How to Keep a Money Diary For Saving
02 December 2014
Keeping a journal has often been advised for anyone wanting to recollect their introspective thoughts and experiences. However, it’s also possible to use this form of diarising to keep account of spending so that you improve the health of your financial profile. Why not challenge yourself to keep a money diary for a month and then look back on where you’re actually spending your money. This retrospective view can offer insight into where you can start to save on your monthly expenditure.
But where to begin? Here are 5 tips for keeping an accurate financial journal of your daily activities, income and expenses.
Sweat the Small Stuff
Record absolutely every piece of income and expenditure, including that quick coffee with a friend or that fruit juice you bought with lunch. It’s often the little things that we don’t make a note of that add up over time. It can often seem as if your income is just disappearing and without the record there’s no way of identifying, then curbing, your spending habits.
Don’t lie to your money diary. Omitting or falsely recording your transactions won’t help you to hit your saving targets or retire comfortably. It’s critical to the fundamental success of the exercise that you’re extremely honest with yourself in terms of capturing all of your expenditure. You can’t manage what you don’t know.
You’ll need to make daily entries in order to truly see the value of recording every cent of income and expense. If you try to recap at the end of the week or month, it’s likely that smaller purchases here and there will remain unrecorded. This will leave a question mark as to where your money is actually going instead of into savings.
Start Trend Spotting
Once you’ve kept a record of your spending habits over a while, you’ll begin to notice certain patterns arising. You’ll soon be able to identify where you tend to spend your money unnecessarily. It could be eating out at restaurants too often or taking a few too many indulgent road trips. Once you know, then you can challenge yourself to reduce these expenditures.
Use your money diary to record your goals and the rewards that you’ve assigned for hitting certain financial milestones. Make your prize relative to the difficulty of the challenge. Also, find inspiring stories or quotes from blogs and social media, remind yourself of these in your diary daily to keep motivated and on track.
For more information on money-saving tips, read our article on “How to Save Money as Newlyweds”.