Start A Spending Journal To Find Out Where Your Money Goes

start-aDo you know how much you spend each day? Each week? Each month?

Most personal finance sites will tout the importance of tracking your spending, so you probably already know it’s a crucial step to getting control of your finances.

Typically this involves a spreadsheet, personal finance software, or at the very least, a binder with a list of expenses and categories. Having one of these methods in place is a great way to get your finances under control.

But, if you’re like me, sometimes you look at your monthly spending and wonder how in the world it all added up! It didn’t seem like you were spending that much…

Enter the Spending Journal

What exactly is a spending journal, you ask?

Let’s take food journals as an example. Many successful weight loss stories begin with the use of a food journal. You have to write down every single thing you eat in your food journal. Every little morsel. The forced accountability can keep you from eating that cookie because, well, you don’t want to write it down. Plus, a food journal can help you start to see eating patterns. Maybe you get a snack attack in the late afternoon – when you recognize this, you can plan ahead for a healthy snack.

A spending journal functions much the same way. When you write down every penny that leaves your wallet, you become more accountable and you start to see patterns emerge.

The spending journal forces you to write down the smaller spending that you may not be recording in your expense tracking method, especially if you are using cash. You know, that soda from the gas station? Yeah, that’s what I’m talking about.

A spending journal can show just how much the little things add up. And once you identify those things, you can figure out ways to eliminate or, at the very least, keep them at a minimum.

You can keep the journal for a week, a month, or a year. It doesn’t matter. The idea is to track your spending, at least for a little while, to find those leaks and correct them.

How to Start a Spending Journal

Get your journal. A small notebook will suffice or, if you must, stop by the dollar store to pick up a small journal. Make sure it’s small enough that it won’t be burdensome to carry around.

Even if you’re not a pen/paper type of person and prefer to use your smartphone, I would still encourage you to use the journal method, at least at first. Otherwise, you may have a tendency to forget to record purchases.

Keep it with you at all time.

Record spending as it occurs, or daily. But do it at least daily. If you choose to do it daily, keep your receipts or take a picture of them so you don’t forget. That’s the whole idea here, friends – to track the spending that often gets overlooked.

Evaluate your spending. At the end of a week, evaluate what you’ve spent.

  • Were you purchasing necessities?
  • Could you substitute something free or cheaper for the things you spent money on? (For example, could you take a thermos of coffee with you instead of buying one at the coffee shop?)
  • Could this spending be easily eliminated?

To get a really clear picture of your spending patterns, I would encourage you to keep the journal for at least a month. And, by all means, if you find it helps you spend less, continue to utilize it as long as it is useful!

After you’ve identified your problem spending areas and make changes to cut back spending, make sure you put your savings to good use. Don’t let that savings disappear into thin air!

Have you ever kept a spending journal? If so, how did it work for you?

29 thoughts on “Start A Spending Journal To Find Out Where Your Money Goes

  1. In this day of automated apps that track your spending, too many have lost the value of manually tracking your spending. My wife and I did it for 10 months in a row last year, as it was critical that we really understood our spending when finalizing our retirement budget and FIRE date.

    It’s amazing what you can learn by writing things down each day, then reviewing the numbers at the end of the month. We started challenging some expenses, and saved thousands as a result (e.g., we “fired” our insurance company after shopping around). Great reminder.

    1. Thanks, Fritz! It’s great that you and your wife did this to figure out where your spending was for FIRE. Great idea!

      I’m a bit old school in this respect…love paper/pen. I seem to remember things better when I physically write them down. Plus, it’s easy to miss small spending (like the coffee or a snack) – the journal can help identify patterns and leaks.

  2. A spending journal is a great idea. I’ve done it many different ways-a notebook, a printout, an excel spreadsheet, and now using a personal finance software (YNAB). I buy basically everything on my credit cards and it’s so easy to import all my transactions into software and be able to tell within a few minutes how I’m doing on my spending for the month. I believe that tracking spending is THE ONE most important fundamental thing in getting started in personal finance (way more important than budgeting).

