Over the years I have used many techniques to keep my finances in order and work toward my goals. Some methods have worked better than others, but I’m always on the lookout for new ideas and I’m willing to try anything that sounds reasonable. About two years ago, I tried financial journaling for the first time. I’ve kept journals off and on throughout my life, but those were recountings of the days events or rants directed at people that I couldn’t yell at in person. They were just collections of random thoughts, not entries focused on a specific topic.
Then I read a book (that I can no longer remember the title of) about guided or directed journaling. The idea is that you write on one topic about which you want insight or answers. You can journal for weight loss, addiction recovery, getting in touch with your dreams, relationship issues or any other issue that you are struggling with. The process of writing out your thoughts is supposed to show you patterns in your behavior, keep you on track and accountable, and open you to new ideas or behaviors. I was skeptical at first. All of my journaling efforts to date had pretty much killed a rainforest, but done nothing to advance my thinking. But, because I’m open to trying anything once, I decided to give it a try.
I chose financial issues for my guided journal. At the time we weren’t having financial trouble, but I was debating quitting my full time job to open my own business and I was struggling with the financial aspects of the decision. At first my efforts bordered on the ridiculous. Staying on one topic was hard for me and everything came out stilted. I felt like I was trying to write an essay for a teacher, not a journal entry for me. But I stuck with it for a couple of weeks. Finally, I started to see some things changing in my entries. I became more relaxed, which helped a lot. I started to really tap into the things that were bothering me about my business decision.
Then one day, it happened. I got the answer I needed. I was surprised to see, there in black and white on the page, that my biggest problem with starting my own business was that I was afraid to succeed. I wasn’t afraid that I wouldn’t make any money or that our financial situation would plummet immediately. I was confident in my ability to attract customers and do the work. I was more afraid that I would succeed beyond my wildest dreams and what the implications of that might be. I was worried about the tax implications, of screwing up my taxes and having the IRS come after me, the thought of having to hire employees, and the possibility of having to move the business from my home to a bigger space. Those were all things I didn’t know how to deal with and they scared me.
Once I saw it on the page, I realized I was being silly. Why was I worrying about things that might not ever happen? Or, if they did, wouldn’t happen for a few years. I was putting the cart so far before the horse that the poor horse was still back in the barn getting saddled up while the cart was halfway to the next town. I wrote about the issue some more and laid out plans for dealing with those problems, should they arise. I made notes about what I would need to learn and where I could go for the information. I felt a lot better by that point and decided to go ahead and open my business. Two years down the road, none of those problems have cropped up and I don’t regret my decision one bit. But had I not found the answer on that page, I might still be waffling back and forth about whether to get started.
I’ve kept doing guided journaling and branched out to other topics when I have an issue to work out. I find that it helps immensely to get things down on paper and then go back and reread the entries. When I’m rereading, I often find that the same things come up again and again. When that happens, I know it’s pointing at something I need to deal with. I can also be brutally honest in my journal and say things that I would never admit to another person, even my spouse. There are some places in each of us that we never want to expose to others, no matter how close we are to them. But you can tell anything to a journal and it won’t tell you you’re crazy or reveal your secrets to the world (unless you don’t secure it and you have nosy housemates). You can work out the most difficult parts of your issues on the page and discover the answers.
In respect to financial journaling, I’ve found help with other financial issues, as well. Along with resolving my business troubles, the journal has helped me to identify when I’m overspending and why (and on what), when I’m being too thrifty and why (what’s making me feel like I don’t have enough when I know I do), when my financial goals are out of whack with either my earnings or my dreams, or when I’m losing touch with the things that I want my money to do for me. I use the journal to find out where my heart really wants to go and then direct my financial efforts to reach that place. It’s also great for making seemingly huge, insurmountable problems seem smaller and more manageable. It helps me find the next step I need to take. Journaling has kept me more on track than I would be without it and it helps me identify potential problems before they get out of hand.
If you want to start financial journaling, what should you do? First, decide how you want to do it. Do you want to write on paper or on the computer? Whichever you choose, invest in some good tools. (Don’t go hog wild buying tools, but investing in a nice notebook or a good journaling/word processing program can make the process much more enjoyable and something you’re likely to stick with. But if you’re strapped, a spiral bound notebook and basic text editor will work just as well.) Once you’ve got your tools, find a safe place to keep them or password protect your computer files. You don’t want people reading this.
(Despite the popularity of online blogging, I don’t recommend it for this type of journaling. No matter how much you say you won’t censor yourself, when you know it will be read by others you will censor yourself to some extent. Plus, some of what you need to write about might be hurtful to others. And do you really want a potential employer to read about your financial traumas? You might want to publish an edited version of your journals later, but I think it works best to keep the raw product to yourself until you’ve had a chance to go back through and edit out the hurtful and nonsensical parts. That’s just my opinion, but I vote for keeping this to yourself.)
Second, write what comes to mind, even if it doesn’t seem connected to your finances at first. You should be thinking about the financial issues you want to deal with, but just get out whatever you have to say. You’ll probably be surprised to find that random things like how much you hate your in-laws relates in some way to your financial picture. If you want to react to current events, go ahead. You might discover that your feelings about that can lead you to some different decisions. Don’t censor yourself because honesty is key. You can only get at the root of your problems if you are willing to be brutally honest with yourself about what’s holding you back. Don’t worry about spelling, grammar, or neatness, either. Just get it out; it doesn’t have to be pretty.
Third, after you’ve been writing for a few days, go back and reread what you’ve written. Look for patterns. Does the same thing keep coming up? Why is that? Do you see something that you never realized before? Is there something on the page that you would never have considered in “real life?” As you identify things that you need to pay attention to, keep them in mind for exploration in future entries. After a few weeks of writing and rereading, you’ll probably start to see things emerging that will help you sort out your financial issues. Maybe you’ll see patterns of overspending or fear. Maybe you’ll discover that you really want to open your own business but are afraid. Maybe you’ll discover that you want a house in the county but don’t see how you’ll ever get it. Maybe you’ll discover that you’re doing better than you thought and you need to stop worrying so much. Be open to whatever you discover and don’t discount something because it sounds stupid or impossible. If you wrote it on the page it was probably for a reason so try to figure out that reason.
Financial journaling doesn’t require a huge outlay of time to yield big results. Even writing a paragraph can help as long as you’re honest and thinking about the problem you need to solve. In the beginning, I advocate doing it every day to get in the habit and give you a large chunk of information to work with, but later you might do it every other day or less (currently I’m writing three times a week).
Once your main problem is solved, I advocate keeping at it because there is always something you can learn or change about your finances. Sure, you could go unburden yourself to a therapist but that will cost you a lot more than a $3 notebook and pen. And a therapist limits you to an hour and will cut you off just as you’re about to have a breakthrough. Your notebook will let you write until your hand breaks or you have that breakthrough. Whichever comes first.