ratio of wants to needs. You can also set a target spend amount, sync to use the app on multiple devices and export your data to a CSV file if you want. Syncing backs up your data on the MoneySmart server, so you lose some privacy, but at least you’re not divulging bank or credit card details.
Xpenser was much less convenient to use, but it does provide valuable information. You have to set up an account online before you can use it, and there’s no way to create a new category from your phone — my biggest gripe. It meant I often ended up accessing the program on my computer, which became a chore I put off for longer and longer periods. Capturing the information soon after I made a payment seemed more useful and less painful.
On the plus side, Xpenser allows you to add tags to expenses. I created tags to indicate what payment method I used and whether the expense was junk food — my biggest vice. At the end of the month I had a very clear table showing exactly where my money went, which I’ll use to figure out not only where I can trim, but also which categories might warrant a rewards credit card. For example, food makes up a significant portion of my expenses, so I’m considering getting a card that earns extra points on groceries.
The final expense tracking method I tried — notebook and pen — lasted about four days before I essentially gave up. I waited until the month’s end and used receipts and credit card statements to recreate a spending list. But I may have missed a few. If I were going to complete the task, I would enter everything into a spreadsheet and create my own categories. Once it’s set up, such a system wouldn’t be a bad way to go if you need or want to stick to analog methods. It just takes a bit longer to use than the apps, and lacks the immediacy of having a real-time chart of your spending.
Whichever method I was using, I found that recording expenses as I went had a chilling effect. It put me in touch with Future-Me — the person I’d be at the end of the month or (gasp!) nearing retirement age, cursing Current-Me for frittering away all our money.
In the beginning, Future-Me appeared after I’d recorded an expense. But as the month wore on, she showed up before I’d even begun to note a purchase. I’d be checking out another post-holiday shoe sale or salivating over some sour cream donuts, and there she was. She wouldn’t yell at me. She’d simply sigh, then remind me of my dusty suitcase or mumble about eating Alpo in retirement.
It was too much. I began to avoid her by going home for lunch instead of eating in restaurants, and recoiling from bargain bins and other impulse-buying traps. I even put off getting new workout togs when I saw my clothing spend creep up to an uncomfortable level. Future-Me counts my new gym membership as a need, but she’s convinced me that I can wear some old shorts there for a while longer.
I’m not sure how I’ll react if she decides to leave. Maybe that’s a good reason to continue with expense tracking, especially if I put reasonable spending limits in place. And thanks to technology, I won’t need to include spectacles in my budget — at least not yet.