Do you know how much you spend each day? Each week? Each month?
Most personal finance sites will tout the importance of tracking your spending, so you probably already know it’s a crucial step to getting control of your finances.
Typically this involves a spreadsheet, personal finance software, or at the very least, a binder with a list of expenses and categories. Having one of these methods in place is a great way to get your finances under control.
But, if you’re like me, sometimes you look at your monthly spending and wonder how in the world it all added up! It didn’t seem like you were spending that much…
Enter the Spending Journal
What exactly is a spending journal, you ask?
Let’s take food journals as an example. Many successful weight loss stories begin with the use of a food journal. You have to write down every single thing you eat in your food journal. Every little morsel. The forced accountability can keep you from eating that cookie because, well, you don’t want to write it down. Plus, a food journal can help you start to see eating patterns. Maybe you get a snack attack in the late afternoon – when you recognize this, you can plan ahead for a healthy snack.
A spending journal functions much the same way. When you write down every penny that leaves your wallet, you become more accountable and you start to see patterns emerge.
The spending journal forces you to write down the smaller spending that you may not be recording in your expense tracking method, especially if you are using cash. You know, that soda from the gas station? Yeah, that’s what I’m talking about.
A spending journal can show just how much the little things add up. And once you identify those things, you can figure out ways to eliminate or, at the very least, keep them at a minimum.
You can keep the journal for a week, a month, or a year. It doesn’t matter. The idea is to track your spending, at least for a little while, to find those leaks and correct them.
How to Start a Spending Journal
Get your journal. A small notebook will suffice or, if you must, stop by the dollar store to pick up a small journal. Make sure it’s small enough that it won’t be burdensome to carry around.
Even if you’re not a pen/paper type of person and prefer to use your smartphone, I would still encourage you to use the journal method, at least at first. Otherwise, you may have a tendency to forget to record purchases.
Keep it with you at all time.
Record spending as it occurs, or daily. But do it at least daily. If you choose to do it daily, keep your receipts or take a picture of them so you don’t forget. That’s the whole idea here, friends – to track the spending that often gets overlooked.
Evaluate your spending. At the end of a week, evaluate what you’ve spent.
- Were you purchasing necessities?
- Could you substitute something free or cheaper for the things you spent money on? (For example, could you take a thermos of coffee with you instead of buying one at the coffee shop?)
- Could this spending be easily eliminated?
To get a really clear picture of your spending patterns, I would encourage you to keep the journal for at least a month. And, by all means, if you find it helps you spend less, continue to utilize it as long as it is useful!
After you’ve identified your problem spending areas and make changes to cut back spending, make sure you put your savings to good use. Don’t let that savings disappear into thin air!