Personal Finance 

Can a Financial Journal Help Your Finances?

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Journal EntryWhen I was younger, I was quite involved in keeping a journal. While I still have a journal, I don’t update it very often. Journaling seems like a quaint pastime, a relic of the past, when people still saved handwritten letters from friends and family. However, journaling can still have its applications today — including in your finances.

One of the ways that you can learn to make better financial decisions is by understanding what you are doing with your money, as well as why you make the money decisions that you do. Journaling can help you do both of those things, providing you with greater insight into your financial habits and motivations.

Track Your Spending

At the most basic, practical level, a financial journal can help you track your spending. When preparing a practical budget, it’s important to realize where your money is going. Knowing what you are spending your money on is vital if you want to make changes. How will you know which items you need to cut from your budget if you have no clue as to where your money is going?

You can use a financial journal to track your spending. A small notebook, carried around with you, can serve this purpose easily, although many of those who are more tech savvy use a note-taking application on a mobile device for this purpose. This isn’t just about going back over automatically generated categories by a personal finance program; this is about the physical act of drawing attention to your spending choice — and how much it cost you — by writing it down immediately.

Not only can this provide you with a record of what you spent, and where you spent it, and what you spent your money on, it can also force you to think before you spend. When you have to record your expenditure, it forces you to stop and take stock of the situation in the moment. Having to actually write something down just before you spend the money, or while you are in the act, enforced ideas of conscious spending that aren’t always viable when you look back on a simple card swipe later. In some ways, it’s a lot like using cash to really bring home the fact that you are spending money.

Why are You Spending the Money?

The more emotional part of a financial journal is actually recording your thoughts and feelings as you spend your money. Make small notes next to the dates and amounts and items about what is going through your head. Try to pinpoint your motivations for the spending. Did you stop off at that restaurant because you’re hungry? Why are you buying those new shoes? Are you trying to impress someone? How did you feel after the purchase? Did remorse set in? Or were you giddy?

It can also help to revisit your entries later and write down how you feel about the purchase now. After a couple of weeks, are you bored with the item you were so excited to get earlier? Why are you tired of it now? Do you wish you had spent the money on something else? Looking at your purchases in this way, and writing down your thoughts and feelings, can really help you see why you make the decisions you do. It can also help you spot patterns in your true priorities and desires. Once you understand your motivations, you can change your behaviors to match what’s important to you, as well as make better spending decisions.

What do you think? Is a financial journal a good idea?

(Photo: JoelMontes)

{ 5 comments, please add your thoughts now! }

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5 Responses to “Can a Financial Journal Help Your Finances?”

  1. While I don’t have a journal I do use quicken. I don’t think it would make much of a difference to me but I definitely think there are some people this would help tremendously.

  2. Grace says:

    I’ve kept journals/diaries on various subjects since I was in 4th grade. I don’t write every day, and now my financial journal is mostly within my blog, but I still have the set of composition books and I still write out my monthly budget, gift lists, feelings, etc. I think it helps but I can’t say that I’ve made any huge changes as a result. I will say that it is fascinating to go back and read the entries from my pre-kids days–where planning trips and saving to buy a house seemed to occupy a lot of my thoughts.

  3. Matt M says:

    Now it’s so easy to keep track of everything online that you don’t even really need to do it. Banks and credit card companies do it for you.

  4. Sandy C says:

    It’s something I seriously started doing this year as I’m ending my first year of widowhood, luckily do have a financial plan and a good planner and coincidentally have achieved that wonderful age of 71 at which time I now have to use up the money in my IRA and give back to the gov instead of concentrating on socking it away. Figuring out my projected monthly expenses for the future was harder work than preparing the house for sale after nine years of marriage (second for my husband) and living in the house. And I said I never ever wanted to do that again. As other posters say, keeping track may not be necessary for everyone on a regular basis, but if you’ve never done it before and you’re not in a “money is no worry” situation, I think everyone should do the exercise at least once. It’s quite eye-opening. If you’re younger, maybe you get the message about what you need to do for a good future. If you’re older, you need to know where you are financially so you can make sure you’re money lasts as long as you do.

  5. Great idea Miranda! Keeping a journal is a great way to hold yourself accountable (I’ve even heard of people doing this to stay on a healthy diet too). I’ve included your article in ReadyForZero’s Weekly Shout Outs: Financial Planning Edition since this topic fit in so perfectly. (

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