The Power of Financial Journaling: Why Writing It Down Works

Sitting down to review your finances can feel overwhelming, and you’re not alone in those feelings.

According to a Northwestern Mutual study, nearly 70% of Americans say financial uncertainty has made them feel depressed or anxious. Avoiding their financial problems can worsen those feelings.

Whether you've been avoiding your finances or you're just starting to get a handle on them, WorkMoney has your guide to financial journaling — one of the simplest and most powerful tools you can have.

What Is Financial Journaling?

Financial journaling is the practice of keeping a dedicated space where you regularly write about your money. You can track your income and expenses, reflect on financial goals, or explore your emotions around spending decisions. 

Budgeting tracks the numbers, while journaling helps you understand what's driving your decisions around those numbers. 

Why Financial Journaling Works

Research shows that the act of writing about your experiences and feelings can meaningfully improve your mental and emotional well-being. 

According to a study from the National Library of Medicine from the National Institutes of Health, journaling as a practice helps lower anxiety, depression, and post-traumatic stress disorder — benefits that extend directly to financial stress. 

Reveal your money patterns

You might recognize you're overspending, but not realize it’s often tied to stress, boredom, or being in a hurry. Recording your thoughts and feelings alongside your spending helps you recognize patterns and triggers that lead to unnecessary purchases. Then, use those insights to make more intentional financial decisions.

Find money leaks

Some spending habits are obvious, like unused subscriptions you haven't canceled. But some habits might be harder to see. 

For instance, maybe you’re grabbing takeout when you’re exhausted, or you make impulse buys every time you’re in the grocery store checkout line. By tracking your spending and detailing the reasons behind your purchases, you’ll begin to pay attention to each transaction and build spending awareness. 

Reduce financial shame

Sometimes we feel like it’s better to avoid the problem, hoping it goes away, even when we know it won’t.

Research from the University of Colorado Boulder and Harvard Business School found evidence of a vicious cycle between shame and financial hardships. Money shame leads people to withdraw and disengage, increasing the likelihood of making counterproductive financial decisions and further worsening financial hardship. 

Let’s say you took out an auto loan to buy a car, but you lost your job and can’t afford the payments. Rather than contacting your lender to explain your situation, you stop making payments and avoid their calls. You finally find a new job, only to have your car repossessed. Without reliable transportation, you end up losing your new job.

A financial journal is a place where you can authentically share private details without the weight of shame and guilt around money. Writing down your thoughts and emotions is a meaningful first step toward change.

Connect habits to goals

Start by writing down your intentions. Once you've written down your long-term money goals, you can work backward to identify the specific steps needed to reach them.

Say you have a goal of saving your first $1,000 in an emergency fund. Calculate how much you can realistically save every paycheck. That way, you know how long it’ll take for you to hit this goal. 

How to Start a Money Journal

The most important thing to understand about financial journaling is that there is no single right way to start — there are several approaches that work for different people. 

Turning Insights Into Action

The real power of financial journaling is what you do with what you discover. If you notice that a lot of your spending goes to necessities like gas and groceries, try to find ways to save in those areas. Apps like Upside give you cash back on gas and groceries. You can also use AccessPerks to help you spend less on the things you enjoy, with discounts of up to 50% on popular brands and retailers.

If you’re struggling to make ends meet, financial journaling may reveal spending patterns on food, encouraging you to reach out for assistance. If you’re eligible, consider applying for the Supplemental Nutritional Assistance Program, or SNAP. These are benefits you’ve already paid into, made for any qualifying family in need. 

The Bottom Line

If you’re trying to make real changes to how you handle money, start by understanding why you do what you do. Then, you can figure out how to make better decisions with your money. You don’t need to have it all figured out. You just need to start writing.