How Journaling Practices Have Helped My Financial Situation

I’ve mentioned often on The Simple Dollar how journaling is a daily practice for me and has been off and on (but mostly on) since middle school in various forms. At times, it’s taken the form of simply cataloguing my day; at other times, I’ve written in response to various prompts; today, it’s completely different (and I’ll write about that in a bit). In any case, writing in my journal – simply put, getting thoughts out of my head down on paper – is something that is a daily part of my life.

Why have I kept up with it for so long? How has it helped me in any way that’s made it worth the time investment? And what does that practice look like? That’s what I want to share today.

Let’s start with the why.

The Benefits of Journaling, Financial and Otherwise

I keep up with a daily journaling practice for a lot of reasons.

First of all, it feels like a mental relief to do it because it quiets the monologue in my head. Along with meditation, it’s one of the two most effective routine things I’ve found in my life for getting the constantly chattering voice in my head to quiet down a little. That voice is constantly going over things I need to do, things I’m thinking about or worried about, my upcoming plans, some problem I’m interested in, and all kinds of other stray thoughts. That constant stream of thought is distracting. I find that dumping some of that stream of thought down on paper quiets that distracting voice pretty well, at least for a while. I’ve found that one big burst of writing in my journal at the start of the day coupled with having a pocket notebook on me at all times to jot down other stray thoughts throughout the day keeps that voice a lot quieter and a lot less distracting.

Second, I use it to work through challenging problems in my life that I’m not quite sure how to solve. When I observe something I don’t like in my life, my mind often worries on that problem without ever really coming to a good conclusion on it. I’ll think about that problem over and over, but at best my idle thoughts will come up with really half-baked solutions. When I sit down and journal and dump that problem out on paper, I find that I almost always work toward an actual good solution to the problem (or problems) in my head. By writing out the problem as I see it, I usually get some better insight into what’s really going on, and then as I write down that insight, more pop up, and eventually I lead myself to the real source of the problem and perhaps a start down the path to a good solution.

This applies very well to personal finance. For example, it was writing in my journal that really helped me piece together that something was wrong with my financial life and gradually led me to the decision to make some major changes. It has helped me figure out what things in my life were frivolous expenses and which ones were not. It has helped me to identify situations where I was spending money nonsensically as an emotional response to some other situation in my life.

Third, it’s helped me to understand complex ideas by taking a bunch of swirling bits and pieces I’ve learned recently and didn’t fully understand and combine them into something meaningful and comprehensible and useful. Many of my journal entries have originated from my thinking about something I read recently or experienced recently that I didn’t quite understand, and by simply spelling it all out piece by piece, the idea came together for me. I used to do this a lot when I was in college, but I still do it quite frequently when I’m reading something or when I’ve had a difficult interaction with someone.

For example, it was this practice that really helped me to understand investing and how index funds work and helped me decide that I should put as much of our investment money as possible into index funds. The ideas made sense on their own, but it was assembling the ideas and relating them to our own situation, which I did over a bunch of journaling sessions, that locked our retirement planning into place.

I did the same thing when we were shopping for a home. Many of my entries during the months in which we were house shopping were oriented around figuring out how the house buying process worked, how mortgages worked, and so on. This actually leads well into my next point.

Journaling has helped me come to a firm conclusion when there were a lot of options on the table. Often, decision making comes down to being able to filter through a lot of options, figure out which elements matter the most, and choose from those options based on that. Journaling has helped me with every piece of that process for many different major decisions in my life.

As I noted earlier, journaling was essential in our home buying process. I wrote down extensive thoughts on each home we visited, the relative merits and drawbacks of each, and what each would look like financially. My journaling process helped Sarah and I choose a home that we could afford that met our needs, a home we still live in.

It’s helped me decide between investment options. It’s helped me make career choices when I had several options on the table at a few points in my life. Simply writing through each of the options, figuring out what was good and bad about each one, and then coming to a clear decision not only helped me make a great decision at each of those crossroads, it also helped clear my head of constant worrying and constant thoughts on the subject.

So, how exactly do I do this? What does my journaling practice look like?

