Keep a Money Journal
Why Writing Down All Your Expenses Will Help You Save Money
Tracking your expenses in a journal will help you not only determine where you're spending too much, but also, how to re-allocate that money.
A soda here, a pair of Prada flats there…big expenses or small, you need to track them all. And what you’ll find could surprise you. One pair of designer shoes may not be the real culprit in your battle to spend less. All those small purchases are what really add up.
Why You Should Keep a Money Journal:
- You’re forced to write down every single expense. So much for a shopping marathon. Your hand will get tired faster than your feet! If you make yourself jot down everything you buy, you’ll become much more aware of what goes out of your wallet and into your shopping bag.
- Write a detailed list. Don’t just put down, "bought a latte" and move on. Write why you bought the coffee drink, how it made you feel, what prompted you to stop and purchase it and what your mood was after you consumed it. Think of this exercise as a financial diary. Only, we’re not just talking about money here. Emotions play a large part in why we spend. If you’re forced to look at those expenses on paper, you’ll begin to examine your own behaviors and what led to those buying decisions.
- Probe your emotions. This may have started out as a financial tool to get you to stop spending so much, but it might end up becoming a way for you to learn more about yourself. After you’ve tracked your spending for a couple of weeks, look at the areas where you buy the most. Do you spend more on food, clothes or electronics? Is every purchase planned or do you buy on impulse? Where do you think you could cut back, even on necessities? If your grocery bill is unusually high, consider planning your menu around coupon deals, or shopping at warehouse clubs. If clothes are the problem, you might be paying too much for designer apparel, when many discount chains offer much the same items at steeply discounted prices. Finally, is your electronics purchase a "need to have" type of item, or are you simply trying to keep up with Joneses?
Bottom Line: Looking at why you bought something is just as important as what you bought. By keeping a money journal and tracking all your expenses, you’ll begin to see a pattern emerge…a pattern you may not like, but one you can stop by examining the motivation behind your buying habits. Once you do that, you’re well on your way to re-prioritizing your spending.
The copyright of the article Keep a Money Journal in Consumer Education is owned by L. Marie Dubuque. Permission to republish Keep a Money Journal must be granted by the author in writing.
