So what exactly is a spending journal? A spending journal is where you keep track of all your daily expenses including the .25 cent pack of gum you bought. It may sound tedious at first, but I guarantee you that you’re in for a shocker at the end of the month.
When I first realized I needed to keep track of my budget, the first thing I did was to look back at all my banking transaction to see exactly what I was spending money on. It’s crazy how my daily dose of caffeine at Dunkin Donuts could amount to so much! After I realized how much money I was throwing out the window, I decided to keep track of every single dollar I spent every day for an entire month!
When you first begin your spending journal, spend money as you normally would. Keep in mind that you’re not trying to stick to a budget at this point; you’re simply trying to figure out where exactly your money is going every month. At the end of the month, categorize each transaction into its own unique bucket to see how much money you’ve spent in each category.
Now this is where the fun part begins. You’ll start to realize which categories you’re overspending the most. Of course you have your monthly fixed costs such as your mortgage or car payment, but take a closer look at your variable costs such as transportation, groceries, coffee, or eating out at restaurants. Control what you can, and forget the rest.
Once you’ve completed your spending journal, you now have a basis of how to create your monthly budget since you know exactly how much you’re spending in each category. Figure out a game plan on how you’re going to stick to your budget. If you allocated $200 in eating out at restaurants, how are you going to achieve this? Does this mean you’ll only eat out twice a week? Or perhaps only eat out on weekends.
Pro Tip #1: Sometimes it helps to break down your monthly goals into smaller weekly goals.
Pro Tip #2: Make sure you allocate some money for your entertainment. Look, trying to stick with a budget doesn’t need to be a torturous task. There’s no reason you have to give up on your social life when trying to stick with a budget.
At the end of the day, your budget is going to dictate your financial future. It’s the backbone of the infamous saying, “Spend less than you earn.”
Author Bio: Kevin is one of the founders of SpringCoin and a certified credit counselor with the NACCC. SpringCoin helps consumers lower their monthly payments while helping them establish healthy spending habits. Previously, Kevin started his own affiliate company for one of the largest debt settlement companies but later lost faith in the industry after seeing poor results, lack of transparency, and lack of long-term financial impact. He spent the later part of his year fighting against these debt settlement companies to set things right with his clients.