Manual vs. Automated Spending Tracking: Which is Right for You?

For many consumers, the rise of financial apps like Mint are exciting.

These types of apps make it easy to track spending, and look for patterns.

However, these types of apps that automatically track spending also tend to disconnect some consumers from their finances.

While I understand that these types of financial apps work well for some people, it’s not really my thing.

I’d much rather track my spending in a more active manner.

Manually Tracking My Spending

Rather than relying on an app to track my spending, I prefer to do it manually.

I do have personal finance software, but I purposely avoid linking it to my bank accounts.

Instead, I make it a point to keep it on manual settings so that I have to enter the information into the software myself.

I do this for my checking account, but I also do it for my credit card spending.

Manually adding my credit card spending to my personal finance software is important because it allows me to see exactly what is happening with my finances right now.

There’s no waiting until the app communicates with the bank account and updates.

Plus, manually tracking my spending ensures that I can also focus on planning ahead.

While YNAB and zero-based budgeting isn’t my preference, I think that YNAB has the right idea by making it a core principle that consumers should take an active part in planning and tracking their spending. I think it creates a deeper connection to your money, and forces you to really pay attention to what is going on with your spending.

Having to manually track your spending can also mean that you plan ahead. With apps like Mint, your introspection often comes after the fact, rather than in the moment. You can identify issues later, but it’s harder to catch them in the moment. If you have to manually enter a transaction once you get home, it’s something that is more “real” to you in the present. I know some people who write down their spending in little notebooks as it’s happening as a way to force themselves to evaluate what they’re doing. While I don’t go that far, I can see how that might be useful. It’s the height of conscious spending.

Deciding What Works for You

Of course, you need to decide which method is going to work best for you. If you have an app that updates regularly, you might be able to see what’s happening with your finances right now, and see it all in one place, before you make your next purchase. Plus, having that automatic feature means that you don’t have to worry if you misplace a receipt, or forget to account for some other transaction; it’s all updated via communication with the bank, and that means that you don’t have to worry about keeping track of it yourself.

The important thing is that you take the time to reflect on your finances sometimes. Whether you do that while you are spending money, or whether you do it later, looking at a neat pie chart from a personal finance app, you need to think about what you are doing with your money, and consider whether or not it is helping you accomplish what you would like it to accomplish.

Look at the way you record your transactions, and determine whether or not it’s making you a more conscientious spender. If you find yourself struggling financially, and if you are constantly surprised about what is going on with your bank account, it might be time to change things up a little bit so that the way you record your transactions forces you to pay closer attention to your cash flow.