Expense tracking means writing down every amount you spend, along with what it was for. You do it so that at the end of the week or the month you can see where the money went. It is not a budget: a budget is the plan made before the money is spent, and tracking is the record of what was actually spent.
What is the difference between expense tracking and budgeting?
A budget is written before the money is spent: this much for food, this much for transport, this much for bills. Tracking is written after: what was actually paid, and for what. A budget with no record cannot tell you whether you kept to it, and a record with no budget has nothing to be compared against.
If you have never done either, track first. A few weeks of real entries give you real figures to build the plan on, and you can carry on from a monthly household budget from scratch.
What are the ways to track expenses?
There are five common ways. They differ in how much work each expense takes and in what each one fails to see.
| Method | What it asks of you | What it misses |
|---|---|---|
| Paper notebook | Write each expense by hand and add up the totals yourself | Anything you forget before you reach the notebook |
| Spreadsheet (Excel or Google Sheets) | Type each expense into a row; the sums are set up once | It is usually filled in later, sitting down, so small cash payments get forgotten |
| An app you type into | Open the app, type the amount and pick a category | Anything you don't enter |
| An app you speak to | Say the expense in one sentence and check the amount was heard correctly | Anything you don't say. Awkward in places where you would rather not speak aloud |
| An app that reads bank SMS | Almost nothing for card payments, once you give it permission to read your messages | All cash (the market, the kiosk, the microbus fare), because a cash payment sends no message |
Flosyfeen, which we make, is the third and fourth kind: you say or type the expense in Egyptian Arabic or English, and it files the amount, the category and the date. It does not read bank SMS. If you are choosing between specific apps, the comparison is in expense tracker apps in Egypt.
What should you record for each expense?
Three things: the amount, what it was for, and the date. A category is the fourth, and it is what makes the totals useful later, because it adds up all the food or all the transport into one figure. Write the amount you actually paid, including delivery and tips.
Keep the list of categories short. These suit most households in Egypt:
- Food and groceries: the market, the grocer, bread, the kiosk.
- Housing and bills: rent, electricity, water, gas, internet, phone top-ups.
- Transport: microbus, metro, taxis, petrol.
- Health: doctor's visits, the pharmacy, lab tests.
- Education: school fees, private lessons, books.
- Eating out and delivery.
- Clothes and personal items.
- Instalments and the gam'eya (الجمعية): fixed amounts you owe every month.
- Occasions and gifts: Ramadan, Eid, weddings, back to school.
Why is expense tracking worth doing?
Because people expect to spend less than they do. Research by Howard and colleagues, published in the Journal of Marketing Research in 2022, found that consumers under-predict their future spending. In one of its experiments, with more than 1,700 people in the UK, predictions undershot actual spending by 32%. The participants were in Canada, the UK and the US, not Egypt, so take the size of the gap as an indication only. A written figure is more accurate than a guess.
A record also shows that a few categories carry most of the spending. In CAPMAS's Household Income, Expenditure and Consumption Survey for 2019/2020, the latest with published tables, food and drink made up 27.7% of urban household spending; housing, water, electricity and gas 20.4% (a figure that counts an estimated rent for homes the family owns); health 9.5%; transport 7.7%; and education 7.6%. Together those five come to about 73%. The survey is several years old and your household's shares will differ, which is the reason to keep your own record.
Tracking by itself does not save money. It shows you where the money goes, and what you do about that is your decision.
How do you start tracking your expenses?
Start with one week, not a month.
- Pick one method from the table, the one you expect to still be using at the end of the week.
- Start with cash. Nothing else records cash, while card and mobile-wallet payments can be looked up later in the messages or the statement they leave behind.
- Record each expense at the moment you pay, before the change is back in your bag. Entries left for the evening get forgotten.
- At the weekend, add up each category and look at the totals: which category is the largest, and which total is higher than you expected.
- If you miss a day, write down what you remember and carry on. A week with gaps still shows you more than no record.
Does tracking your expenses make you stingy?
It is an understandable worry; nobody wants to feel they are counting every pound against themselves and their family. But writing an expense down does not stop you from spending it. The outing with your friends and the gift for your mother go into the record like everything else, and nobody is holding them against you. What changes is that when money gets tight, you can see which spending matters to you and which you hardly noticed.
Sources
- Howard, Hardisty, Sussman & Lukas (2022), "Understanding and Neutralizing the Expense Prediction Bias", Journal of Marketing Research
- Chicago Booth Review — How to Set a Better Budget (summary of the same research)
- CAPMAS — Household Income, Expenditure and Consumption Survey 2019/2020 (via the ERF data portal)