What is a money diary?

They go by many names—a money diary, a spending journal, a money mindfulness notebook—but they all serve the same purpose. A money diary is a record of your daily spending and decision-making. Money diaries capture your financial habits and they include all of the little nuances of your daily life (the good and the bad!).

LendingTree’s Millennial Money expert Sarah Berger says that “Money can be such a taboo topic. People don’t like talking about it openly.” It’s no wonder that money diaries have grown a small, cult-like following on the internet in recent years (thanks to a popular series of money diaries published by Refinery29). “People like being able to read a random person’s deep dive into all of their finances,” she says.

But what is it like keeping a money diary? Is it a healthy personal finance exercise, or simply just another way bloggers have discovered to overshare their personal life with the world? Here’s your guide to starting a money diary, why you should consider keeping one for a week, and how it can help you reach your financial goals faster.

3 reasons why you should keep a money diary (at least for a week!)

There’s a clear social component that makes money diaries so interesting to read. “It’s a peek into someone’s life. They’re entertaining,” says Berger. Keeping one can be an insightful tool for helping you understand your habits: “A money diary is a great idea to do for a week, just to see how you’re actually spending your money and what your day-to-day looks like.”

When you keep a money diary, you write down every single transaction you make in a day. When you write one for a set period of time like a week or a month, you’ll have a true-to-life history, not only of your spending but of your moods, how your job went, what went right or wrong in your finances.

Specifically, a money diary can help to:

  1. Track your everyday spending to see where your money is truly going
  2. Help you build a realistic budget. Whether you have a budget created or you’re starting from scratch, a money diary can help you set more realistic spending categories
  3. Help you realize your money habits. Are you purposefully frugal or loose with your spending money? Are you focused on the most critical priorities in your life, or do you think there’s room for change?

At a high level, Berger says that keeping a money diary is an exercise that can “help you set yourself up for financial success. It’s all about understanding your behavior and being aware of it so you can make a change.”

What should I include in my money diary?

There are a ton of ways others have recorded their own money diaries. But just like a budget, there is no one right way to keep one. There are a few ingredients; however, that most money diaries have to be successful. Here are the essentials for tracking your finances with a money diary.

Your basic financial profile

Before getting started, take stock of where you are with your money. At the beginning of a money diary, write down:

  • Your sources of income—what you earn in a week or month
  • What you have in your savings and assets
  • How much debt you have and what kind of debt it is (Credit card debt, auto loan, mortgage, etc.)
  • Your expected spending—any upcoming payments and planned expenses
  • Even if you choose not to share it anywhere, include anything that would be important for someone to know about your financial situation. Make a note of a recent change in income, a medical emergency, or any major financial challenges that came up during the week.

Your daily spending

Each day, you’ll record in detail (as much, or as little as you wish) what your day-to-day life is like. Be sure to include in each day’s entry:

  • An honest record of each day’s transactions, including all of your payments, your morning coffee, that online shopping order, everything
  • A total of each day’s transactions
  • A journal of each day—your thoughts, moods, why you made the decisions you did, what happened at work, the weird thing you saw on your way to the grocery store, even why you chose to watch the crime documentary versus the competition reality show

How it all went down

At the end of a week of keeping a money diary, take some time to reflect on the ways things went. The final page in your weekly money diary should include:

  • A total of the week’s transactions, and how it compares to what you expected to spend at the beginning of the week
  • An end-of-week reflection—how it helped, or hindered, your progress on your financial goals
  • Any actions or goals you want to make based on your week

Read More: How to Create A Monthly Budget

Examples of popular money diaries

Below is a list of examples of money diaries from different people with different financial situations. We think these might help spur some inspiration to help you get a better idea on how to keep a money diary for yourself:

  • How one woman coped while being furloughed during the COVID-19 crisis, via Refinery29
  • A frugal couple’s week in their mission to retire early, via Wealthbar Blog
  • How a couple in St. Paul, Minnesota handled money while on disability, via Refinery29
  • A mother of 4’s grocery spending money diary, via MamaMia Blog

How it all works together: Keeping a money diary to enhance your budget to achieve your financial goals

Where is your money is going? You should be able to answer that by the end of a week of keeping a money diary.

Take a look at everything you spent—are you spending money on the things you want to be spending money on? Are you saving the kind of money you want to be saving?

The point is to focus on the money moves you can change. You might not be able to change your income overnight or pay off that high-interest auto loan tomorrow, but you can become more mindful and take better control of your financial priorities.

Compare your week of spending to your budget and spending categories. Do your habits line up with your planning? If not, take some time to figure out how you can adjust your budget to better align to your actual financial life.

If you’re not keeping track of your financial goals, consider creating a plan to set financial goals based on your reflections in your money diary. If you have any wiggle room in your finances, inject your financial goals into your budget.

Read More: How to Set Up Financial Goals for Success

What if you don’t like the results of your money diary?

You might look at your money diary at the end of a week and think, “I don’t like what I see.” Perhaps you’re embarrassed by your habits, or you feel angry at your financial situation. After all, your money diary is a true-to-life, strangely intimate glimpse at yourself.

If you’re living within your means, you have a good record of your behaviors and you know what you have to do to cut back on overspending. Berger says an easy, actionable way to close some spending loopholes are to look out for “Money vampires like subscription services that you didn’t even know you were subscribed to.”

The hardest kind of money diary is the one that you can’t even bear to look at. “Sometimes it does take those big transformational money moves in order to really get yourself back on track. Cutting out your Starbucks isn’t going to make that big of a difference if you are just paying way too much rent or sinking in credit card debt. At this point, focus on your financial priorities and big changes,” says Berger.

Get Started: A Final Note on Money Diaries

Before you get started on your money diary journey, Berger says to be careful. “It’s that natural human instinct to compare yourself… People like to stack themselves up against others and measure how they’re doing next to other people.”

Especially if you’re not thrilled with your financial situation, “I don’t think you should use other people as benchmarks,” Berger says.

Remember that while others have shared their money diaries with the world, you can keep yours in a private notebook that no one else has to see. Unlike a lot that life throws at us, you are in control of your money diary, and it’s ultimately meant to help you achieve your financial goals so you can live your best life.

Read More: Financial Stress & Navigating Money Anxiety

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