Use your cell phone as a budgeting tool

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Resisting rich foods is a good way to control weight gain. Similarly, the best way to manage expenses is to go on a budget. You’ve heard the strategy of writing down every expense, even $2 for a bottle of water, to ferret out money wasters. But that can require keeping track of a bunch of receipts. To avoid the mound of paper, some people fit budgeting into busy lives with a tool they use already — their cell phones.

Budgeting on the go

Some free services enable you to submit your expenses on the go, using your cell phone to send a text message, an e-mail, a voice mail or, for Twitter users, a tweet. The information is stored in an account that you can access via the Web from anywhere, then export the data to QuickBooks or Excel. Road warriors can also use such services to track mileage without the need to keep a separate notebook or transfer the numbers from a scrap of paper to a spreadsheet.

For instance, about 30,000 people use Xpenser to record their purchases as they make them. Setting up your account takes a few minutes on the Xpenser Web site. Then using it is as simple as texting “exp lunch 39.11 with Jane.”

Paula Luaces of Miami uses Xpenser to ensure she does not overspend in any one category. “I like its multiple entry methods. I can log in to my secured account and enter expenses manually. I can text my expenses as they happen while standing in front of the cashier or I can e-mail them,” she says. “I tried other systems before, but they only allowed me to enter expenses online, which forced me to take notes on a piece of paper for later.”

Necessity, the mother of invention

Parand Darugar of San Diego created Xpenser for his own use after his wife informed him he was $20,000 behind on submitting expense reports for his frequent work-related travel. “Expense reports were the bane of my life. I hated sitting down with large stacks of receipts at the end of the month and trying to remember where I was and when,” he says. After he started using it, his friends wanted in. Then he opened it up to the public.

Another service, Texthog, works in a similar way and has features such as including tags and categories when you send your expenses to help you organize transactions. Philip Tadros, founder of a Chicago-based Web design and social media firm, started Texthog, which has about 73,000 users, to allow people to leverage their love of text messaging. “Everyone is so quick and comfortable with texting, I thought they should be able to use it to post expenses, make budgets and analyze their money on the go,” he says.

Both services have free plans that include expense tracking, an unlimited number of reports, and the ability to set budgets and bill reminders. For users who want enhanced features, such as subaccounts or longer data retention, Texthog offers paid plans, and Xpenser soon will.

How to budget with your phone

Setting budgets via Xpenser is pretty simple, using the service’s “reports” feature. For example, you can set up a report online called March 2010 and set the nickname for it as “mar.” As you head out of the grocery store, you can text to Xpenser, “exp 38.00 groc mar.” You’ll get notification that the expense was received and you’ll get the total for March so far. You’ll know instantly when you’re nearing the monthly limit you set for yourself, so you can skip the temptation to head to the mall.

Others use these services to track hours or mileage. Jeff Lehman of San Diego and his fellow search-and-rescue team members for the San Bernardino County sheriff’s office must report the number of hours spent on each activity such as searches, rescues or training. He began using Xpenser a few months ago to track his time and his mileage and gear expenses, which are tax deductible. “After carefully keeping track of hours for the last few months, I realized that I have been underreporting my hours for many years. The Twitter interface allows me to update them on the fly and easily,” he says.

It’s a good idea to keep a copy of receipts for tax-deductible expenses. Xpenser and Texthog enable you to do that by simply taking photos of a receipt with your cell phone’s camera, then sending it along with the expense information. Then you can throw the receipt away if you wish. Xpenser allows this on free accounts; with TextHog, only paid users (plans start at $7 a month) get this option.

Those who aren’t fans of texting or who don’t spring for unlimited SMS/texting plans can still use their phones as budgeting tools. Both programs allow you to submit expenses via e-mail or Twitter. Lehman prefers a Twitter app made for his BlackBerry. “I never use SMS because it’s a big rip-off,” he says.