It may sound like a very simple question, but do you really know where your money is going? An excellent way to find out is to keep a spending diary. It’s very easy to do and won’t take much time or effort, but it can really open your eyes as to where your hard earned cash is disappearing to.
Many people only have a general idea of what they’re spending on a weekly or monthly basis and this idea may turn out to be quite far from reality. It can be frustrating when money seems to fly out of your account, without anything to really show for it. Pinning down exactly what you’re spending on will mean you can review your expenditure and see which areas you can improve or cut down on.
It doesn’t have to be a complicated exercise. All you need is a diary or notebook that’s small enough to fit in your pocket or handbag. Make sure you keep it with you at all times, and make a note every time you spend something.
Don’t be tempted to leave out items that you feel are too small or insignificant. Include everything, as the small purchases add up quickly. Also make sure you include the cents, don’t fool yourself by just recording round amounts. For example, if your daily latte costs €2.49 and you were to write this in your spending diary as just €2, over 4 weeks your total cost would be recorded as €56, when the actual cost would be €69.72 – An extra €13.72.
Try to keep up your spending diary for at least a few weeks to a month. At end of the period, tot up your expenditure for a clear picture of how much you’ve spent and what you spent it on. You may be surprised by the results.
Now you can review your spending and make changes where necessary. Having to actually write it down each time you spend money can make it seem more “real”, especially if you tend to use cards rather than cash. It may also help you think twice about impulse purchasing.
Knowing exactly where your money is going can help you feel less stressed about your finances as you then have more control. Once you have a handle on exactly how much is going out of your account, you’ll find it’s much easier to make sure your money isn’t just slipping through your fingers.