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THOMAS JEFFERSON once said that eternal vigilance is the price of liberty, and the philosopher Socrates opined that the unexamined life isn’t worth living.
Although they were talking about political freedom and personal philosophy, respectively, Jefferson and Socrates could well have been discussing personal finance. One of the best ways to engage in financial vigilance and self-examination is to keep a daily financial journal.
I’ve kept a personal journal since I was 14 years old, and I’ve written a daily personal financial journal for the past 15 years or so. While both practices have been beneficial, here I’ll talk about how I keep a financial journal.
Every morning, coffee in hand, I sit down on the couch, fire up my laptop, and grab a pen and my journal. A date goes in the upper left-hand corner of the day’s page. The top third of my journal I dedicate to non-retirement matters.
On the top left go bank account balances. I also list a brokerage account not designated for retirement. These entries detail all the funds I have on hand. Checking these accounts daily ensures that incoming pay has actually been credited and that outgoing checks have cleared.
In the middle of the top of the page, I list a running total of the charitable contributions I’ve made for the year. This total confirms whether or not I’ve hit the mark on my charitable aspirations. Right below this number, I list any bills coming due. This item keeps me from forgetting about them and incurring late charges. I also list here upcoming quarterly state and federal tax payments.
Finally, I list my Discover and American Express running totals. Discover I use for big, unexpected bills like car repair or cat repair or Doug repair. My American Express I use for day-to-day expenses.
One of the benefits of checking and logging these numbers daily is to detect fraud promptly. Once, in the early hours, I was noting my American Express charges from the previous day.
Trip to Aldi. Check. Coffee at work. Check. Four Uber trips in a California city I’ve never been to? A quick call to American Express resulted in shutting down the account and eventual issuance of a new card.
A second benefit of checking American Express every day is that doing so makes it easier to track the quality and quantity of my day-to-day purchases. I can see relatively quickly whether I’m spending too much and will overshoot my monthly goals. In an article, Bola Sokunbi argues that “consistently keeping a spending journal will tell you exactly what’s happening with your money.” If you don’t track your expenses, it’s difficult to change them.
Under my credit card expenditures, I also list my two credit scores and my “membership rewards” points, which I faithfully transfer to my Delta Skymiles account every month.
After I finish with current accounts, I move to retirement. Starting with my tax-advantaged accounts, I list current values, making a note by each account detailing when it will be used and how. For example, by one account, I might write, “Post-70 annuity.”
On the right-hand side of the page, I list the current balance of a pre-Secure Act IRA I inherited in 2011. I also record the amount of the required minimum distribution (RMD) I’ve taken for the year. Below the inherited IRA, I list the current value of my Roth IRA.
The two accounts are listed together because they work in tandem. Every year since 2014, I’ve paid taxes on the RMD and deposited the remainder into the Roth. Checking these accounts helps me ensure that my contributions have actually made it into the Roth and that they aren’t sitting for months without being invested.
Below my tax-advantaged growth accounts, I list my two dividend accounts—a REIT index fund from Vanguard Group and a managed stock dividend account. I also note the dividends I’ve received for the year, and I make sure that these numbers are growing.
Finally, below my dividend accounts, I list my three non-stock core retirement accounts. First, I list the balance on my Calvert Community Investment Notes, and I also keep a running log of the dividends I’ve received for the year. Then I list the current value of my cash-balance pension plan. Every two weeks, I use an online calculator to run an income projection. I want to know where I’m going to stand in about 13 years. Finally, using my online My Social Security account, I run projections of my Social Security income at 67 and 70 every month or so.
Knowing where you stand is half the battle in personal finance. It can keep you from panicking and worrying.
Another advantage of daily tracking is that if—God forbid—there’s a security breach, I’ll know about it in almost real time. Ditto if I ever try to log in and can’t.
Finally, while I recognize that there are apps that’ll perform some of these functions, I don’t want to link my accounts, plus I get pleasure out of watching a blank page take shape every morning.
In 1852, Henry David Thoreau celebrated the keeping of a journal. While Thoreau was writing about personal journaling, his thoughts apply to keeping a financial diary: “The contemplation of the unfinished picture may suggest its harmonious completion. Associate reverently and as much as you can with your loftiest thoughts. Each thought that is welcomed and recorded is a nest egg, by the side of which more will be laid.”
