Why using Debit Cards is Better for Expense Tracking Than Cash or Credit Cards


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When you are budgeting, you need to know exactly where your money goes, right down to the last penny. Why do I say this? It is so easy to spend cash or put stuff on credit cards and rack up a balance. I know that with a credit card, we get a statement from the bank on the next monthly statement that we receive, but it is not part of your regular disposable income and you can still lose track of what you are spending. Even more difficult, if you do not pay off your balance and decide to do it at a later time, you lose all track of where your money is going. Yet, another issue with credit cards is that you may just enter it all into a category as “monthly credit card payments”. Basically, there are really no benefits to credit cards since they really do not help you track your outgoing expenses. If you have a budget, credit cards and not real ways to track your outgoing expenses.

With a debit card, you have a direct immediate recording of your expenses. You do not need to wait until a credit card bill arrives in the monthly statement. Since almost every bank offers online banking, you can download your expenses and see them usually the very next day. That in my opinion is the best way to track your expenses. I use Quicken’s online tool to connect to my bank account and simply download the balance. Once the balance is downloaded (in QIF which is Quicken’s native format), I can assign categories to each expense and then create a cash flow report of all of my expenses for any given time period. My usual cash flow for the time period is each month. With the cash flow, I see a summary of all expenses in a specific category. That’s priceless.

I Do Not Care About Each Expense. I Care About The Category Each Expense Falls Under

When I download my transactions into Quicken from my bank, I can see exactly where my money goes by the category that acts as a summary of wherever each expense is going. I do not care about the expense. I care about that category. For example, if I spend $35, $65, $40 going out to eat, my Quicken will automatically tell me that I spent $130.00 for my dining category. I also have a category called Work Dining to track how much money I spend buying lunch at work and if I bring lunch from home, I still add that into the Work Dining category since it went to my lunch.

You just cannot do that with cash without consciously writing down all of your expenses in some book or entering it into some kind of mobile app on your phone. Maybe your mobile app helps you scan cash receipts. Wooo! Maybe you just keep your receipts in your pocket or wallet or desk. Then, later you will sort those receipts into piles for each categories. All that is too much work! A debit card that is connected to your online banking account is just seemless and effortless. Even if you do not have Quicken and don’t want to spend the money for it, you may have Google Spreadsheet which is totally free or if you have Microsoft Excel, that is good too.

In a nutshell, I think the combination of a debit card connected to an online banking account and a tracking software like Quicken are best. If you have other suggestions for tracking your expenses, let me know.

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