Track Your Spending
Posted by Gail | Filed under Financial Literacy
Are you keeping track of the money you are spending every day? Why not? Do you think you’ll remember the coffee, the magazines, the candy bars, the bottles of juice, the lottery ticket, every time you pop over to the supermarket, the parking receipts along with and the myriad other things you dip into your wallet for every month? Research shows that mental math doesn’t work. Writing it down does.
Time to start a spending journal. The idea is to have a real-time reflection of your real-time money activity.
At the top of the first page, write the amount you have in the bank. As you go about your day, collect receipts for EVERYTHING you buy. Whether you use cash, debit or a credit card, ask for a receipt. When you get home, sit down and make your spending journal entries.
Every time you spend a penny, you deduct it from the balance.
Every time you get a penny, you add it to your balance.
Your spending journal will look like this:
Not only will your spending journal keep you in the know about how much money you have left in the bank, it’ll keep you conscious about what you’re spending. It’s so easy to just whip out a card and – cachunk cachunk – charge it. If you aren’t tracking your spending, you may find yourself facing a credit card bill that’s higher than you can afford to repay come the due date.
According to a study published in The Journal of Experimental Psychology, “…using a less transparent form of payment such as a credit card lowers the vividness with which one feels that one is parting with real money, thereby encouraging spending.” However, if each time you use your credit card, you write what you’ve spent into your spending journal, and deduct that money from your bank balance, you’re much more likely to stay real.