Douglas W. Texter is an associate professor of English at Johnson County Community College in Overland Park, Kansas. Doug teaches a composition I course that focuses on personal finance. His essays and fiction have appeared in venues such as the Chronicle of Higher Education, Utopian Studies, New English Review and The Writers of the Future Anthology. Check out Doug’s previous articles.
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Hi Doug! It was interesting to read about your expense tracking method. I have been tracking my expenses for the past 3 years. I track them daily using empower (formerly Personal Capital). Tracking my expenses daily has helped immensely. I am very aware now where my money goes, lol. I also set up my credit cards to alert me via email any purchases over $1. I don’t budget per se (mentally maybe) because I track expenses and feel that is sufficient. Tracking expenses has been one of my best financial choices 🙂
I salute the idea of keeping track of your finances. I even understand the idea of the handwritten journal. However, someday, maybe in say 10 or 15 years, you will want to know when you did something, bought something. Maybe you made some improvement to your home that could affect its taxable basis. What will you do then? Will you go back page by page through 25 years of handwritten journals trying to find that little bit of data you need? Via Quicken, I have all the info you have plus it is easily available and able to be located quickly.
Well, what you say might be true for some. I don’t own many physical assets. No house. No desire for one. I’m a pretty committed renter. Cost basis for all financial assets is obtainable via the companies holding the assets. Everything else that I would buy would be recorded via credit card.
I think that if you check with the credit card co you will find that there is a limit of perhaps 5 years of data, so that if you want to know something outside that time frame you are SOL….Likewise brokers do retain your cost basis for what you purchase, they do not retain statements indefinitely….And, what happens, god forbid, if your rental had a fire, do you have copies of your journals at least?
I’m not sure what I would need to retain in terms of credit card receipts beyond five years. I’m not planning on selling anything during my lifetime in terms of qualified accounts, so that really isn’t an issue. If my journals burned, they’re about record keeping, but they’re more about instilling the habit of tracking.
I am sure you have renter’s insurance. You know this is either a replacement cost version or ACV version in which items are depreciated. With the replacement cost version you get new items even though they cost more than the old ones. But, you have to be have proof of purchase to id the item and its cost…..You might ask your agent what documentation you need to have to prove a claim…(maybe you will tell me that you rent a cave and use boulders for tables and chairs) 🙂
No cave. But in Walden, HDT talked about wanting to live in a tool shed. Maybe that’s my next move. I do have renters’ insurance because my landlord makes me have it. Honestly, I really don’t have that much tangible stuff. 5000 dollars would replace just about everything. And one correction: above I said qualified. It’s non qualified that I will never sell.
Enjoyed your article! No daily journal for me, but I use an Excel spreadsheet to track income projections, bank balances, investments, and expenses, and have from time to time discovered a couple “4 uber trips in a city I’ve never visited” incidents on a credit card. Probably 5-10 minutes a day to do the updating. One tab of the spreadsheet is a textual record of major financial actions that are helpful to look at from time to time. Perhaps that is my “financial journal”?
I do something similar on a daily basis. My spreadsheet has numerous sheets also to track things like charitable giving, cost per trip to see family etc. On Jan 1 every year I first list all the things I’m grateful for. Next, I list several big things I’d like to do during the year such as visit Yellowstone NP. Then, I update a spreadsheet that tracks all my assets, every account, everything. Once done, I save that sheet as sort of an end of the year snapshot, then create another sheet and move on. I can now go back, over the years, and see the progress, the ups and downs giving me perspective on how events such as Covid or the Great Financial crisis in 2008 affected my finances.
Glad you enjoy yourself, but there is no way I would ever do that. I take the opposite approach – benign neglect. I do check my credit cards and bank account a couple of times a month which is adequate for catching fraud (assuming the credit card company didn’t do it for me). Almost all my bills are on auto-pay, although I do pay my credit cards myself. My investments are in low cost index funds that require no attention. Once a year when I take my RMDs I rebalance my portfolio if I think it’s needed.
It’s a good use of time for you, because you obviously enjoy it, but it would be a big waste of time for me, because I wouldn’t enjoy it, and I don’t see the necessity.
