There is no one right way to track expenses and only one wrong way. We will look at several methods of tracking expenses and you choose what works best for you – or even combine a couple of them – to find what is right for you. What is the one wrong way? The wrong way is not having a system – keeping track only in your head. You will undoubtedly miss things and will not get a proper picture on where your money goes.

  1. Receipt Method

This is an easy and convenient way to track your spending. Get a receipt every time you pay for a product or service. The key to this method is saving EVERY receipt whether it be $1.00 or $100.00.

  • Label all receipts with expense categories, such as food, transportation, or clothing.
  • Have a set place where you are going to keep your receipts. It can be as simple as box or container on your counter or dresser. As soon as you get home go that spot and put away your receipts. Use one envelope or divider for each category. Bills such as utilities and insurance should also be placed in the box after they are paid.
  • If you use credit or debit cards, be sure to file those receipts also.
  • If you don’t get a receipt, make one, label it, and file it in the proper category.

At the end of each week sort the receipts. Write down how much money you spent in each category. Keep receipts can also come in handy for warranties and returns if something breaks.

  1. Envelope System

The envelope system works well if you like to pay for things with cash. It requires little paperwork.

  • Make an envelope for each expense category (rent, utilities, food, etc.).   Label the envelope with the category, amount, and date due.
  • When you receive income divide cash into envelopes for each expense category.
  • Inside each labeled envelope, put the amount of money you plan to spend in that category each month. You don’t have to record how much you spend.   Just replace the cash with receipts.
  • Pay bills right away, so you won’t get late charges or be tempted to spend money for something else.

Keep envelopes in a safe place, preferably locked. The key here is not to take money out of one envelope when you run out in another. If there is money left in an envelope at the end of the month, you’ll know you’ve done well. Save leftover funds for future emergencies in a savings account or safe place.

People often find that going back to good old fashioned cash results in them spending less. Seeing how much money you have left can make a big difference. On the flip side, other people find cash on hand just is too tempting and spend it too quickly. This is something people have to determine or learn for themselves.

  1. Calendar or Notebook Method

Some families use a calendar or notebook to track income and bills.

  • List income on the date it is received.
  • Write in bills and expenses on dates they are due.
  • As bills are paid, mark off each one.

A calendar with large spaces to write on works best. The calendar may also be used to plan for larger irregular expenses. Examples are insurance payments, school supplies, or holiday gifts. The notebook can also be used to store bills so they are easy to find. Again, it is important to record everything you spend .

  1. Computer System

Tracking your expenses on a computer is an easy way to identify spending in different categories. You can buy personal finance software or develop your own categories on a spreadsheet.

Using a computer to manage your finances is relatively easy.

  • You can quickly update your spending information.
  • If you enter transactions often you will stay on top of your financial picture for the month.


  1. Online Options and Apps

There are more than a few tools online that are able to handle all the details — and may have a few additional features thrown in:

  • If you’re always on the go, Xpenser can be a good option. It allows you to text your expenses in, helping you ensure that you don’t forget to track your spending between the store and home. In addition to SMS, you can email, Twitter, IM, call or manually add your expenses.
  • For tracking expenses in multiple accounts — such as business and personal — Moneytrackin’ provides easy management of expenses between those accounts. You can also tag transactions and budget easily.
  • While Mint only tracks your expenses made through a bank account (checks, debit cards, credit cards), it does integrate expense tracking with a whole host of other features, including tools to help you analyze your spending and automatic expense categorization.
  • Another site that primarily tracks expenses made through bank accounts, Buxfer also has tools to help organize shared expenses — such as splitting the rent with a roommate.
  • You can add expenses by hand to Shoeboxed, but the site’s real value is that (for a price) they’ll scan in your receipts and upload them to your account on the site. If you do a lot of spending with cash, this site can truly simplify matters.

No matter which option you decide to go with, don’t be afraid to change it so that it works for you. These systems are just ideas to give you a starting point. You may decide to combine a couple of the systems. The key is to find what works best for you and your family. Don’t worry if it does not work perfectly the first week, or even the first month. Tracking expenses is a going to be something new and like all new things, it will take some getting used to. However, once it becomes a habit you won’t have to even think about it anymore, it will become something you do automatically.

[i] Lockhard, Marsha. (2003). Tracking Income and Expenses. University of Idaho. CIS 1112.