Save Money! Maintain a Detailed Spending Log

Today's frugal living tip doesn't deal with one particular method of saving money. Instead I want to introduce a strategy you can use to help control your overall spending habits.

It's a simple concept really. The first step is to get yourself a pocket-sized notepad and pencil, and, beginning today, record every penny you spend and where you spent it. Whether it is your mortgage payment, or a quarter dropped in a gumball machine, write it down! Though admittedly somewhat tedious, if you give this strategy a try, I think you will find the small inconvenience will be heavily outweighed by what you learn about just where your money goes. At the end of the day, transfer the data you've gathered to a spreadsheet to allow for easier record keeping over a long period of time.

The benefits of this record keeping are myriad:

First and foremost it acts as an impulse check. That chocolate bar that costs "just a dollar" will seem less necessary when you are forced to pull out your pencil and paper and record the purchase.

Secondly, it can act as a pie chart for your spending habits. If you want to know how much of your money is going to wants and how much to needs you only have to look back through your spreadsheet and see just how much money you've been allotting to each category.

Thirdly, and this is where I find this technique most valuable, it allows you to compete against yourself by providing you with a month by month history of your overall dollar spending. What do I mean by compete against yourself? Well, let's say at the end of this month you tally up all the purchases you made and bills you paid. Your total spending for the month is $3430. Considering you have a mortgage payment in there, and a car payment, along with all your other utility bills etc. that's not too bad, right? But can you do better? This is where the competition comes in. Suddenly, with the numbers there in front of you, you'll have a concrete target that you can shoot for when it comes to lowering your spending. That chocolate bar that was "just a dollar" and was an inconvience to write down, now has a double impulse check applied to it. Now, every dollar you spend brings you closer to that limit that you promised yourself you weren't going to exceed. You'll find yourself really scrutinizing every purchase, and you'll find that the line between wants and needs is now a much more clearly defined gap.

This self competition doesn't just need to apply on a month to month basis. Because of certain seasonal costs that are beyond your control, it is going to be pretty difficult to spend the same or less each month than the one before. For instance, most people will find it pretty challenging to spend less in December than they did in November (unless you do your Christmas shopping earlier than I do). Because of this monthly spending inequity, sometimes a fairer comparison will be to take your spending from the previous December and try to undercut that target. Even if you can only match it, you will have at least cut your spending by the equivalent of inflation. Whether you compete against yourself on a monthly or yearly basis is up to you. Just remember that these seasonal inequities exist, and don't give up on the program just because you fail to meet your goal in a given month.

This competition also has the added benefit of making us more creative in our saving practices. Want to beat last August's $2915? Take the insurance off the car, and bike to work that month. Not only will you save a month's cost of auto insurance, you'll also save gas. With that $150 head start beating your target should be easy. What can you come up with in September to continue that trend? By forcing yourself to think outside the box, you'll be amazed at what wacky ideas you can come up with to save a few dollars.

Want to put a leash on your spending habits? This is a great way to do it. Grab yourself a notepad and get started today. If you don't already have a notepad, you don't have to record the purchase of one. That's your one and only freebie :) Have fun with it, and be creative. At first you'll find that you spend more than you realized, and with this simple valuable tool you'll soon be saving more than you ever thought you could.