And another thumbs up for Quicken. Each morning, I grab a cup of coffee, log in, hit “Update Now” and every bank account, credit card, and investment account is fully updated for any new transactions and most recent valuations. Any new transactions are flagged so I can review them for propriety. The only account that is missed is the US Govt TSP so I have that secured w 2FA and an additional account “lock” and manually update once per month. I have little interest in tracking my daily net worth. I do this purely as security check for any fraudulent activity. It takes less than a half cup of coffee and sets me back the princely sum of < $0.17 per day at Quicken’s $60/yr fee. Worth every penny.
Your system is a bit more detailed than mine, but similar. Many years ago my husband and I were working toward a goal and wanted to easily see what our accounts had done over the year. So we listed all our accounts (on paper) and how they had increased or decreased, with a total. Twenty five years later it’s so easy to see the progress. It was so helpful when he passed away, too, and I had a list of all the accounts.
Thanks for sharing.
I like the way you’ve created ritual to further your enjoyment of tasks that many people find onerous. Because I like technology, I’m the opposite in terms of rituals, but find myself doing all the same things my way.
Just wondering if you’ve ever tried, or considered, automating the payment of your bills. I don’t have a single monthly bill that is not paid automatically, except for my annual property tax bill (that I wait until the last day possible to continue earning the interest). I still review the bills, including credit card statements, to assure no fraudulent charges. Just seems like a considerable amount of precious time you could spend more productively every morning. Have you totaled up how much time this routine consumes each month, or over an entire year?
It takes about 15 minutes a day. I do not automate bill pays, and I don’t have that many bills. I just don’t like giving up that control.
One thing to consider is that emergencies happen. One of the main reasons I automate all my bill-paying is what if I have an accident or sudden illness and am in the hospital or otherwise completely out of commission? I don’t want late fees, credit score hits, or utilities disconnected. Just gives me peace of mind. I still check everything a couple times a week to make sure there have been no mistakes or shenanigans.
Douglas, my takeaway from your article (and bio) is that you have probably edged your students towards financial awareness through your teaching style.
The quote from Thoreau is especially relevant to success. We need to envision where we want to end up in order to pursue a path to get there.
Loyal Quicken user here– I know this Tigress won’t change your paper stripes, but in the interest of a bit more efficiency, why not type & save your basic account names in the order you prefer (Word or Excel). Print these out in bunches & then write your notes? Easy to scan them later for a digital record in the cloud, if you wish. Personally I’d go a step further and recommend excel, with each column being a day, then you could update totals with a formula.
Why do I need more efficiency? I would never store this stuff in the Cloud. I think because I take notes on the numbers, I’d prefer to handwrite. Thanks for your comment, though.
You do you, Doug. Chris
Before i read your bio i would have guessed engineer.
At least you will have your mornings filled with things to do when you do retire😎
My bank and Amx alert me via text each time my card is used and also if my card wasn’t present as with online purchase. I have been the subject of fraud a few times and each quickly resolved.
Going to my Fidelity account shows me every activity as it happens, transfers, dividends, interest payments, reinvestment, etc.
Maybe my trust in technology is misplaced, but I really don’t like paperwork
Well, I’m a science fiction writer and fan. I think back to Battle Star Galactica. Adama said, “We have many computers on this ship. None of them is networked.” He was a wise man. I get the alerts you do.
I started a financial journal this year. I did this because I felt I should have a paper trail to remind me of what changes I started such as some monthly (to dollar cost average) Roth conversions I am making and why. I have also made some changes to our portfolio regarding where we are accessing cash.
BTW how long do your daily journal entries take?
Interesting article. I expect lots of comments about how using Quicken or something similar will track all this for you. But there’s something about the old school “stubby pencil drill” that is worth more than just knowing the numbers. I don’t do it personally but can certainly see the value of it.
You were not incorrect. Grin. I think a lot of technology is overrated. For example, I may be the last person on the face of the earth without a smartphone. I’ve seen what they’ve done to my students. Why replace something that already works just fine?
I resisted smart phones for a while but now find mine useful. I have difficulty hearing on the phone, so texting is preferable. I use my phone to adjust my Bluetooth-enabled hearing aids, and it will transmit podcasts, radio etc. directly to my aids. When I was traveling abroad I used the map app rather than paper maps and it was invaluable for using public transport. Now I would probably use its translation capabilities more. However, I have very few apps loaded and don’t use social media.
I finally relented to a smart phone years ago when the case for my flip phone broke and I was soon to travel cross country for training for a new job in a city I did not know.
Yes, the satisfaction derived from the ritual is clearly conveyed in the writing. Wouldn’t change a thing.