A financial journal is simply a written record of how much of your money you spend and on what you spend it on. The idea is to keep track and be accountable for all your income and expenditure. Once you’re able to see your entire financial picture, it’s easier to think of ways to improve your financial situation. Your financial journal should also be used to jot down ideas on how to cut down expenses or how to create more income.
Starting a financial journal may seem daunting at first. With the current economic challenges, many people spend a lot without realising it, no thanks to technology that has made transacting more seamless.
It is either we are hopping in and out of a taxi and making a mobile transfer to pay the bill or ordering items online with just a click of the button to have them delivered at your doorsteps. A lot of Businesspeople now find it more efficient to use POS because of the convenience and ability to track transactions for financial records. Keeping financial records might not be easy at first. However, practise makes perfect. You will need to decide on a method that works for you. You can either use the old-fashioned route of writing in a notebook or use an app on your phone.
Just make sure it’s something that you are comfortable with and easy to carry around.
The big idea is to capture how your money flows, in and out.
After deciding on your bookkeeping method, create an income page, an expenses page, and a future goals page. This will help you track your current financial picture. The details you input on these pages should help determine spending habits. You will have a clearer plan on when best to save (depending on your income stream) and how or where to get funds for your next vacation and any other important project.
Write down what money is coming in on your income page and write down everything you spend on your expenses page. Add each page up and see where you stand. Are your expenses greater than your income? If yes, review each expense and find where you can make cuts e.g. taking home-made lunch to work rather than eat out every day.
Use your future goals page to jot down things you want to accomplish. Future goals could include paying off all credit card debts within the next three years or saving enough for a down payment on a house within the next five years.
Seeing your goals written out will motivate you and help you establish a plan to reach your goals.
Your financial journal if updated regularly should show you what your spending habits are like. It will reflect your spending triggers, which could include an increase in expenditure when we are upset, impulse buying or impromptu expenditure e.g. walking into a shoe store when you’ve had a stressful week and buying an unplanned extra pair, not within budget.
Here are some tips to help you keep a financial journal and ultimately attain a better financial balance:
1. Keep it simple and easy
When building a new habit, make it as simple as possible. All you need to do is to write
down the item and how much it costs. For example, socks – N150.
2. Check your account statements
Pinpoint your money habits by taking inventory of your bank accounts, including your credit cards. Our mobile banking device and other alternative channels also help you to monitor your spending pattern. You can generate your bank statements directly from your FirstBank app.
3. Identify room for change
As you monitor your expenses, be ready to make adjustments. It’s worth your time to keep tabs on your monthly expenses because of what you’ll uncover.
Remember, there’s no right or wrong way to start a financial journal, as long as it works for you. The main purpose is to make you aware of your financial situation so that you can make improvements and be happier with your accomplishments.
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