Pen and paper versus digital: which is better for keeping track of your money? (2024)

I faithfully used the budget planner printables I designed way back in 2013 to trackmy income and expenses up until a few months ago, when I made the switch to digital.

I’m very much a pen and paper person and prefer to keep track of appointments etc. using a paper planner. However, a couple of years ago my accountant informed me that I had to make the switch to digital for tracking my business’ income and expenses.

Since I reconcile my spending on a weekly basis and reconcile shop expenses at the same time as my personal spending, it made sense to just do everything digitally (in Excel), all at the same time.

I share my current system for tracking spending later in this post, but first, ifyou’re trying to decide whether to go digital or stick to pen and paper (or vise versa), then I’ve compiled some pros and cons for each, as well as different tracking methods to consider!

I highly recommend color coding which you can do using both pen and paper and digital systems. On paper you can use colored pens, on a computer you can use colored text or color the boxes in Excel. Color coding just makes it so much easier to track what money has been spent where!

Pen and paper options for tracking spending:

Budget Planner Printables
Cash envelope system
Notebook

Budget Planner Printables

I used printables to track spending for around 5 years. In an effort to simply my planning system (hence why I’m trying out 52 planners in 52 weeks), I’ve extended that philosophy to my finances.

The main reason I liked using printables was because they keep everything separate. I used separate pages for bills, the monthly budget etc. so I knew exactly what went where.

I also liked that I could keep it within my planner so I could record spending then and there and keep track of where every single dollar went. Having everything in the one place and with me wherever I went was the main reason I used printables / pen and paper for so long.

Cash envelope system

I’ve personally not tried this system before. I try and avoid using cash and put everything on my credit card (to earn points). Then transfer money out of my savings account to pay off the credit card so I never actually pay any late fees.

For this system, you use a separate envelope for each expense category e.g. groceries, discretionary spending etc. and keep a record of where the money has been spent by writing on the envelope, or by writing on a piece of paper kept in the envelope.

I made some cash envelope stickers (in lots of colors so they’re ideal for color coding!) They’re available in my printables shop if you want to try this method.

The pros of this system are that once the cash is gone you can’t spend it!

Notebook

A notebook is the easiest, simplest (and cheapest) method for tracking expenses. If you use this method I recommend keeping 1 running list of expenses and using different colored pens or highlighters to color code each expense category.

If you have a lot of expenses, using a separate page for each expense category is a good idea, or ruling 1 page in half.

Pros of tracking income and expenses on paper

Don’t need to worry about your computer crashing or files corrupting, or needing to back up any files
It’s all right there in front of you
You’re more accountable – there’s a theory that if you hand-write something you’re more likely to remember it. I definitely agree with this theory – I used to hand-write / re-write out all my notes at university otherwise I wouldn’t remember anything!

Cons of tracking income and expenses on paper

Good idea to scan the pages or take photos to keep a record just in case something happens
You can end up with a lot of paper scattered everywhere
Can be cumbersome and time consuming to coordinate tracking yourself and your husband’s spending

Pros of tracking income and expenses digitally

Formulas automatically calculate – you just plug the number sin and the spreadsheet do the work for you
You can use cloud based tools so you and your partner can both track expenses, and you can update it from anywhere that has an internet connection
If you use excel (and most apps will do this for you) you can use graphs to visually see if you are meeting your financial goals
I like to use excel as I can set it up to give me an average based on spending. I also like to enter in forecast amounts and see how this affects the average so I know how much money to set aside
Can add as many rows / columns as you like – so if you need more space, just add some more
Can start the spreadsheet at any time of year – as most places have financial year starting at different times (here in Australia it starts on July 1 but
Quicker to update – can automatically see how increasing and decreasing certain thins can have an effect on taxes and other expenses – it’s faster way to keep track of expenses (plus I can type faster than I can write and my hand-writing is rather messy!)
Create spreadsheet template once, save a blank copy to always be able to refer back to
I use excel and everything is kept in the 1 file with tabs so everything is within easy reach

As you can see, in my opinion there are a lot more pros for tracking expenses digitally!

Cons of tracking income and expenses digitally

If you’re on the go you can’t record them if you’re not at your computer. You can use cloud based solutions but I prefer to keep money stuff private with access only via my password protected laptop.
Some online software / money management tools are paid
Tend to not ne as attractive. One of the reasons I made the budget planner printables in the first pace was because I love chevron – you can’t really add patterns in Excel and most accounting software tends to be a bit boring and lacking in color
If using excel you need to be careful that the formulas are reading the write cells, otherwise it may not give you the answer you want to see!

Digital tracking systems

Excel spreadsheets
Apps
Software such as MYOB

Apps

I’m not someone that has their phone glued to their hand every day. I only use it to take photos, for Instagram and to check emails when away from my computer. I really dislike using apps due to the small size of the iPhone screens. I also hate the tiny keyboard.

There are an overwhelming number of apps. I wasted a lot of time trying to compare them and all the different features – some would do something I wanted but not have another feature etc. My phone is prone to filling up quickly as I use it to record videos for my YouTube channel so I didn’t want another app taking up space.

A money management app was not a good fit for me, but if you’re someone that is prone to forgetting where the money goes, the convenience of being able to record it on the spot using an app would make it the best option for you.

Software

I considered used software such as Quickbooks, but my business is not at the stage yet where my accountant says I require it. Given I sell digital goods only, my book-keeping is simple as I don’t need to track cost of goods sold. I only have one virtual assistant not a team of employees so I don’t need to track payroll, health, sick leave etc. either.

I studied accounting subjects in high school and learned how to use MYOB (albiet it was beginner level only) and I hated it! So I intend to avoid using accounting software for as long as possible!

Excel

I chose to use Excel to track spending for a couple of reasons:

It’s simple and easy to use
I can customise it to suit my exact needs – I can add extra colums and rows when needed
I can change the colors of the spreadsheets so I can color-code the cells (I’m a bit obsessed with color coding!)
Can filter expenses – so if I want to see a total for a certain category, I can filter the other expenses out to only see those that I need, then highlight those cells to get a total. When I used to use paper I’d have totals scrawled in the corners or the page, and sometimes I’d miss an expense in a category so have to re-calculate
I don’t need to touch a calculator – Excel does all the calculations for me – and I don’t have to worry about whether the maths is 100% right – it’s so easily to accidentally miss hitting a number on a calculator, or accidentally switching the orders of numbers around
Now that I’ve set the template up I can re-use the same template again and again 🙂
I already had Excel as part of the Microsoft Office suite so I didn’t have to pay for an app or accounting software

I also like to geek out over graphs – I find it much easier to see if I’ve achieved money goals by looking at a graph that a bunch of numbers 🙂

I recorded a video walkthrough of the spreadsheets I created (and have been using / tweaking) for the past 6 months or so if you want to take a peak at my current budgeting system.

Toenlarge the screenof the video, click the square icon in the bottom right hand corner of the video (it will say ‘full screen’ when you hover your mouse over the icon).

Don’t forget to subscribe to my YouTube channel🙂

Links mentioned in the video:

In the Excel Spreadsheet I simplified income and expenses into just 4 tabs for:

Annual summary of income and expenses
Breakdown of income, expenses, debts and savings
Tax deductions
Monthly savings tracker

I still keep track of when bills are due using a planner (using stickers or writing a reminder). And I still use the dates at a glance printable from the budget binder to track bill due dates. So I guesstechnicallyI haven’t gone 100% digital when it comes to spending. I may at some point, but the combination is working well for the moment 🙂