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Saving Money using a Spending Diary

By plrprousers | June 14, 2009

Are you the type of person who is a savvy money manager?Or, are you normally struggling to scrape by till your next paycheck? If you are still living paycheck to paycheck then now is the time to grab control of your financial situation, plan your spending and save money via a high interest savings account.

You’ll never know what financial emergencies you might encounter along the way – which is why it helps to establish a savings account. This is a secure way of saving money in a bank, with the added bonus of earning a particular percentage of interest for the amount that you will deposit.

Saving Money 101: How to Create a Spending Diary, Keep Tabs of Your Spending & Get a Head Start with Your Savings

If you’re like the average person, there would be a lot of instances when, after withdrawing $100 from the ATM machine, you will wonder where all the money went about a day later.

This normally happens when your not keeping a good track on your spending patterns. This is not a good idea if you are serious about building your savings account that you have opened.

So what’s the best way that you can use to get a head start with saving money? You can do it the old-fashioned way: by creating a spending diary, keeping track of your spending habits and adding money to your savings account so that you can start saving money.

In a nutshell, a spending diary allows you to track where you money has been spent and allow you to see where improvements and cut backs can be made to save money. Going back to the example mentioned earlier – if you did take out $100 from your savings account through an ATM machine, you will see where that amount actually went.

After withdrawing the money, write down on your spending diary which items you bought with that $100. Did you spend it to buy coffee or a magazine on your way to work? Did you use it to buy food? Or did you have an ‘attack’ on your conscience and you actually put that amount towards your savings account?

If you’re spending money via a debit card instead of cash then you can double check your spending by viewing your bank statements with online banking.

Once you have developed the habit of writing down on your spending diary the ins and outs of your finances, you will be able to see which aspects of your spending you can actually cut back on. If you see that you’re spending too much on eating breakfast outside of the house on your way to work, you may want to pack a hearty sandwich for yourself. Better yet, wake up earlier and enjoy the financial and health benefits of eating a nutritious breakfast at home.
Once you stop wasting money on items you don’t require you will find your savings can start to increase at a rate faster than you expected. This way, you will be able to determine which purchases are wasteful and which ones should be once-in-a-while indulgences.

In addition, your savings account will be given a boost because the money that you will be able to save from the unnecessary purchases can go towards saving money instead. It might be a bit tedious and difficult at first to keep a spending diary. It might seem like a chore at first to keep track or your spending but once you get used to it you will find it easy and enjoy watching your savings grow.

Article by Richard Greenwood who runs a number of sites to help people compare credit cards and other banking products and then apply online.

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