Expense tracker or budget app: which do you need?

What an expense tracker does

An expense tracker records purchases and sorts them into categories. Its strength is hindsight: at the end of the month it shows that you spent a lot on eating out, or that subscriptions add up to more than you thought. That is useful, but it arrives after the money has gone.

What a budget app does

A budget app starts from your income and decides in advance where it goes. It also records purchases, but it compares each one against a plan, so its strength is foresight: it can tell you on a Tuesday whether you can afford Friday.

The question to ask

• If your question is where did my money go?, an expense tracker answers it.
• If your question is can I spend this?, you need a budget.
• If you live paycheck to paycheck, the second question is the one that matters every day.

What to look for in a financial tracker

• It starts from your payday. Your money arrives on a schedule, weekly, every two weeks or monthly. A tracker that only understands calendar months will always be slightly wrong.
• Bills come off first. The amount you see should already exclude rent and other fixed costs.
• Logging takes seconds. If adding a purchase is slow, you will stop doing it.
• It handles a bad week. Overspending should adjust the rest of the plan, not break it.
• Your data is private. Look for encryption and a clear statement of who can see your figures.
• It works on every device you use. Your phone at the till, your laptop at home.

You may not need both

A good budget app tracks expenses as a side effect: every purchase you log against the plan also shows up in your categories. Starting with the budget and getting the tracking for free is usually simpler than running two tools.