How and Why You Should Keep a Spending Journal

Updated: August 17, 2022

Keeping a budget can be a powerful tool for managing your finances, but it is not always easy to make.

When writing up a budget, it is necessary to know how much money you spend on what purchases.

A spending journal is a great way to add up and even itemize expenditures.

What is a spending journal?

Essentially, a spending journal is a log of your total expenses over the course of one month. It could be longer than a month, but 30 days is enough to get a complete picture of your usual expenses.

When keeping a spending journal, it is important to record necessary expenses like rent and groceries and discretionary ones such as a cup of coffee or a meal at a restaurant.

Impulse purchases are particularly important, as they can quickly add up and drain your wallet.

How to keep a spending journal

There are two ways to go about keeping a spending journal: the old-fashioned way and the high-tech way.

Personally, I prefer the old-fashioned way, because all that’s needed is a pen and a notebook. My preferred journal is a Jofelo refillable journal when using a pen and paper. It is good practice to take the notebook and a pen everywhere to accurately track all purchases.

A more high-tech way to keep a spending journal would be to use a smartphone note application, or a similar application, such as Evernote. The important thing is using the method that works best for you, one that will allow you to correctly jot down all your purchases.

To get a more complete picture of my finances, I don’t just write down how much I spent.

I also include the date, a description of the transaction, and what I thought about the purchase. Describing the purchases I made allows me to create spending categories for my budget, and recording what I thought about my purchases is especially helpful when it comes to my discretionary spending.

If I know what I am spending my money on, I know what I can cut from my budget if I need to save up something else. That said, if I know how I felt about an impulsive purchase, I can understand why I decided to buy an item at the time I did.

Why keep a spending journal?

Whether you have debt that you need to pay off or plan to save up for a larger purchase like a car, a spending journal can help you develop a workable budget and meet the 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.

Should a spending journal be a permanent practice?

The permanence of this practice in your life depends upon you and your individual situation. If your income and necessary expenses don’t change much from month to month, you may only need to keep a spending journal once a year or so.

This practice is essentially a tool that you can use or choose not to use. You could use the journal to craft your budget and reign in your spending until you get the hang of managing your money, or you can use it to continually assess your expenditures.

If your income is irregular, you will greatly benefit from keeping a spending journal regularly. A log of your purchases as you make them can help you cut down on discretionary spending and plan for any emergencies or lapses in income.

In the beginning, keeping a log of all your expenses and purchases might seem tedious, but like any exercise, it gets easier over time.

You may find you like the peace of mind that a spending journal can bring you and decide to keep doing it. Whatever you decide, a spending journal is an effective tool you can employ to assess your spending habits and meet your financial goals.

This article is written and contributed by Lynnel D.

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  1. I agree Sir Fitz. Keeping a spending journal really helps especially if you’re a breadwinner because your money is not for you alone to spend & save. I’ve worked as a bookkeeper in a bank for 7 years and I know how important it is if you know how to manage your finances very well.

    I’ve been doing this even before but not on a regular basis because I already know where majority of my income goes. I used to write my cash flow on a 3-column journal. I also tried a mobile app Evernote.But I find myself more convenient on creating my own format in MS Excel spreadsheet. That’s the only time that I became regular and consistent in creating a budget & writing down my daily expenses because you can program it with formulas (automated calculations).

    It doesn’t matter how you do it, what’s important is for you to find a medium where you can do it religiously. If you can do it for at least 30 days consistently, then it can become your habit.

    It’s really of great help if you want to have a sense of direction to achieve your financial goals.

  2. We recently decided to revisit this practice due to the COVID-19 crisis. When my wife and I first became a couple, she went “nuts” keeping the “financial scorecard” accurate and detailed. She went crazy looking for that last peso that was unaccounted for until I insisted she take a chill pill and relax. Her motivation was to show me that she was not like a previous girlfriend-business partner who had very poor money habits. After our marriage, we settled in for the long haul, very comfortable that our budget was fully under control and we had plenty of extra for mad money impulse buys etc.

    Well, here we are after four wonderful years of marriage. We are still partially in crisis mode due to the pandemic of 2020. Our three local business operations are shut down due to the COVID-19 scare. We are fortunate to have our regular flow of off-shore income that we both had when we first became a couple. In fact, my night time trading gig did very well due to market volatility. In times of uncertainty and fear, market volatility runs up and that has a spillover effect on option prices. Since I am primarily a seller of options, not a buyer, my income increased.

    Why did we revisit our original budget plan and record sheets, closely looking at the numbers again? We needed to see where we could free up more cash as we laid out a new business plan. During the early days of the pandemic, we thought a business with no personal contact, mainly on-line was something we needed to explore. My beautiful bride had a certain lifelong goal but a brick and mortar version was never within reach due to the high startup cost. Thank you to modern technology, it is now possible to launch a “virus proof” version. Venture number four is now OPEN FOR BUSINESS and orders for products and services are already flowing in. Simple word of mouth has produced both individual and bulk orders. It will be interesting to watch this when other forms of promotion go live.

    The answer to the question in the previous paragraph is, we had to free up cash to build BIZ #4. Our existing three local business ventures are idle and waiting to re-open. NO income from a closed business. We were able to take a quick look at the original budget and spending ledgers to know exactly what we needed to do and where we could make cuts. I am a believer in quality food as I think you are what you eat. I would rather eat well and be healthy than visit my Doctor for pills to control blood pressure. I also refuse to let down the charities and those who depend on us in times of crisis. I am very happy to report, ALL of the things important to us were accomplished. There is nothing extra and nothing going into saving at this time but I am confidant that will also revert back to our original planning. Tracking your spending and a solid budget plan is very important, NO DOUBT ABOUT IT !!!

  3. I’m on the right track. I’ve been doing this since 2012. It helped me to project my cash flow which helped me to determine if I can afford future big purchase. It takes a lot of discipline to jot down expenses but it became my second nature eventually. I even suggested this to my sister and nephew

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