We always hear and read on personal finance sites or Facebook pages how powerful keeping a budget can be. But most of the time, managing our finances can be a daunting task for many of us. It is important to know how much money you spend on what purchases when writing up a budget. Having a spending journal is a substantial way to add up and or itemize expenditures.
Without further ado, let’s learn the importance of keeping a spending journal and how to use it.
THE IMPORTANCE OF KEEPING A SPENDING JOURNAL AND HOW TO USE IT
Spending Journal: What?
According to Quicken, “A spending journal is a visual aide that lets you see exactly where your money is going. By noting what you spend every time you stop for your morning latte, go out to dinner or cruise the grocery aisles, you’re creating a record that will, over time, answer the question: Where has my money gone? Some people choose to enter everything in their journals, including rent and utilities. Others just keep track of discretionary spending, which can take a toll on your bank balance if you’re not careful.”
Spending Journal: How to Keep?
Contemporary time allow us to have over one way to go about keeping our spending journal. We have the old-fashioned way which is a pen and a notebook; and the high-tech way which we can carry on our smartphones, tablets or laptops.
I keep both. It is easier to brainstorm on pen and notebook the expenditures I made and the monthly obligations I needed to pay. It is easier and more convenient to use the note application on my smartphone if I needed a quick glance on my budget while at a grocery store or any public places I go to.
While writing every expenditure I have, I write the date, amount, and the description. I don’t just describe what I purchase. I also include my thought about the purchase I made. Is it something I needed, a want or a junk purchase. This kind of practice is a great way to get to know yourself better and be superb at becoming more aware on the things you are spending your hard-earned money with.
If you are becoming more aware of your spending, you can learn where you can cut your budget to spend less and save more of your money.
Spending Journal: Why keep?
Whether you have debt that you need to pay off or you plan to save up for a larger purchase like a car, a spending journal can help you come up with a workable budget and meet financial goals that you set for yourself.
Think of a spending journal as a map to a certain destination. How can you get to a certain place if you don’t know where to go? The simple answer is that you can’t. You would get lost, unless you had a map.
In this way, a spending budget can allow you to reach a monetary goal by helping you change your spending habits. When you have successfully tracked all your purchases, you can begin to alter your spending habits as needed. I have found it very eye-opening and empowering to know exactly where my money is going every month.
Spending Journal as a Permanent Practice
Keeping a spending journal creates a positive impact in our lives. Because we become more aware of how we spend our money, we can now create a strategy to increase our wealth and achieve our financial goal which is FREEDOM. Having financial freedom means fewer worries on how to pay our bills and obligations. It means more productivity in our work and a healthier us.
Wouldn’t it be nice if the time comes where we worry a little to nothing at all on how we can pay our bills? Wouldn’t be wonderful if the only problem we will have is how to help others with the blessings we have?
No matter how regular or irregular our income, a spending journal is a must. A log of every purchase we make can help us cut down unnecessary spending and we can create a plan for lapses or emergencies in our income.
We may not be keeping a log of every expenses and purchases we have in the beginning, but as we created a hobby of tracking our expenses, things will get easier overtime.
A spending journal is an effective tool we can use to assess out spending habits and meet our financial goals. We may or may not find the peace of mind that a spending journal can bring. It is up to us if we continue to create this new habit or not.