Your way would work, but I learned of a way that I think is much better.  I use Anki,  a free ¨spaced repetition¨ computer program to  help me review words on a schedule that research shows is most efficient for memorizing things.  

I do as he describes in this video below. I watch a video or movie in my target language that has subtitles in my target language as the source for finding words I want to memorize .

https://www.youtube.com/watch?v=o5ccduvnGZ0  If the link does not work for you, search for:  Anki: What it is, how to use it (to learn a language) 

Read whatever is interesting or relevant to you, such as a newspaper or a book you like, or a book on something that interests you. Look up the words you don't understand in a dictionary, and write them down to review later. I don't know what is a vocabulary book, but I do know you need to see a word in a context to remember it, so try to memorize the whole sentences rather than just words.