How Can Keeping a Money Journal Help You Improve Your Financial Situation?

How to easily keep a spending diary. [source/ Skint Dad]

But how does keeping a money journal feel? Is it a great opportunity for individuals to practice personal finance or is it yet another platform for bloggers to overshare their private life with the public?

A money journal serves as a log of your daily purchases and choices. Your financial habits and the details of daily living (both good and unpleasant!) are documented in your money diary.

In theory, yes a money diary does work. In practice, it also works.

Here's how to make one, why you should keep one for a week, and how it could help you get closer to your financial objectives more quickly.

Here are justifications for why you must immediately begin a money journal:

Read More

Learn to budget

By monitoring how much money you make and where it goes each month, you can make a budget that works for you. Compare the results of your initial budget with your cash flow after one month. Find ways to change your spending plan if you went over (or under) your budget in a certain area.

Spend less money

The fact that you will spend less money is one of the initial benefits. This happens naturally after keeping a spending record for about a week.

When you begin keeping track of your expenses, you quickly realize how much you spend and naturally start cutting back. Spending less will allow you to save more money, which you may then use to pay off any debts, like credit card debt, a mortgage, or a car loan and invest.

Each month, you may view your overall spending. It’s simple to observe if your spending has suddenly increased, so you may pledge to cut back a little the following month.

Aids in the organization of home administration

How much should I budget for transport? How much more expensive is this year’s insurance renewal quotation than the previous year’s? How much is going as tuition fees for your kids? A spending diary will help track when and how much money you should spend for less regular jobs and once-a-year costs.

Help you recognize your wins

How often have you looked back on the previous month and felt uninspired or perhaps forgotten the experiences you shared, created, or learned from? A money journal will allow you to keep track of your everyday activities and enjoy your progress that month and all of your victories along the road.

You can buy an A5 book or just use your phone or laptop. Embracing technology helps us track everything from a single search if there is need to review past transactions.

Also read: How to earn extra income without quitting your full-time job