Options to Track Your Spending

I don’t like clichés. I try to avoid using them. One cliché I might use and is appropriate for this post but is rather gruesome when you think about it is, “there’s more than one way to skin a cat.” First of all why would you want to do that and second, why would you want to know all the different techniques?

Applying this to the topic at hand I would modify it to read, “there is more than one way to keep your spending under control.” As clichés go this one is not that good, but it’s true and a lot less bloody than the previous statement.

I have seen plenty of blog posts and advice columns that state the definitive method to keep spending under control, stay within budget, and get your finances in order, but is there really only one way? Most of them are correct, not because the others are wrong but because each person is different and responds to different incentives.

I don’t really care where you spend your money but the key to success is that you know where you spend your money. Tracking your spending is crucial to success. Below are what I call the big three methods of doing this with pros and cons for each. Pick the one that works best for you.

Credit Cards only:

This one is my favorite, it’s the method I use but has one big problem, it doesn’t work if you have credit card debt. If you can’t pay off your credit cards every month, this isn’t the choice for you. If you carry a balance on a credit card, for even one month, skip to the next method.

By using your credit card for all your purchases the tracking of those expenses is automated. I still recommend importing that information into a spreadsheet or financial program such as Quicken because of the ability to see reports and to aggregate all your other bills and expenses.

The added benefit of this option is that if you have a credit card that offers rewards, you are adding value to purchases you would be making anyway.

Debit Cards only:

These are the same as credit cards but with the added benefit that you won’t be paying interest. I’m beginning to lean toward this as a better option because some banks are offering incentives to use debit cards such as higher interest rates on savings accounts. Which is more important, the higher interest or the rewards? You decide.

The downside to this is that you can’t spend any money you don’t have. That’s a good thing but if you need to make a purchase today but aren’t getting paid until tomorrow that can be a pain. The other downside is that you must be aware of your balance at all times. The moment you have an overdraft charge, just one, is the moment you stop using this method.


This method is a bit antiquated in the digital age of debit cards but offers something the others don’t – discipline. If you have trouble with the previous two suggestions such as not paying your credit card off in full each month or overdraft fees, then this is your best choice.

In this method you simply take out the cash you expect to spend over the next month and divide it into envelopes for the various expenses such as eating out, groceries, entertainment, clothing, etc. You can be as detailed as you like. If you didn’t take out enough it’s ok to go to the bank as long as you’re only taking money that you know isn’t supposed to be used for something else like the mortgage or rent.

Each method offers something but don’t forget that your daily expenses are just one aspect of your overall expenses. I would still use a program like Quicken to keep track of everything. Knowledge is power. If you know where you’re money is going you will make better decisions.

Have other ideas or methods? Let me know!

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