Imagine living without debt and all your desired luxuries brought to life.
Whether you’re worried about covering rent for the month or wondering how you blow through each paycheck so quickly, keeping a money journal helps you revolutionise your spending to become more financially aware.
A money journal is just how it sounds — a place for personal reflections and expense lists so you can make the best financial moves and decisions.
If you’re craving monetary freedom and mastery, here are six reasons to start a money journal today.
1. Track spending
The most obvious reason to keep a money journal is to track your spending, from income to payments.
When you jot down your deposits and expenses, you can notice habits and areas for improvement. For instance, are those daily coffee runs amounting to $25 a week? Perhaps you’ve made recent impulse buys or are paying for subscriptions you don’t use.
This awareness is critical for making wiser spending choices.
2. Create and work toward financial goals
Write down your financial goals — everything from planning for retirement to saving for a holiday and buying a house. Maybe you plan to have a wedding in the coming year or no longer want to live paycheck to paycheck.
For many, big-ticket items could be temporarily out of reach. For example, research indicates only one in 10 first-time home buyers can purchase a home amid skyrocketing housing prices.
Although milestones like homeownership may seem far into the future, making it one of your goals can inspire you to save more money and spend less.
3. Enhance budgeting
Just 62 per cent of adults can somewhat afford rising health care costs.
As groceries increase and petrol prices also rise, covering your most essential needs has become more challenging. A money journey teaches you how to budget to ensure you have enough to survive.
Do you know how much you’ll need every month and what it leaves over? This information prevents you from overspending on unnecessary things until you can pay for the basics. Budgeting will also help you work toward your financial targets.
4. Manage debts
If you have school loans and a growing pile of debt to pay off, your money journal can help you attain financial freedom. You can even make debt repayment one of your aims.
Go through your debts so you know the remaining balances. Also, review the payment due dates and when you must have them completely paid off.
Additionally, budgeting for the essentials and eliminating debt from your financial woes should be a top priority. In your journal, reflect on what you can do with your money and how you might feel once you remove your debt.
5. Make wise investments
Many women have passed on investment opportunities, growing up accustomed to meeting societal expectations of keeping a home and raising children. However, you can seize many prospects to secure your financial future. A money journal encourages you to put cash where it matters most.
Experts always say you can never go wrong with investing in real estate, but setting up retirement accounts is an excellent place to begin if you’re just starting.
How much would you like to contribute to those funds each month? Can you still afford to invest if you lose your job? Journalling and planning your investments will allow you to assess the financial risk you’ve taken and make changes as necessary.
6. Be prepared for emergencies
The unexpected can put a severe strain on your finances. Unemployment, a medical emergency or a car accident are costly when you’re on a budget. You should have an emergency fund ready to allow for these unforeseen circumstances.
Age-old wisdom says it’s best to have three to six months of living expenses in savings to afford emergencies. Of course, you should sock away what you can in today’s economy.
Journalling about money allows you to develop a solid response plan for sudden expenses. Through thoughtful planning, you can find areas to pull cash for emergencies.
Let a money journal be your compass
A money journal will help you to gain more visibility of where your money goes and could empower you to better manage your finances.
It’s a helpful tool to raise awareness of your spending and devise a strategy to achieve your money goals. Allow your money journal to guide you to financial independence.
