With inflation and prices rising at gas pumps, grocery stores and everything in-between it’s more important than ever to track your spending. While it may sound like a daunting task, tracking expenses is easier than you might expect – especially with the help of apps like Mint.
The most important thing to remember about expense tracking is that it helps you identify ways to save and can help you avoid negative financial situations. Let’s make that first smart money move together by discussing how to track spending:
What is an Expense Tracker?
An expense tracker can come in many different forms, and the one that is best for you depends on how you learn and how you spend money. At its simplest, expense tracking can be just writing down your expenses on a piece of paper. The classic “envelopes of cash” system is another way to track expenses.
But in an increasingly digital world, many people find value in an expense tracker that is connected to your bank and credit card accounts. That way, your expenses are automatically tracked, imported and categorized. With an automatic expense tracker, you don’t have to worry about forgetting to input receipts or keep track of where you are spending. Experiment with different ways to track your expenses and see what works best for you.
How to Automate Expense Tracking
If you find it difficult to stick to a budget, it may be because you didn’t adjust your budget to your financial reality. A budget is only as good as the information that goes into creating and maintaining it. While an expense tracker like Mint can help you in setting up a budget, where it really shines is in the ability to track your spending over time.
Depending on how well you’ve tracked your finances in the past, you may have to do a bit of guesswork when initially setting up your budget. You might not know exactly how much you spend each month on clothing, entertainment or other household expenses. You can review your bank and credit card transactions for the past 90 days and get an average of how much you spend in each category. But over time as you track your spending with Mint, you’ll begin to get a better picture of your actual expenses. This can help you adjust your budget as needed to ensure that it has a more accurate accounting of your income and expenses.
How Mint Tracks Your Expenses (and Keeps You Organized)
Using Mint makes tracking your expenses super easy. Mint connects directly to your bank accounts, credit cards and other financial accounts. Then it periodically polls each of your accounts and brings in all of your transactions. That way you don’t have to remember to input receipts or write down where and how much you spend. Mint also uses multi-layer security to keep your financial information safe and protected.
One way that Mint can keep you organized is that Mint will automatically categorize each of your transactions. It knows that if you made a purchase at a grocery store, that it probably should go in the grocery categories. Similarly with restaurant, entertainment and other types of purchases. Anything that can be done to speed up or optimize the review and categorization of expenses makes it much more likely that you’ll stick with the budgeting process. You can also adjust the categories that Mint assigns if you need to correct or reapportion any particular expenses.
How You Can Use Mint
As you start to get a few weeks or months worth of data in Mint, you can start to use Mint’s analysis tools to help you improve your budget. While there are a lot of ways to track your budget, there are some advantages to doing it inside the Mint tool itself. When you set up your budget within Mint, the tool can alert you when your spending in a particular category is higher than usual. Review how you are spending against what you set up as your budget for each category. This can help you know if there are changes that you might need to make.
The Bottom Line
One of the best reasons to track your spending is because that helps you stay involved in your finances. When you regularly pay attention to your spending, you’re more likely to stay within your budget, and even have extra each month. That can help you to gain financial confidence, which further reinforces positive financial habits.
Using spend tracking tools like Mint can be a big part of this, since it allows you to automatically import, categorize and track all of your spending in real time. The more you can put your finances on autopilot, the more likely you are to stick to your budget and get ahead.
Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids.