Happy birthday to me, happy birthday to me, happy birthday dear Elizabeth, happy birthday to me!” I am one of those people who really loves their birthday. Yes, that’s right, this weekend I celebrate another birthday and another year of being thankful for my life.
One of the things I’m most thankful for, other than my family, is my business. I love being a CPA, who owns a bookkeeping business. I’m also thankful my business is thriving and in good financial health. A lot of people cannot say the same. In fact, some clients of mine, who happen to very successful, can’t understand why they can’t stay in positive cash flow. In these cases, I advise my clients to keep a money diary or a spending journal to get a good picture of their company’s spending and making habits. But before you begin writing “Dear Diary” here are some things you should know:
- LIST OF INCOME AND EXPENSES – A money diary is basically a list of all income and all expenses. It’s ideal to keep one every day for a month. Here’s how it works: list all the money coming in no matter if it’s work, gift money or debt owed, and write down where it comes from. Next, write down where you spend your money and why you spent it. Make sure you include the date and time of the expenditure, including all cash transactions.
- HELPS WITH BUDGETING – When you write down everything you make and spend, you’re basically creating an extremely detailed budget. Knowing these numbers can be the key in changing your spending habits.
- BETTER UNDERSTANDING OF WHERE MONEY IS SPENT – Writing down what you make and how you spend it for at least a week, up to a month, is an eye opener. For example, if you spend $3 on a cup of coffee, five days a week, it is costing you $15 a week or $60 a month for a total of $720 a year. That amount could be invested in an office space, a special event, or a long weekend vacation.
- SPEND LESS – Did you know that people who write down what they spend are more likely to reduce their spending when they see the expenses written out on paper or on their computer? It’s true. Keeping a money diary helps you visualize your expenses and in the end could result in spending less.
Having a spending journal or business or personal money diary is a great way to realize how much you make and spend every day. If you’re having trouble saving for your favorite things, paying off a loan or debt, or replacing business equipment because of lack of cash flow, then you might want to consider starting a journal.
In my spending diary, sometimes I write myself notes about why I chose not to buy something, like a cup of coffee. I also include what I will use the saved expense on in the future, like a short vacation. I consider that a win, win! So on my birthday weekend, I wish both you and me lots of relaxation, travel and another year of life. Happy birthday to me!!!