My Own Journaling Practice

I’ve used a number of practices over the years, but the one I’ve used for the last few years, with a few tweaks, has been a small variation on the “three morning pages” journaling practice first popularized by Julia Cameron.

In Cameron’s original practice, she simply suggested that a person sit down with a blank journal and start writing, filling up three pages in a journal with their writing before stopping for the day. Write about whatever’s on your mind – if it’s on your mind, just write it down, no matter how inane or pointless it seems. It gets that thought out of your head and makes space for whatever’s next. Some days, everything is inane, and that’s fine. Other days, you’re working through some very difficult things, and that’s fine, too. The goal is to empty that junk out of your head so you can get clean start to your day.

I tried doing this exact thing for a while, but I ran into a number of small problems with it. The biggest one was that my handwriting is small and the pages in my journal are big. I tend to journal by writing in block capital letters – it just feels the most comfortable to me – and the writing is pretty small. Most of my journals are either full size pages or close to it. Thus, it can take a long time to simply fill up a page with words, even if I’m writing as fast as I can.

So, I modified the practice to what I call “45 morning minutes.” I just set a timer for 45 minutes, sit down with my journal, open to the next blank page (or partial page), and start writing. When the timer goes off, I keep going until there’s a clear break in thought and then I write a big double line across the page indicating the end of the day, and I’m done. Journaling with a strict time limit keeps it within a reasonable time frame for me and makes it easy to schedule.

Obviously, I do this in the morning, usually before anyone else is awake. I find that doing this early in the day is really effective at quieting down that internal monologue that distracts me with chatter and ideas throughout the day. I’d rather have it quiet in the mornings and afternoons so that I can get focused work done. So, that’s another big part of the equation for me: journaling in the morning quiets my internal monologue so that I can focus better during the work day.

After I finish, I usually read back through my entry over the course of a few minutes, mostly to extract things that I need to get done in the near future. Are there any actionable items that I thought about or generated during that journaling? If so, I move them to my to-do list manager or to my calendar so I can find them later on in the day when I’m actually doing stuff. Again, another key point: journaling often generates specific actions I need to work on or things I need to take care of, so I transfer those out to a to-do list.

After that, I just close my journal and go about my day.

There are a few obvious questions that come about from that description, so let me address them right now.

I read old entries, but nothing older than a few months. After four or five months, the old entries start to read like they were written by another person living another life. It’s familiar in the way that a distant memory is familiar, but it doesn’t feel like me any more. When journal entries reach that point, then there isn’t really any value to them any more, at least not for me. The method of journaling I use is not really a record of what I did each day, so once the entries aren’t fresh, I don’t find any personal value in them. I’ve changed enough as a person that the situations and solutions I wrote about in old journals no longer apply specifically to new situations. I haven’t actively read journal entries more than a few months old in a long time, and every time I happen to see one, I really don’t care to read it.

There are a few reasons for this, but most of it boils down to the fact that my journals reflect my active thinking at that moment, but when that moment fades away, there’s not much value there. It’s not a record of my life, but an outpouring of my current thought.

There are some specific reasons, too.

I am often deeply critical of myself, something that doesn’t need to be re-read and dwelled upon. I sometimes tear myself to shreds when I’m writing a journal entry. I’m extremely critical of my flaws and mistakes, and while that can be good in the moment when I’m assessing a situation or setting out a goal, it doesn’t do me any good to read it later or for someone else to read it.

I am sometimes honestly critical of my children in a way that I wouldn’t want them to read; I do this not to be cruel, but to figure out how to be a good parent to them. It does not make me a good parent to pretend that my children are perfect and flawless. Rather, one of the best things I can do as a parent is to honestly assess their good features and their flaws and take those into account when I figure out how to communicate well with them and guide them toward good decision making practices, life ambitions, and things of that nature. For example, I might write down that one of my children is extremely conscientious of others but is sometimes excessively boastful, or I might write that another child is richly thoughtful but very quick to frustration and anger. (Obviously, these aren’t actual observations and are quite sanitized to boot, just examples so you understand what I mean.) Those aren’t thoughts that I want them to read, or anyone else to read.

