Money often has a way of disappearing right before your eyes so if you want to know where it is going, follow it by keeping a money journal. I suggest that all of my clients do this at least once a year to see if their spending habits are still on track or if they are running free.
To get a good handle on where your money is going you will need a journal, check register, or notepad. (Your cell phone is also a great place to make daily notes but you will need to transfer them to a hardcopy to complete this exercise.) Give yourself a month to complete this exercise. Then once you start, write down the following items every time you spend anything, even if it’s just for a coffee or chewing gum:
- the date
- the time
- what you bought
- the category it falls in (i.e., food, clothing, entertainment, charity, kids, parents, housing, etc.)
- the amount of the purchase
- how you paid for it
- how you were feeling before and after the purchase
This last item is very important because it can help you identify how your emotions play into your spending. At the end of each week add up the amount you spent in each category and compare it to what you projected or would like to spend in each category to see how close you are. And if you find that your money is not going in the places you want it to, try to make some adjustments the following week.
At the end of four weeks you should have a good idea of where your money is going and who is in control – you or your money. If it’s you, congrats! On the other hand, if it’s your money, I suggest you take a look at my new Squeeze book. It will walk you through the steps of taking control and taking charge of your money to achieve your goals. ps!