    1. Thanks, Kathryn! I love YNAB! It’s a great way to track and budget, but is still flexible enough that it doesn’t feel restrictive at all. And, I’m with you on the spend tracking! I don’t have a “budget” in the standard sense, but tracking spending keeps expenses in line.

  3. We keep a spreadsheet, and have been doing it for over a year. A couple of things:
    1) We started during a spending freeze, so we had fewer transactions to record while we got in the habit. That helped a ton.
    2) I’ll put in a rough amount even if I don’t remember the exact amount of the transaction and don’t have the receipt in front of me. Then I adjust as i get credit card bills/bank statements. Make sure you’rereconciling your totals in your journal against other records.
    3) I like the spreadsheet because I can use pivot tables to analyze by month, by type of expense, etc. But if you’re using paper, make sure at some point you total up…you might be surprised at how some little numbers add up.

    1. Awesome, Emily! I love the idea of starting the tracking during a no-spend month! It would make the process so much easier. I’m having a no-spend month in January (and will be posting about it). Love no spend months for savings, but they’re also the perfect time to start budgeting, spend tracking, and lowering bills! Thanks! 🙂

  4. We don’t keep a spending journal but I think it might be helpful. Both my wife and I are naturally frugal and spend beneath our means. We have a general budget where we determine how much we should save and we don’t really worry too much about the rest. We’re probably too lazy to keep track and the apps that we’ve tried aren’t always accurate. I would like to have a better idea of our spending just so we can plug up some leaks and to also determine how much we’d need to live on (just in case we reach FIRE u know!)

    1. I’m much the same way, Andrew. I track our overall spending and we spend beneath our means as well. I also think we miss some of the spending, like the charges for less than $10 on the credit card – those little things often get overlooked. Those add up over time…plus there may be some patterns there that we aren’t consciously aware of.

  5. I’m a big fan of writing things down, but I’ve never kept a spending journal (although I do have a personal journal). For me, it’s just a little to tedious to record every single expense. It’s the same reason why I never used the fitbit app for the tracker a friend gave me for my birthday.

    Luckily for me, I use personal capital to get an overview of my expenses on a weekly basis. For me, it’s must much easier to keep track that way. However, I do see the value of writing down the expenses because it becomes much more “real” than looking at it through some app! Thanks for sharing.

    1. Thanks, Andrew! I think the spending journal would be particularly useful for those just starting out getting the finances under control. Writing it down may be a little time consuming, but it does force you to pay more attention when you do spend. I like Personal Capital as well, especially for looking at the big picture with monthly spending and net worth.

  6. This is great advice! I’m a huge fan of tracking where your money is going. As you say, if you don’t do this, it’s too easy for a lot of little expenses to add up to a big total over a month. And usually those little expenses aren’t very memorable, so if you’re not tracking it you end up at the end of the month wondering where that extra couple hundred dollars went.

    1. Thanks, Avery! 🙂 Exactly – those little expenses aren’t very memorable. I track monthly spending pretty religiously, but I still overlook some of the little purchases. And, you’re so right, they can add up to an extra couple hundred $$s. To me, that’s significant!

  7. Keeping a spending journal was hands down the best thing we did to start paying off our $600k in student loan debt! It definitely helps us spend less and it was helpful in creating a budget (the first one that we’ve been able to stick to). GREAT advice 🙂

    1. It’s great that it worked so well for you, Amber! Thank you! 🙂

  8. This is great advice, Amanda, especially before the New Year begins. Tracking expenses is one of the most important things we’ve done the last few years. We use the Expense Tracker Mr. Groovy created and it has helped us tremendously. I like that I can easily sort by categories and do comparisons. When we’re on the go or on the road I just make notes on my phone and we add those in, along with receipts, once a week.

    1. Thank you so much for sharing the Expense Tracker, Mrs. Groovy! Tracking is absolutely the best thing I’ve ever done for my finances too. I think most times, people are spending more on certain categories than they ever guessed when they aren’t tracking!

