Personal Finance Advice

Keeping track of what you spend your money on is a good habit to have. Why not expand your record keeping and begin a financial journal?

The benefits of financial journaling

• You think clearer. People think clearer when they write out their thoughts which can help your success. This provides you with a better picture of your financial situation.
• It improves your focus. A person focuses more on a subject when they have to write it out. Instead of a million thoughts going on in your head, you can zero in on just one.
• It provides chronological documentation. Documentation of all you do and want financially helps tremendously when analyzing your habits and setting goals.
• It can be used to help others. Help your children learn from your mistakes and triumphs. And if you aren’t shy, share it with others outside your family. Many people are using blogs to relay their personal experiences in debt reduction and wealth creation.

What your Financial Journal should include

• Set goals to achieve financial success. We all need goals. Financial goals are especially important if we want to stay financially sound. Make sure you note when and how you succeed once you achieve these goals.
• How you save money. What did you do to save money today? Write down or list the things you did to save yourself money. This could be not eating out, carpooling, whatever. Just make sure it is something you achieved, not something you do anyway.
• How you make money This should be outside your ordinary income. Writing, “I went to work” is not very satisfying. Put something down like, “I sold that old desk I don’t ever use.” It could also be something like;” I helped a project by cutting costs by 2 percent.” This is what you would flag for later review to see if this actually got you more money by getting a raise.
• Create a point system. Have a little fun with your financial journal. Make a game out of it. Maybe create a point system based on income or net worth. Every dollar can be a point. The object of your game could be to earn more points each month than the previous. If your goal is debt reduction, every month your debt should get smaller. You could also set a time limit and connect it to a goal in your goals section of the journal.

You can keep your journal on a pad of paper, a bound journal, computer, PDA, blog, anything that feels right to you and that will be accessible when you need it. You can also use a combination of the above such as writing stuff down throughout the day on a note pad and then recording it more formally in your permanent journal at the end of the day. Any way you choose to do it, you can increase your ability to take control of your financial situation.

Image courtesy of athena.