A simple way to track expenses

An ideal system for tracking expenses should be simple enough and good enough. It is hard to maintain both simplicity and quality. Therefore, you should think about things you actually want to catch using your tracking system. There are several issues you might want to track.

• date and time of spending
• amount
• specific product that you buy
  
• type of expenses
• point of sale
• manufacturer
• environmental issues (recyclable or not)
• ...
  

It would be nice to have all those features in our tracking system, but it would take several hours per week to type in all those data. One solution is to hire somebody to do it for you, but it is wasting of money if you don't need all those features. So what you could do now?

1. What types you are going to track? It would be nice to track gifts to family, gifts to friend, even maybe gift to a person, but it would take time. My suggestion is "No more than 10 types of expenses". Reserve one type called "Other expenses". Take a look at the following example:
   
   • transport
   • house maintenance
     
   • leisure
   • mortgages and other financial expenses
     
   • food
   • junk food
   • kids
   • clothes
   • investments
     
   • other expenses
     
   
   
2. Create a spreadsheet. Label three columns as: type of expenses, date of expense, amount spent. You could add one column for specific notes if you like.
3. Type in data daily or weekly.
   

Some recommendations

• Usually is doesn't matter if you miss accurate date. It is important to put in appropriate month. Therefore, you could even create combo boxes for choosing types, and months. Any actual data you have to type in is the amount of an expense.
• Even actual amount is not that important (there is not big difference between $27.89 and $28). Such data would be perfect but it could help to get a rough picture about your spending.
  
• Resist the need to modify types for first month or year. After that you can modify the list of types, but keep it simple as much as possible. The key point it to keep is simple because the more difficult tracking is, it is more is probable to abandon the tracking.
• You can group several expenses. For example: You buy apples for $5, carrots for $4, milk for $4.5 and pretzels for $1.5. You can type in:
  
  1. food, May, $13.5.
  2. junk food, May, $1.5
     

Using this method, you should spend no more than 30 minutes per week, or 3-4 minutes per day. And that is perfect for filling the time gaps in daily schedules.