5 Goals of a Good Personal Income-Expense Tracker

Here at Basta sa Bahay, we suggest the personal earning-expense tracker. We will present this a series but first let's start with what its goals should be.

It should seek to completely capture where your money comes from and where money should and actually ends up

This means that a good money tracker should tell its user how much money came in, from one's salary for example, and how much money is spent, all living expenses, etc. Ultimately, this will tell what income is left, and even what is done with this has to be tracked.  At times, income is being accumulated for a big purchase in the future. Other times, it is invested. Being able to plan and track this sort of end-to-end flow of one's money helps to keep track of any goals, and it can even encourage correct organization. One good action that can be done for example, is to set aside money for specific purposes in separate bank accounts or a stashes (like Tonik's). This offers a protection so that this money is used aptly. In any case, any good money tracker can quickly show where every portion of one's income goes to. Though unavoidable, unexpected and untracked expenses are one of the most sure fire ways of throwing off one's financial goals, so we want to keep this to a minimum.

It should provide enough detail in categories so that good actions can be taken

To add to completion, good money trackers give enough detail about where money is from and where it goes to, specifically in the form of categories. This has the effect of, one, ensuring completeness of numbers, and two, allowing for concrete action. Let's take the example of expense that are tracked in categories, like food, rent, clothing, etc. First, with good categories, one can be more sure that all these expenses are recorded. Think of how you know that for sure, you spent money on food or rent. Second,  expense category tracking allows taking action to be easier. It's difficult to cut "general" expenses, but to cut, for example, your food budget, is more concrete.

It tracks money in a timely manner

This is often assumed since it's so simple, but it's important to decide how often you want to be studying your finances. In finance, this is sometimes referred to as a reporting period, but it's basically a question of looking at your finances every month, every quarter, or every year. A bad example of a reporting period is an only-once-a-year schedule. At this level, it's hard to know if you're on track if you're in the middle of the year for example. You may run into risk of finding only at the end of the year that you are far off your goals. I examine my finances upon my salary payouts, so it's every half month. At the very least, Basta sa Bahay suggests doing this every month. This is often enough so you know if you are on track. Needless to say, this implies that periods are closed, which is just finance term to mean that your tracker should have finalized numbers, i.e., you put in all your expenses, regularly. This allows you to study those final numbers, gain insight and judgment, and decide what needs to be done in the next period. If you put off recording incomes and expenses, you may not be able to respond to any issues quickly.

It examines planned versus actual numbers

Good trackers also show planned versus actual numbers side-by-side. This means that you keep budget  or planned numbers; that is, you don't overwrite them with actual numbers. You log actual income and expenses in separate cells and lines. To be fair, it's possible for an expense tracker to only contain actuals, but there's something to say about the comparison to the planned or goal budget. At the end of any period when it is closed, one of the most important insights is if you are over or under budget, because either will result in a course of action in the next period. Simply, if you are over budget , the next period should have a goal of underspending. Personally, I also like to have a running available budget even before the period is closed. This is basically an extra line computed from the budget for the period minus any logged expenses. I find it very useful because, if you can log expenses and incomes as soon as possible, it can become an as-of-date indicator of how much legroom there is to spend.

Bonus: It shows income and cash flow separately

This is actually a goal for advanced users, but basically, this is a few extra lines on the tracker that let you see ending cash for a period apart from the simple earnings-minus-expenses. The latter doesn't take into consideration if any earnings or expenses actually came in or flowed out as cash during that period. As some of you may guess, this matters for example, when some of your expenses are done through credit card. Though this may be difficult to those who are new to this, cash flow reports are important if you have investments for one. In general, you will want to put money in investments as soon as possible, and delay payments to as late as possible as long as you don't incur any late or interest fees. The cash flow allows you to make such decisions. If I find that I have positive cash flow during one period, I can make the decision to advance a planned investment just so that I can earn more interest.


And there you have it, 5 functions that a personal finance tracker should be able to fulfill. Coming up are discussions on how to start that finance tracker, as well as some other tips. Spoiler, Basta sa Bahay believes the spreadsheet to be the best app.

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