How to Start a Money Diary 

The term “diary” might invoke the thought of a teenager writing about their beloved crush or high school drama, however a money diary is actually a fantastic way to monitor your expenses as an adult.

We’re sharing all the details about what a money diary is, how to keep one, and how to utilize it to promote financial stability.

What is a Money Diary?

A money diary is a record of your daily spending, financial habits, and decision-making strategies. Money diaries capture your financial habits and they include all of the little aspects of your daily life (both the good and the bad) that are easy to forget about upon reflections. 

It is estimated that only 38% of college educated individuals practice budgeting. Tracking your spending habits by keeping a money diary or assessing your credit card statements can help keep your finances on track. These habits can also help set you up for success in the long term.

While it might feel daunting to start writing every single transaction down, putting pen to paper to monitor your transactions in a dedicated notebook can help you evaluate your spending patterns in order to build a financial strategy that works best for your lifestyle.

At the end of the day, there is not one right way to break down your expenses. Everyone has a different financial situation and different priorities. This means that budgets, money habits, and behaviors will differ from person to person.

The goal of keeping a money diary is not to make yourself feel bad about financial decisions you’ve made. The point is to increase your accountability and financial literacy. This will help you make strategic decisions that will benefit you in the short and long term.

5 Reasons to Keep a Money Diary 

• Track spending
• Increase accountability
• Build a budget
• Set SMART financial goals
• Recognize your wins 

Track Spending

One of the biggest benefits of keeping a money diary is that you can look back on your transaction at the end of each day to analyze your financial behavior. Don’t berate yourself if you spent over your goal one day. Instead, consider it a learning experience and identify this behavior to address it going forward.

If you impulse bought three dresses one day, use that to determine your priorities and spending patterns. Maybe you don’t need all three dresses and can return what you won’t wear. Perhaps you will utilize all three items. Regardless, use this purchase as a model to deter you from impulse buying in the coming months. 

If you see that most of your spending comes from dining out on a daily basis, you might consider how you can integrate more mindful ways to plan for meals. Maybe you decide to integrate meal prepping into your routine? If dining out is important to you, look into getting a credit card that gives you maximum benefits when dining out and eating at restaurants.

While this won’t change your spending habits, getting a credit card that aligns with your financial behavior is one of many tricks to help you get perks based on your lifestyle.

Increase Accountability with Money

Change cannot happen without accountability. By gifting yourself (and your financial standing) regular self-appraisals, you’ll be able to take pride in your finances, track your progress, and make your own recommendations for the next year. Yes, you can be your own mentor.

According to a study by LinkedIn, 80% of employees prefer regular feedback. While you won’t have an employer to provide you with feedback, you can use your money diary to provide yourself with feedback.

Ask yourself these questions when reading through your money diary:

• How are you doing in relation to your financial goals?
• Have you been over-spending in any area?
• Is there an area where you’ve spent less than anticipated?
• What do you want to improve?
• What are you proud of?

Build a Budget

Keeping a daily money diary can help you build a realistic budget based on your lifestyle. Whether you already have a budget created or you’re starting from scratch, a money diary can help you determine and assess more realistic spending categories based on your unique situation and your priorities.

Part of building a realistic budget that is sustainable for you to stick with means building a budget based on your goals and your preferences. Building a budget based on what others tell you won’t be as effective due to differences in priorities, salary, and other financial factors.

Setting SMART Financial Goals

If you haven’t heard about SMART goal setting before, now is a great time to learn more about this effective strategy to help you set and achieve your goals.

SMART is an acronym for:

• Specific
• Measurable
• Attainable
• Relevant
• Timely

Each of the guidelines is digestible and actionable in order to ensure that you don’t get off track and can hold yourself accountable each step of the way. By keeping a money diary, you’ll be able to see your expenses in front of you to determine realistic goals for yourself.

You’ll also be able to see where you spend the most and least within your regular expenses. Usually, your mortgage or rent will take up a big portion of your set monthly expenses. With this in mind, unexpected expenses such as a medical emergency can lead to extensive financial stress if you’re not prepared.

