Whether you are a newbie to bookkeeping, or have savings goals and want to save money, it’s important to pay attention to the differences between budgeting and expense tracking. Knowing the difference will help you find the methods that suit you best at each stage of your money management journey.

Expense Tracking: The basics

Simply put, expense tracking means recording your spending so you know where your money goes.

You record each expense and categorize it to determine spending trends. Apps like Fortune City can make this task lightning fast, since Fortune City includes 10+ default spending categories, like food, entertainment, and transportation.

Over time, you’ll be able to see where your money is really going. Many of us might think that small expenses aren’t worth worrying about, but over time, a few dollars here and there can really add up.

Keeping a Budget: The basics

Simply put, budgeting means making a plan for each of your dollars before you release them into the world. Developing a personal budget gives you a plan for how you will spend your money in the future, so you won’t risk running out at a crucial moment.

For example, besides fixed expenses like rent or a phone bill, you may put a certain amount of money aside each month for groceries or entertainment. One way to do this is to use an envelope system, where you fill an actual envelope with cash for each budget category at the beginning of the month. This method is particularly helpful for irregular spending that can get out of control, like eating out with friends or shopping for new books.

Expense Tracking vs. Budgeting: Which is better?

Of course it would be great if this article could give you the perfect answer, but the real answer is: It's up to you! When it comes to personal finance, there is no one-size-fits-all solution. Instead, you must decide which option better suits you based on your current life stage, sources of income, fixed expenses, and long-term financial goals.

If you are new to managing your own money and don't have a clear sense of your current monthly expenses, you can start tracking your expenses to get the full picture. Already pretty clear on where your money is going, but want to increase or decrease spending in a certain category? Create a budget by identifying expenses you’d like to cut down on and setting spending limits.

Fortune City can help!

If the idea of managing your personal finances feels daunting, it doesn’t have to be so stressful! Fortune City makes keeping track of income and expenditures actually fun.

Fortune City is an actual city that you add buildings to each time you record a transaction. For example, when you record your salary as income, you earn an adorable piggy bank building in the app. Expenses earn you themed buildings by category, so over time, your city begins to resemble your spending patterns.

The app also provides advanced analytics to help you identify your biggest expenses and further develop budgets to manage your money better. You can download the app for free on iOS and Android, and start building your Fortune City today!