Today’s topic for Financial Literacy Month 2014: Your Finances from A to Z is Journaling. Specifically, how to create a journal to track your spending.
For the month of April, we will be bringing you daily posts centered on our personal finances – saving, making and managing our money.
One of the first steps to create a personal budget is to know how much you spend on a regular basis. This information helps you to determine what areas you can cut back on or eliminate all together. Tracking every dollar you spend for a week can be an eye-opening experience! To get a true idea of what you spend, I challenge you to track your spending for a month to help you with preparing your personal (or family) budget.
It may be tempting to create an Excel spreadsheet, plug in the numbers and keep it moving. Don’t do it! Purchase an inexpensive notebook and commit to writing down everything you spend money on (gas, eating out, vending machines, etc). Make sure you categorize your items (ie – food, automobile, household expenses, etc) to help with reviewing the information later.
For the first week, to help get into the habit, take out your journal and write down every time you spend money. As you get used to tracking your money, you can save your receipts and transfer the information in at the end of the day.
Do not get discouraged if you forget items. It will take time to change your habits of spending and accounting for cash. When I first did this project, I was FLOORED by the amount of money I spent at the vending machines in my office. If I snacked just once in the morning and again in the evening – I was spending a $1.60 for each trip. That quickly added up to over $30 a month!
Journals to track your spending are a great tool to help control your personal cash flow. It does require commitment and patience, but the results make a great addition to your personal financial action plan.