The same is true for my wife and my role as a husband and, occasionally, some of my friends and my role as their friend. I do similar evaluations of my wife at times. In what ways is she amazing? In what ways can I complement her with my strengths? In what ways does she complement my own weaknesses? How can I help out in areas where she’s not as strong? I’m sure she’s glad that I think about such things and consider how to be a better husband, but I don’t think even she would want to actually read such thoughts. The same thing is true if I assess a friend, particularly if they’re asking me for some life advice. I want to give the best advice I can to them, and that sometimes means being critical, and sometimes those words find their way into my journals.

Thus, I don’t save old journals, at least not anything older than my most recent one. I keep my current journal and my previous one in a secure place where they can’t easily be found. My current journal is easy for me to grab in the mornings, but it’s not in a place where it would likely be found. When my current journal is full, I destroy the previous journal after I read through it again.

For a while, I was keeping digital copies of my old journals, but I found that I was never looking at them, didn’t really want to ever look at them, and didn’t want anyone else to find them, so I stopped doing this. The downside to others finding those thoughts was worth more than the upside of any potential limited use I might have for them in the future.

The policy of destroying the journals and keeping the current one secure lets me be more unguarded with my journaling. Given that I know my journals won’t be around for posterity, I feel more comfortable just letting my thoughts fly on the page. I don’t worry about who might read them or how they might appear for posterity. At worst, the most recent journal or two might be found, and that doesn’t worry me too much. I usually start off each journal with a note saying that this is a collection of my unguarded thoughts as I worked through personal decisions and I would appreciate that the journal would be destroyed upon discovery if I were to pass.

I vastly prefer handwritten journaling, but I may switch to using a stylus and writing on a table in the future as those technologies improve; writing by hand provides a clarity of thought that typing doesn’t quite provide for me. For me, typing is conducive to rapidly recording ideas, but the process doesn’t allow me any space to think about them. If I want to explore my thoughts, consider things, and actually remember them, I write things out by hand. This is true for journaling, but it’s also true for taking notes at meetings, taking notes when I’m reading, taking notes during a lecture, and so on. I write all of those notes by hand and, if there’s potential value that I might get out of them later, I convert them to digital format.

I feel like taking notes with an Apple Pencil on an iPad is 90% of the way to where I want a stylus to be, but it’s not all the way there yet. When it’s perfect, writing thoughts down on a tablet using a stylus will be the best way to journal and take notes because it offers the advantages of both writing by hand and digital notes, but for now, it’s not quite there yet, and given a choice between the two, the thoughtfulness and retention of writing by hand outweighs typing out journal entries for me.

I use Leuchtturm 1917 journals and either Uniball Signo 207, Pilot G2, or Pilot Juice pens. The journal isn’t a requirement – I’ve used all kinds of different things over the years – but I really like the size and the binding and paper quality of that specific journal. One of those usually lasts about two and a half months for my journaling purposes. As for the pens, I really only have three requirements for a pen: it needs to write when I want it without a lot of futzing around, it needs to have a thin line and not bleed all over the page or make a mess, and it needs to not leak in my pocket. The pens listed up there pass those tests with flying colors. I can get weeks and weeks out of writing with just one of them and it costs less than a dollar, which is good enough for me. I’d rather spend $0.75 on a pen that will write for weeks without fail and not make a mess or leak than a $0.25 pen or a freebie that will need a bunch of waving around or tinkering when I want it to write, leave a ton of messy ink on the page, and inevitably leave a big blotch of ink on the paper or in my pocket.

Final Thoughts

Spending some time each day journaling – simply writing my thoughts down on paper – not only helps me piece through the problems in my life and ideas in my head, it also helps clear my mind and make it easier to focus on the tasks of the day because it quiets the voice in my head that would otherwise keep running through those problems and ideas. It has helped me not only figure out a bunch of financial and professional problems, it’s also helped keep my mind focused when actually doing work to earn an income.

I find that my “45 morning minutes” practice works extremely well for me, but there are many practices out there that range from simply listing the events of the day, writing what you’re grateful for, brainstorming, and many other things. I highly recommend trying several practices until you find one that works well for you and then stick with it for a while. You might just find that it becomes an essential part of your life toolbox.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.