Where has all my money gone?

We are now half way through what is widely regarded as the most depressing month of the year, January! Personally I find January a great time for rebirth, re-growth and renewal. To this end I have decided to take my own financial advice and keep a record of every cent I have spent since the start of the month. Now I agree this is hardly the most exciting way to spend those long, dark January nights when all you can think about is the hot water bottle and some comfort TV, but bear with me.

For the last number of years I have attempted to get good control and proper management of my finances. My motto has always been to try and make the money I work so hard to earn work harder for me. I have kept reasonable control on my monthly spending, but just keeping a record of everything I have spent since the start of the month has been a revelation. Two things really stand out:

1. You spend less: The simple process of recording everything you spend really makes you tighten your spending. It’s totally psychological but if you have to record everything you buy you tend to really consider all purchases. At the weekend I was about to buy yet another work shirt for EUR 55 and then I just asked myself, James you already have ten shirts for work why the hell do you need more! Having to write things down acts as a value check on your spending.

2. You identify your weaknesses: For the longer term this is probably more significant. Certain patterns emerge regarding your spending. For example I realized that I spend far more at the weekend than I thought. I have been kidding myself that a Saturday night out cost EUR50 when in actual fact I withdrew 50 at 9.30pm and another 50 at 1.30am!!!

Understanding where your money is going and where you can make real long term saving will greatly help improve your financial health in 2008.

So go ahead, start today, write down every single purchase for 1 month, I guarantee you at the end you will have saved money but more importantly will start to get a real handle on where your money is going. If it worked for me, it can work for you.