Sometimes it’s the simplest of things that can help you stay motivated and get your finances to a place that you want them. While there are all kinds of theories and devices that you can use, simply taking the time to keep track of what you spend your money on is a hugely productive habit to have. An easy and effective way to expand this financial record keeping is to begin writing a financial journal.
You Think Clearer
For the vast majority of people, they’re able to think more clearly when they have the opportunity to write out their thoughts. The result is that doing so can help you achieve your goals. It will also provide you with a better understanding of your current financial situation, and allow you to see the progress that you have made by looking back over entries as time goes by.
Your Focus Will Improve
Another wonderful benefit of journaling about your finances is that you’re able to better focus on a specific topic when you write it out. Think about it. Instead of having a million different thoughts floating around in your head, when you write, you’re able to zero in and concentrate on that one, specific issue you’re writing about. This focus gives you an excellent opportunity to evaluate that aspect of your finances to see if you can improve it in some way.
You Create Chronological Documentation
Our memories aren’t always the best when it comes to how and when you have spent money, but having a history of this can be extremely useful when it comes to achieving important money goals. When you journal, you create documentation of your spending habits and goals. This information can be a tremendous asset when you decide to analyze your spending habits and when you set future financial goals.
Your Journal Can Help Others
While it might not seem to be that big of a deal, your journal has the potential to be an incredible resource which can help teach your children lessons from your personal mistakes and triumphs. For those that aren’t shy, you can also help others by sharing it with people outside your immediate family. This has the added bonus that others can comment and help you with money issues or questions that you’re having problems figuring out solutions on your own. This is how many people use personal financial blogs as a journal to share their daily money experiences with debt reduction and wealth creation.
The question that most people have when a financial journal is first suggested is what exactly should they put in it. There is no exact formula that everyone should follow. It’s important for you to adapt the journal to meet your needs, but here are a few suggestions for those who aren’t even sure where to begin that might be able to help get that creativity going.
Create Your Financial Goals
In order to reach them, you really do need to create goals. Money goals are especially important for those who a looking for ways to become and stay financially sound. It’s amazing at how many people never sit down to actually create their financial goals, and this can be an illuminating process. By writing down your money goals, you not only have them there right in your face every time you open your journal to make sure you don’t stray from them, you also have the perfect platform to note your successes and what you did to make them happen.
Record Your Saving Money Efforts
Another great way to use your journal is to answer the question, “What did I do to save money today?” Use it to list all the things you did each day to save money that day. This should be such things as not eating out, biking to work instead of driving, or skipping a snack from the snack machine. Creating a goal to accomplish a minimum number of these efforts each day can help to focus on them. Just make sure the listed activities are something you made an effort to do and not simply something that you would have done anyway.
Record Your Making Money Efforts
In the much the same way you record your money-saving efforts, you should also record any efforts to make additional money. This extra money should be income that comes from sources outside your ordinary income. Writing in your journal that you went to work each day, while true, isn’t very exciting and is something that you would normally do. Use the journal to record the extra little snowflakes like selling an old desk that you don’t ever use or helped a friend move and received a $25 gift card for the effort. This can help you find even more ways to earn extra money in your spare time to move you closer to your money goals.
Create a Point System
Another thing to consider is doing something that will enable you to have some fun when writing your financial journal. One way to do this is to make a game out of it. You can do it in a variety of different ways such as creating a type of point system which is based on your income or your net worth. In this case, each dollar can be worth a point. Then you could make a variety of different challenges for the game. For example, you could make the goal be to earn more points the current month than the you did the previous month. In the same way, if your main financial goal is debt reduction, using this same game should result in a reduction of your debt each month. Another variation would be to set time periods to reach a goal that you wrote down in the goals section of the journal.
It really doesn’t matter in what form you keep your journal (a notebook, a bound journal, on your computer, create a blog), but it helps to do it in a form that you’re most comfortable with and which feels right to you. It also helps if it’s in a form that you’ll be able to access anytime you need it. You also don’t need to use a single option. For example, maybe carrying around a small notebook so you can write down things during the day will help you later place it in a more permanent journal or on a blog. no matter which way you choose, creating a financial journal should help you greatly increase your ability to control your financial situation.
If you keep, or have kept a money journal in the past, what are the biggest benefits that you found you derived from having it?
(Photo courtesy of Rory MacLeod)