How and Why to Keep a Financial Journal

Journaling is sadly dismissed as an activity best left to teenage girls, depressed writers or people with too much time on their hands. So what in the world is financial journaling and why would you want to do it?

Every so often, I take up financial journaling for one reason or another. It might be a particularly stressful time in my life, or spending in a problem area may be getting out of hand, or perhaps the family is on a trip and we want to be conscious about how we use our money.

Whatever the particular reason might be, the desired outcome is always the same—more mindfulness when it comes to our money, which simply means being self-aware about how and why we’re using our resources.

Why a Journal?

This kind of self-reflection does not have to be a complicated thing. It doesn’t even have to be written down. In fact, the more you practice mindful spending and earning, the more it becomes a natural extension of your thought process and a habit you just do.

However, if you’re trying to bring some focus to your money for the first time, or you’re doing intermittent, intense periods of self-awareness like me, a physical or electronic journal dedicated to your finances can make a world of difference.

The benefits of journaling for other reasons are discussed by a wide variety of self-help literature. When it comes to your finances, there are some unique benefits as well:

  • A written record of your spending decisions and why you made them.
  • An ability to correlate state-of-mind or certain triggers in your life with specific spending habits.
  • A broad overview of how you spend, and if you (as they say) “put your money where your mouth is.”
  • A place to keep ideas and reminders about expected, unexpected, and potential future spending. (Just to be clear, all three are different: Expected—things you know you’ll have to buy, Unexpected—areas you need to save for, and Potential—things you might like to buy but aren’t required).
  • A record of your family discussions and decisions.
  • A list of income opportunities, as well as ideas for cutting your costs.

There are more, of course, depending on how you personally decide to use your money journal and the connections you make between the data and ideas inside it. Being able to see macro-level trends and ideas is one of the best uses of this kind of journal.

How to Journal

Telling someone how to journal is like telling them how to make love. You can write about the technical components all day long, but it comes down to an intensely personal interpretation of the ideas and an ability to react “in the moment” to what’s in front of you. With that in mind, I’ll share some of the things I’ve found to be successful in the past:

  • Journaling works well in a small, physical notebook that you can carry with you to take notes during your day.
  • If any part of your journaling involves the collection of data, whether it’s dollar amounts or the number of times you do something, transferring this to a spreadsheet gives you the added benefit of analytical tools.
  • The simple act of writing down the vendor and dollar amount of every purchase you make during the day (and possibly sharing this information with your family daily or weekly) has the power to change the way you spend.
  • Notice and write down the mental process that you go through before you spend. While you may not get immediate insights, looking for patterns over a period of time can help you understand why you spend.
  • If you have an insight or something surprises you, don’t dismiss it as something you’re not capable of thinking of. Our brains work on our problems while we’re busy going about the rest of our day, so it’s entirely possible that a critical key to turning your financial life around pops into your head at 2:45 on a Monday afternoon. Grab it and write it down.
  • Bring your notebook to every formal and informal meeting you have about money with your loved ones. Record decisions, lingering issues, and questions.
  • Be consistent with your practice, but don’t be afraid to start and stop journaling based on what your life requires.

Most importantly, make the process your own. Adapt the practice to how you work, process information, deal with issues and analyze problems best.

Do you keep a financial journal? Share your own tips for how to get the most of out this habit in the comments!

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2 thoughts on “How and Why to Keep a Financial Journal

  1. Yes, I do keep my financial journal. What I do is I make sure before i hit the bed I will note my spending in my so called “red book”. It takes me only for 5 minutes. I keep all the receipts whether it is from my off shore merchant account, my transactions that accept credit card on-line, upfront payment.

    The following day I feel healthy and ready to spend without any worry of my financial status.

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