How often have you heard yourself say “I have no idea how I’m spending so much money?” or “I have no idea where my money goes every month!” If you’re like most people you’ll probably hear you or a friend utter those very same words at least a few times each month. Even if you’re a human calculator you’d be amazed at how those little expenses can slip past you and out of that $100 you went grocery shopping with you’ve somehow managed to come home with half a basket of food and $15 in change…which doesn’t add up.
The problem is that most stores are designed to make you spend money that you don’t actually want or need to spend. All those aisles have impulse buys in them and then you have those “convenient” coffee stores and quick meals or snacks too, and all of them are too easy to forget by far.
So the answer to this problem is to bring a small notebook with you and write down everything you spend in any given day – from a stick of gum to gas for the car. There are probably plenty of phone apps out there for this but let’s be realistic here – are you really going to update that app when you’re shopping? The answer is “No” but that little notebook in your pocket is a constant reminder that you need to be documenting your spending.
What you’ll find is that you’re spending money on silly things that you have absolutely no need for. Coffee is a financial killer for example. You know that $5 cup of coffee you get each day? That’s $140 a month you’re spending right there…but with the excuse that you hate cheap coffee right? What else could you spend $140 per month on? What other bill or debt could that pay off for you?
Keeping a “spending journal” is the only way you’re going to be able to highlight frivolous spending – like the coffee example above. You can take our word for it that your personal finances are full of more holes than Swiss cheese.