Dear Diary

There is an old Spanish proverb that says, “Tomorrow is often the busiest day of the week.” This quote applies to many aspects of life, and goes very well with personal finances as well. The most recent example in my life that comes to mind when I read this quote is actually writing this blog!

I would love to tell you that the extent of my procrastination is writing blogs, however, that would be a lie. A big, fat, gigantic, outrageous lie! I write blogs because I like to share what I know with others, but I also get to learn a lot, and keep myself honest.

I absolutely love the season of summer. Warm weather, outside exercise, BBQs, camping, travel, and many other great activities fill our schedule. Unfortunately, with that comes increasing expenditures for many people. It is easy to make the excuse, “It happens…” But our overall financial plan suffers greatly from this mentality.

When I first started taking an honest look at my finances, this thing called the spending diary was brought to my attention. A spending diary is simply a way to log all inflows and outflows of cash for you or your family. These spending diaries can take the form of a physical diary, with pen and paper. Or it can be of the electronic variety. I use the computer program, Quicken, to track my cashflow. But there are other electronic diaries available. A popular, FREE website that I have heard great things about it, is www.mint.com.

The two most important things you can do to ensure a successful spending diary is to:

1.    

Account for EVERY dollar (The electronic diaries are great for this because they are typically linked to your checking account. The one pitfall is if you withdrawl cash from ATMs on a regular basis, you will need to manually account for that.)

2.    

Make categories. If you are diligent about accounting for every dollar, but fail to categorize each dollar spent, you will have lots of data, but no conclusions to draw from them. Some good example categories I have a lot of entries in are usually things like coffee shops, eating out, groceries and things like that. If you have solid categories and are good about accounting, you can draw conclusions like, “Holy crap! I spent 10% of monthly income this month of mocha lattes!” Or perhaps something good, like, “I am unstoppable! I was able to put away 15% of my annual income into my retirement accounts this year!”

Having the ability to draw conclusions is not guaranteed to make us take action on “sinkholes” in our income, but at the very least, it is quite the sobering wake-up call!

You are the only person who is able to change the way that your money is spent. Television, the internet, magazines, and “the Jones’s” should not be a guide or an excuse to how you utilize your monetary resources. Some people spend too much, and some people could probably benefit from spending a little more (I know that our economy agrees, too!) The bottom line is everyone’s situation is different, and once you have some goals set, it is up to you to get the ball rolling, and make those goals a reality.