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In your journey to save money for your mortgage down payment or other money savings goal, I highly recommend keeping a personal finance budget journal. I know, keeping a budget and doing math is no fun. That's why my personal journal is a lot different from traditional budgeting. Instead of keeping track of every little expense (which can be quite tedious, time consuming, and counterproductive), I use my budget journal as a motivational tool to keep myself on track to hit my financial goals.
The Financial Journal: A Motivational Tool
Finances are a private manner. Most people don't want to discuss their finances in depth with their friends. This makes sense both from a privacy standpoint and also because you may appear to be bragging if you talk about money too much. Moreover, nobody likes to hear about others who are doing better than them financially in setting up a game plan to win the money game over the long term. Because of all these factors, you probably never get positive feedback on your finances. Think about it, when's the last time your best friend said, "Great job saving $450 last month by reducing your expenses." Looking at it from a different angle, I'm sure you have heard compliments from your friends and coworkers such as, "Have you lost weight?" Or, "Great sweater!" What do these compliments do for you? They motivate! The more compliments you get, the more interested you are in continuing your workout regiment or paying close attention to your wardrobe. Similarly, compliments and positive feedback will give you a lot of leverage in your financial quest to save money. The problem, as just discussed, is that people don't talk about money openly and even less frequently compliment others for saving money.
This is where the money saving journal comes into play. This is your opportunity to compliment yourself. Because nobody else is going to compliment you for saving money and making financial progress, you need to take things into your own hands. Following is how to create your journal.
How To Create Your Financial Diary
Buy a small journal. If you are more technically savvy, create a journal in Excel (with one row per day) or in Word. Choose the medium that works best for you. The key here is to leverage a medium that is easy to update. Each day, write down the date and one sentence about what you did to further your money saving goal. Next, write down one more sentence as a compliment to yourself. Last, write down how much you saved. One sample entry in my money saving journal might look like this:
I packed my own lunch today even though I would rather eat out.
Great work! You are on the road to saving your down payment.
$5 saved today.
Why The Financial Journal is Powerful
There are two main reasons this is powerful. First, you are keeping track of your successes. Over time, you can look back and sum up how much money you saved. Second, you are giving yourself positive feedback which reinforces your plan, motivates you to do even better, and keeps you on track.
I especially like this format because it is simple. It is something I have no problem updating every day. I'm not interested in tracking every last detail, that is the subject of many other budgeting articles. I need to work with my personal preferences and my preference is to keep a high level journal rather than documenting all of my expenditures. If you are detail oriented or are having particular troubles saving money, you might want to investigate keeping a more detailed journal. You can
learn all about detailed budgeting at About.com.
Every Day Is A Financial Success
Even if you did not save money on a particular day, every day is always a success. Why? It's easy: You are always learning more. For example, let's look at another sample entry:
I overspent at the mall today when shopping for holiday gifts.
Although I lost money, I did a great job learning something new today: I am going to focus on shopping online because there is less pressure from salespeople and I am less likely to overspend.
$0 saved today but definite long term savings in knowledge learned.
One of the most important aspects of the journal is to look at yourself critically. All humans make mistakes and not every day is a money saving success. However, everything can be looked at in a positive manner. We already know the power of positive thinking. Incorporate positive thinking into your journal and you will stay motivated over the long term to achieve financial freedom. As a closing suggestion, never stop keeping your journal. Get in the habit of keeping your journal and make it a daily practice for the rest of our life, your bank account will thank you.