  9. This definitely solves one of the bigger problems with tracking expenses – dealing with cash purchases. I don’t use cash often so it’s easy to “forget” to log it. If I had a journal with me at all times it would make it easier, and I typically tell others to use a notepad in their phone to track cash purchases. I need to practice what I preach though as I haven’t consistently done it myself!

    1. That’s where I typically run into issues, DC. Those cash purchases are easily forgotten. I try to remember to get receipts for them, but it’s not always possible and many times I do not. That’s where the journal comes in most handy.

  10. I was just thinking aboht this last night. I said that I wanted to start tracking the reasons behind why I make a purchase so to speak instaed of focusing on the expense itself.

    1. The spending journal could help with this! I think we all tend to have spending patterns or triggers the journal could help us discover, if we really pay attention. Writing down the time of day, store, etc. may also help.

  11. I used to do this in an excel spreadsheet a long time back – literally tracked every single penny. This helped us understand our spending habits and make lifestyle / spending changes as required.

    Nowadays, we save a fixed amount every month up front. The remaining money is for paying bills and for us to spend on living expenses that are budgeted. If there is any money left, we put it into savings.

    We don’t track down to the penny – though sometimes I think I should.

    1. Thanks, Michael! Tracking spending is one of the best things you can do when you are trying to get control of your financial situation. I do think once you get a handle on the patterns and cut back on expenses where you can, you can let up on the reigns a bit. I’ve done that too, but find I’m more on top of it when I track down to the penny.

  12. This article is spot on.

    The difference in savings is like night and day for me. When I manually keep track of my expenses I save more money, plain and simple.

    1. Thanks, Harley! 🙂 The same is true for me. As long as I’m tracking, I do pretty good, but if I don’t track for a month, I tend to spend more.

  13. It’s great that you keep a journal. My son kept a journal for a full year. It was enlightening. It is amazing how easily you ‘lose’ money. It just ‘drifts’ away. 50p here, £5 there…
    With today’s ‘electronic’ money, it is so easy. Now with contactless cards, you don’t even need to put your pin , or sign a slip. TOO easy!
    The categories I like are
    – Non-essential

    So essential is food, heating, lighting
    Preferable is a wider variety of vegetables/meat, basically wider ‘choices’.
    Non-essential is meals out, alcohol, sweet stuff, casual purchases…

    We try to keep our expenditure to essential or preferable. The odd non-essential creeps in, (wine!),
    but in the wider scheme of things it is pretty minimal.

    1. I love how you categorize your spending, Erih! I started doing something similar after reading Your Money or Your Life – they suggest you rate your categories of spending according to your values and priorities. This helped me better evaluate our essentials, preferables, and non-essentials.

      I agree, it is definitely too easy to spend money in this day and age. Not actually physically seeing the money leave your wallet creates a disconnect that can become detrimental to financial health.

  14. Amanda, I think this method is where Jenny and I need to go next to get a good grip on spending in something approaching real time. What I’m doing now is looking at it each month end and bouncing the various categories against our budget. I do that via an online categorized credit card statement. We put 99% of our monthly out of pocket expenditures on that card, so it captures things nicely.

    BUT, it is a look in the rearview mirror and except for a gut feel that we might be going over budget during the month, it is not convenient to do that tally for the month on the spot.

    I’m not a big fan of notebooks, but I’m going to look into some smartphone apps or method that we can use to track as we go. That will help both of us make better decisions through the month and prevent a surprise that we blew a portion of our budget.

    Great article!

    – Jeff

    1. Thanks, Jeff! Yes, this is exactly what the spending journal is meant for! I sometimes have cash leaks…I record all of the spending on our credit cards pretty easily, but the small cash purchases get easily overlooked. I know there are many apps out there than could help you out. The one most familiar to me is You Need A Budget – sounds like a budget, but it’s also a great way to track every penny!

      1. Thanks, Amanda. I’ll check it out!

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