Creating a Spending Journal: Tips for Budgeting

spending journalWondering where your bank account has gone?   Individuals and families who don’t do the best job in the budgeting department can arrive often move along through a vicious cycle of living paycheck to paycheck, because they’ve neglected to budget their money. If you’re wondering how your money seems to disappear shortly after each perhaps a spending journal could be the answer.


The Useless Budget

Your budget might be useless.   If you have no knowledge of how you’re spending money, where it’s going, and how your finances look by month’s end (budgeted amount vs. actual expenses) â“ you might be wasting your time with your current budgeting strategy.

A budget is something like a credit card statement, so to speak.   In other words, you should not just update your budget, fill in the expected category values with idea numbers, and then even fill in what you’re spending.   You have to put it into action: your budget should serve as a guide, a conversation❠of sorts between you and the numbers.

It may seem a little odd to explain it in that way, but it’s true.   If you aren’t engaged with your budget, looking through the numbers and seeing how you’re doing, you might be wasting your time.   The budget serves as a guide, giving you perspective into your income, expenses, savings, and furthermore.


Using the Spending Journal

Whether it is or isn’t part of a formal budget, a spending journal can give you that perspective.

Imagine if you wrote down anything that you spent money on â“ from your groceries to your morning visit to the coffee kiosk, and even your actual bills â“ all noted in your spending journal.   And add the option to attach a category onto the purchase, which would allow you to itemize and sort the payments.   What would that do for you?

At the end of the month, you would have a list of all the purchases you made, from the expected ones to the compulsive ones that undermine your budget. This is the idea of the spending journal; it is a simpler form of the budget⦠and it could be all you need if keeping track of income isn’t complicated.

As you look at your spending habits, you’ll be able to find areas of improvement.   Maybe you’re spending too much on coffee in the mornings, or eating out (always an area with potential.)   This is the type of tool that can keep your spending habits in check, and allow you to concentrate on your saving/investment goals, and whatever is pressing at the moment (debt, buying a home, etc.).



Well, of course you can keep the journal as a true journal.   Those that prefer the old fashion way of doing things can still log items in via the pen and notebook.

Technological individuals have a number of options.   You could keep your spending journal on a spreadsheet or get a free personal finance budgeting program. There are a number of free options online, or available through software you can install on your computer. If you have a smartphone, you could easily keep track of your expenses when you’re on the go â“ very convenient, as you can imagine.


It’s really up to you!

Regardless of how you keep a spending journal, this powerful tool can offer plenty of potential.   It’s up to you as to how useful it can be in your financial situation.

How do you plan your spending each month? Do you find that a set-in-stone budget is a must-have for financial success? Share your tips with us â“ leave a comment below!

(The following is a guest post by Lisa at  Wallet Watcher, an Australian personal finance blog created to help readers figure out how to save money and watch your own spending habits.)