If you haven’t been motivated enough to use budgeting software to track your finances yet, try this simple experiment. Ask a friend to join you and write down everything that you spend for 1 week, and then compare notes at the end.
Upon completing your week, if you were honest about your spending, you will both likely acknowledge that writing down what you spend has some powerful implications.
It’s a very vulnerable feeling to show someone exactly what you spend your money on. It’s unnerving to share because it opens you up for so much criticism. However, I think it’s a great experience overall and one that has numerous positive results.
1. It makes you want to spend less.
When you have to write down what you spend (and show it to someone else) it makes you think twice about actually buying it. Do you really want to write down yet another tall mocha latte? Do you really want to fess up to purchasing another pair of shoes? When you write it down, you have to really want it. It forces you to pay attention to everything that buy, and it keeps track of all the cash that effortlessly slips through your fingers.
2. It creates another record.
Writing down what you spend is good insurance. If you have a problem with your credit card or your debit card statement, you have receipts and another record to back you up. I’m not saying that a credit card company will take your notes as fact. However, it’s definitely a starting point to work with in the unfortunate incidence of fraud.
3. It keeps you organized.
Many people have a hard time keeping track of receipts, and they are often left wondering where their cash went! It only takes a few minutes to remember that you contributed to that office birthday party or that you just had to buy some popcorn at the movies. However, when you write down what you spend and you get into that habit, you always know where your money is going. This contributes to an overall healthier financial outlook.
4. It keeps you accountable.
Writing down what you spend is a great way to keep accountable if you are trying to cut back or stick to a strict budget. This strategy is even more effective if you have a partner to go through the process with you. Your partner could be your spouse, but they could also be a “money buddy” or a friend. You should meet with this person regularly to compare notes and seek advice on how to take the next steps.
5. It saves you money.
Above all, writing down what you spend is a great way to save money for all the reasons listed above. You’ll spend less, you’ll stay accountable, and you’ll be more organized than ever. Share what you’re doing with your friends and family and encourage them to do the same. While it might seem like a daunting task in the beginning, it’s actually much easier than you might think, once it becomes a part of your daily routine.
Now…Upgrade to an Electronic Budget!
Now that you understand how valuable it can be to track your spending, why not take the next step and track all your finances for the year? You can get started with Personal Capital. It’s a great software for beginners.
In case you need some more encouragement, here’s why you have to do personal bookkeeping to achieve and maintain financial success. PERIOD.
Do you want to maximize your income and invest your savings in order to increase your net worth…and maybe even retire early?! Well then, it all starts with a budget. You can read Personal Itemized Budget Categories & How You Wrangle Them with My Budget Template, for a simple free budget template download!