How and Why to Keep a Money Journal (+ a Template)
If we’re being honest, most of us have no idea where our money is going.
Many of us don’t want to look because we’re afraid of what we might find. When I first started keeping a money journal, I found out that I spent $200 per month on frozen yogurt. I was shocked. That was $200 per month and $2,400 per year that I’d much rather be allocating somewhere else.
Even when we want to know where our money is going, technology makes it really easy to stay in the dark. Think about it. We hop in and out of Ubers without ever actually paying, we click a button on Amazon and things are delivered to our doorstep, and we swipe credit cards which feels a lot different than paying with cash. Imagine buying a pair of jeans with a credit card versus handing over all those twenty dollar bills. There’s no comparison!
Why keep a money journal?
While ignorance might seem like bliss, it’s actually not. Not knowing what’s happening with our money is usually much more stressful. Not only do we worry anyway, we also can’t really do anything about it because it’s not quantified.
When we spend our money unconsciously, it often goes to things that aren’t important to us. We don’t have the opportunity to align our spending with our values and use it on the things that will bring us the most joy.
We may be wasting our money on things that we don’t want or failing to hit our goals that would have otherwise been within reach. We are at the mercy of our spending rather than in control of it. There’s no power in that and it’s very preventable.
One of the most simple yet effective solutions to this problem is to start keeping a money journal. When we write down what we spend, magical things happen. We become aware of and reconnect with our spending. Here’s how to keep a money journal and actually stick with the habit.
Keep it simple.
When we’re building a new habit, we want to make it as simple as possible. All we need to do to keep a money journal is to write down the item and how much it costs. For example, socks - $15.
You can also opt to include income. Most of us are much more aware of our income than our expenses, but it can make it more fun to track that, too.
Here’s a money journal template to make it as easy as possible for you to start.
Make it easy.
We have a tendency to make things harder on ourselves than they need to be, especially when it comes to our money. Keep your money journal in the way that will be easiest for you. If you enjoy writing things, keep a journal with you. If you know that won’t work, keep it in your phone.
You can use an app as long as it allows you to enter your expenses in manually. Apps that sync with our expenses can be helpful for spending recaps but unless we have to enter in our expenses it’s more of the same, and keeps our spending out of sight, out of mind.
The results.
Everyone experiences different revelations from keeping a money journal. The money journal makes us really aware of our spending, much like a food journal. We might decide not to buy something because we don’t want to write it down, or we are shocked to see so much spending in a category that’s not important to us. Once we’re conscious we naturally start making different decisions, and it usually doesn’t feel hard or restricting because we are choosing something we want more instead.
The point of the money journal isn’t to punish ourselves for our spending. It’s more like playing detective. We want to figure out where our money is going and decide if that’s how we want to be spending it. If not, that’s okay. We can adjust.
Some tricks if it’s not working.
If keeping a money journal sounds like the last thing you want to do, I recommend doing it even more. The more we don’t want to do it, the more we have to gain.
Just like with any habit, we’re going to forget to do it. That’s okay. We want to make sure not to give up on ourselves as soon as we make a mistake. If we forget to keep our money journals, we can try to remember what we missed and otherwise pick up where we left off. The point is not to have a perfect recount of our spending but to become more conscious and aware.
Ideally, we track our expenses in the moment when we’re spending money. For example, you buy lunch and then add that to your money journal. If that’s not working for you, try to do a daily recap at the end of the day or start your morning off with the previous day’s journal. It helps some to use calendar reminders or to put a note on the computer or phone until the habit is formed.
Rewards can also be helpful. It might sound silly but we work really well with rewards. You can have a daily reward for keeping your money journal or even a weekly reward if you keep it for a certain number of days. The reward doesn’t have to be fancy. Sometimes checking a box or putting a smiley face in your journal is enough of a reward to have you want to do it.
You can also enroll a money journal accountability buddy for check-ins. Accountability really works! Even when we’re not feeling up to doing something, we do it because we know we have to face our money buddy and because doing something with a friend is always more fun.
How long to keep your money journal.
At first, I recommend keeping a money journal for a month. If that sounds really daunting, go day by day. We want to break down any steps that feel too big into smaller steps that feel more manageable.
Some people love keeping a money journal and choose to do it forever. If that’s not the case for you, after a month, you can stop tracking everything except areas where you tend to spend more than you like. For example, if you tend to spend more than you like on dining out or shopping, you’d continue to track those areas to keep yourself accountable.
If your spending ever starts feeling out of control or you’re not sure where your money is going, go back to keeping the money journal until it feels more clear.
TLDR / To sum it up.
Most of us have no idea where our money is going and that’s a problem for our peace of mind and our goals. One of the easiest ways to reconnect with our spending is with a money journal. I put together this money journal template for you to make it as easy as possible. To keep a money journal you write down what you spent and how much it costs.
Make it as easy as possible to keep your money journal because the most important thing is that you actually keep it. If keeping a money journal is the last thing you want to do, I recommend doing it even more. The more we don’t want to see where our money is going, the more we have to gain from it.
If you’re having a hard time keeping your money journal, try calendar reminders, rewarding yourself, or getting a money accountability buddy. It takes time to build new habits so don’t give up on yourself as soon as you make a mistake! This new habit is a worthwhile one!