Recognize Your Wins and Accomplishments

Keeping a money diary can give you the opportunity to recognize your wins and celebrate even the smallest of accomplishments. This will hugely benefit your mental state!

A study out of Penn State College of Medicine found that journaling was “associated with decreased mental distress and increased well-being relative to baseline.” It also showed that journaling resulted in “less depressive symptoms and anxiety after one month and greater resilience after the first and second month, relative to usual care.”

When there is so much to stress about (career, personal life, politics, the pandemic, etc.), celebrating your wins and allowing yourself a practice of self-care is extremely important.

What to Include in Your Money Diary 

When it comes to writing a money diary, there are many ways to do it. There is no “one size fits all” answer, but there are some points that you should generally be mindful of when keeping a money diary.

• Income
• Debt
• Set Expenses
• Daily Spending
• Weekly and Monthly Totals

Income

You’ll want to note your income and sources of income. Income might come from employment salary, investments, or side hustles. Be sure to include information as accurately as possible to set a solid foundation of what money you have to work with at the start of each money.

Debt

Note any debt you have accrued in student loans, credit card loans, home loans, auto loans, or any other debt that you have.

Set Expenses

Set expenses are monthly expenses that don’t vary from month to month. Some examples of set expenses are:

• Mortgage/rent
• Utilities
• Phone/Internet/Streaming Services
• Insurance payments
• Prescription medications

Daily Spending

Your daily spending will vary, so it’s important to jot down what you are spending each day, and information about the transactions. Are you spending on a certain category more than others? Are you using credit cards because it’s easy to impulse buy? Keeping a journal of your daily expenses can help provide insight into your spending habits.

Weekly and Monthly Totals

Seeing your weekly and monthly totals on paper will help with your accountability and will help you gain perspective on where your money is going each week/month. Keep totals for each week, then total up the weekly totals at the end of each month to see where you’re at.

Examples of Online Money Diaries

A writer and breathwork facilitator shares how she spends during a week in Philadelphia, PA, on a $53,388 salary via Refinery29.

An Engineer discusses how they spend their money during the week in Silicon Valley, CA, on a $147,000 salary via Refinery29.

How this data analyst spends her money: A Week In New Jersey On A $65,000 Salary via Refinery29.

Apps to Help Keep Money Diaries

CNBC outlined the top expense tracker apps for 2023 as follows:

• Best overall free app: Mint
• Best app for beginners: Goodbudget
• Best app for serious budgeters: You Need a Budget (YNAB)
• Best app for small business owners: QuickBooks Online
• Best app for business expenses: Expensify

Mint

In addition to offering basic budgeting features, Mint also provides bill payment reminders, customized alerts when you’re over budget and a credit monitoring service. The Mint budgeting app comes with a daily budget planner, which suggests budget goals based on your spending. You can adjust your goals (and/or add new ones) as you use the app.

Goodbudget

The Goodbudget app allows users to track their household’s spending using the “envelope method.” The “envelope method” means that each month, users allocate a certain amount of their income into categories (or digital “envelopes”) labeled things like groceries, rent and debt payoff. This makes it easy to prioritize your spending and plan ahead.

You Need a Budget (YNAB)

You Need A Budget (YNAB) automatically syncs to your bank accounts, credit cards and investment accounts once you link them to the app.

Unlike other budgeting apps which usually categorize your spending for you, YNAB users themselves choose where every dollar gets allocated to according to their priorities and what is important to them.

QuickBooks Online

The QuickBooks Online app offers many tools to help small business owners manage their company’s financials all in one place.

By syncing bank accounts, credit cards and third-party apps like PayPal and Square, all the company’s transactions appear in the app. The app’s dashboard is updated in real time, so users can track their sales and business expenses as they happen. The app even categorizes your expenses for you.

Expensify

 The Expensify app makes it easy for individuals to track their transactions and submit expenses to their employer. With just one click, users scan their receipts through the app and SmartScan will read and automatically log their receipt details including the date, merchant and amount.

—

This article was written by The Salary Project writer, Michele Lando.