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Dec 22

5 Reasons You Should Keep A Spending Diary

Reading Time: 3 mins

Do you ever wonder where your cash goes? If you find that there is often more month than money – and you are grimly hanging on until payday – perhaps it is time to keep a spending diary.

A spending diary is simply a way to track your spending. It can be a plain notebook, a specific budget book, a spreadsheet or an addition to your daily journal. It could even be an automated spending tracker connected to your bank account – whatever works for you. 

Whichever form of spending diary you choose, it is important to update and analyse it regularly. If you are really struggling with money, updating your tracker daily can be life changing. Once you are in the swing of things and more aware of your spending, every few days or once a week is likely to be enough to have a positive effect on your finances.


How is it helpful to keep a spending diary?

spending diary

It raises your awareness

Tracking all of your spending helps to keep you in touch with your finances. There is no chance of sticking your head in the sand about the state of your bank balance when you look at your spending on a regular basis. You are therefore much more likely to stick to your budget because you notice if you are overspending and can rein it in.

A spending diary reveals where savings can be made

Keeping a spending diary can help you to identify where you can cut back. It is a bit like writing a food diary. You don’t think you eat too many calories, but when you track the food you eat, you might be surprised at how many bars of chocolate or fizzy drinks have crept in.

In the same way, by tracking every purchase, you begin to notice how much unnecessary spending you are doing and the areas that can be cut back or reduced to save money. Perhaps there are unused subscriptions, or you have a huge cappuccino habit? Maybe you have got into buying yourself treats when you are waiting for the train or the bus and it is all adding up?

It shows your spending triggers

A spending diary can reveal when you are most likely to overspend. For example, are you an emotional spender? When you are down or have had a tough day, do you tend to splurge? Or do you buy stuff because you are bored?

By looking at your diary every few days, you can pinpoint the triggers that are likely to lead to impulse spending so that you can recognise them in advance and avert the issues as they arise. 

This post contains ideas to help curb impulse spending.

Tracking your spending gives you back control

Feeling out of control when it comes to your finances creates a lot of stress. When you work hard and yet still don’t have the money to make it to the end of the month, it can cause anxiety and resentment.

Having no control is more likely to lead to debt and prevent you from living within your means. Taking charge of your money by keeping a spending diary will improve the quality of your life. 

Knowing what is coming in and when bills are going out, as well as being able to set a realistic budget based on your spending patterns will reduce anxiety and help you with my next benefit – achieving your financial goals.

It keeps you focussed on your goals

Tracking your spending will help to ensure you reduce extraneous and unnecessary outgoings, avoid debt and save for your future. If you are managing your money badly, even if you earn a decent salary, it might mean you never have enough spare cash to put aside.

Whether you would like to invest, save for a house deposit, put money in your pension pot, pay off debt or build your emergency fund, tracking your spending closely will ensure you can prioritise your resources. It will help you identify where you have extra money to put towards your goals and where you need to reduce spending in other areas.

Having the odd look at your accounts on your banking app is unlikely to help you develop healthier spending habits. Hopefully, by taking note of these five points you will be motivated to keep a spending diary and improve your long term finances.


Will you try to keep a spending diary in the new year? Let us know your thoughts in the comments!


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1 month ago

Good idea. Thanks Isobel.

1 month ago

Good idea to keep track of outgoings.

1 month ago

A few years ago, I started manually tracking all my expenses in an Excel spreadsheet. It really helps to understand where the money is going. This has helped me save a lot because I have a better overview of my expenses and think twice when I want to make a purchase.

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