Simple Path to Expense Tracking
- Ed Tsech
- Nov 3, 2024
- 2 min read
When it comes to expense tracking, most people fall into one of two extremes: either they meticulously track every single transaction, or they rely on automated expense tracking through their bank and get a rough estimate of their monthly spending.
For us, manually tracking every expense was exciting at first, but after a couple of months, we started missing transactions, and eventually, we gave up due to the time and effort it required.
If manual tracking works for you, that's great! It can even help you become more mindful of your spending. But for most of us, a simpler approach works better.
Starting Small: Basic Categories
For us, the key to tracking expenses isn’t precision and detail—at least not at first. What’s more critical is regularity and consistency. Initially, it’s helpful to focus on a few essential categories that significantly impact your budget.
Groceries: This includes food and household products like cleaning supplies, toothpaste, and shampoo.
Shopping: Any non-grocery purchases, such as electronics, home goods, and clothing, fall into this category.
Car: This covers gas, maintenance, and tolls.
Home Maintenance: includes all expenses related to repairing, maintaining, or improving your home, such as repairs, DIY supplies, and professional services.
Eating Out: Dining at restaurants, cafes, and bars goes into this category.
Clothing: If clothing is a significant expense, it’s worth tracking separately to gain better control over it.
Food Delivery: If you frequently order food, it makes sense to track this expense independently.
Automating Expense Categorization: The Merchant-Based Approach
These simple categories allow us to streamline the expense tracking process and make it merchant-based:
Purchases at supermarkets go into "Groceries."
Restaurant and bar payments fall under "Eating Out."
Gas stations and auto services go into "Car Maintenance."
Hardware store purchases, such as those from Hornbach or OBI (Home Depot or Lowe’s for those who live in US), are grouped under "Home Maintenance."
Online orders from Amazon or similar stores are categorized as "Shopping."
We use Revolut, which makes merchant-based categorization straightforward.

We copy our data each month and update these categories in Zefire app. This helps us track whether our lifestyle is inflating in certain areas and monitor our progress toward financial independence. We also track which expenses are covered by our monthly withdrawal amount (based on the 4% rule) and which are not.

Simplistic, Yet Effective
Our approach may seem overly simplistic to some, but we believe in starting small. It’s better to stick with an easy, manageable system that you can maintain consistently. Over time, you can fine-tune it and add more precision as needed.
When you’re ready to take your expense tracking to the next level, you can always refine your categorization, start budgeting by category, or even manually track each expense — if that works for you. Check Zefire Demo Here