Welcome to Day 3 of Where’s My Money Going? Month! This February 2009, I’m challenging readers (and myself) to track spending manually for 28 days. Don’t worry if you’re late to the party, you’re still welcome to join.
Today’s post is by Jon, a friend of mine and (it turns out) reader who shares how his expense tracking has evolved over the last year. He writes:
I find the topic of tracking spending interesting because I’ve gone through the process of selecting an expense tracking tool over the last year myself.
I started with a spreadsheet I built myself. It worked fairly well, but I had two problems: adding spending/budget categories was difficult, and entering in all my spending by hand became tiring. While I was able to use it for almost a year, I definitely had lapses where I didn’t use it.
So I decided to try a dedicated program that could import transactions. I settled on GNU Cash because I didn’t want to spend money on a program that was supposed to save me money. I looked briefly at Mint and Quicken, but I don’t really trust them to have all the information from all my separate bank accounts and credit cards.
GNU Cash is pretty powerful for tracking spending, but weak on budgeting. There is a rudimentary budget feature that is basically incomplete. Importing transactions works great, but there is no matching feature; every month I had to tell it what category my car loan transaction is. The greatest strength of GNU Cash is that it business oriented and will track 4 categories: assets, liabilities, income, and expenses. That made it easy to see where retirement/savings was at, and where my debt was. It was one program and I could see the status of every one of my financial accounts.
I ultimately dropped GNU Cash because the lack of budgeting, but I definitely miss the ability to look at all my accounts at once.
For the last 4 months I’ve been using YNAB Pro, which I paid $50 for (free refund within a month, but I wanted to keep it). The program is very budget-oriented, but also has easy ways to import transactions/expenses. It can import and match bank statements.
The budget part of the program is based around the program writer’s philosophy, which is a little complicated, but the main 2 points are: 1) Get 1 month ahead of your expenses (all income for this month goes towards expenses next month). And 2) give every dollar a position in your budget.
Its only been four months, but I think I’ve been very successful with YNAB. All my expenses have been recorded and assigned to categories. I have money set aside for specific upcoming expenses ( eg. new glasses), and I have a budget set up for February. I think the reasons YNAB has worked so well are the easy expense entry and the flexible integrated budget. I’ve had much better control over my spending than I did with either Excel or GNU Cash.
Having said that, I can’t speak for everyone. There are certainly better spreadsheets available, and I think some people benefit from entering expenses by hand [which you can do with YNAB Pro, but don’t have to]. Personal experience gained by actively tracking your expenses is the only way to discover what will work for you.
This post was part of Where’s My Money Going? Month. Tomorrow I’m going to be talking about spouses/partners and where they fit into all this.