What is financial journaling?
Financial journaling is simply the process of writing about your finances on a regular basis. Just like regular journaling, you can approach it in any way you choose.
A journal is a concise record of all transactions a business conducts; journal entries detail how transactions affect accounts and balances. All financial reporting is based on the data contained in journal entries, and there are various types to meet business needs.
Be familiar with the different types of accounts. Being familiar with the different types of accounts you might create journal entries for can help you record financial transactions correctly. Basic account types include expenses, revenue, assets and liabilities.
A money diary will hold you accountable
How many times have you looked back at your bank accounts and honestly not remembered where your money went? By jotting down your daily purchases, you'll be able to see your spending habits and behaviours (both negative and positive) and identify areas to improve.
For example, a company that purchases new supplies creates an expense in its office supplies account. This also reduces the company's assets since it purchased the supplies with cash to make the purchase. The company would debit its office supplies account and credit its cash account.
The Journal of Personal Finance published by the IARFC is distinctive - being practitioner-oriented and an academic journal combined. The research-based articles examine the impact of financial issues on households as well as the practice and profession of financial planning.
To successfully track your spending, you need to commit to writing something down every time you make a transaction over a specific period of time. This will help you identify your feelings and help you understand why you are spending money on various items. (Leveraging journal prompts might help).
In a report by The Smart Lioness, journaling can cause some to overthink about their daily movements, negatively impacting their mental health. Furthermore, journaling can make some think about how they will write daily experiences in a journal rather than actually experiencing in the moment what is occurring.
Set small goals: Start with the intention to write just a few sentences or for a few minutes. Often, beginning with a small goal can help overcome inertia and lead to longer writing sessions. Incorporate art: If words aren't flowing, try drawing, doodling, or adding some visual elements to your journal.
What are the differences between Journal and Ledger? Journal is a subsidiary book of account that records transactions. Ledger is a principal book of account that classifies transactions recorded in a journal. The journal transactions get recorded in chronological order on the day of their occurrence.
What is a financial journal?
A journal is a detailed record of all transactions done by a business. The information recorded in a journal is used to reconcile accounts. Entries are usually recorded using a double-entry method. The double-entry method records a transaction in two (or more) entries.
The Three Golden Rules of Accounting
These three golden rules of accounting: debit the receiver and credit the giver; debit what comes in and credit what goes out; and debit expenses and losses credit income and gains, form the bedrock of double-entry bookkeeping.
Instead of writing in a journal, speak out loud
Speaking out loud forces us to slow down our thoughts and process them differently by engaging the language centers of our brain. You can use an audio note on your phone or computer or stroll outside or around your home and talk to yourself out loud.
Start writing; keep writing.
Start with the present moment (“What's going on?”) Or start with a feeling (“I'm so mad I could bust!”) Or start with a story (“Today the weirdest thing happened….”) Once you've started, don't go back to edit or rewrite. And don't think too much. Let it flow.
In order for it to work you must write down absolutely everything you spend and how you pay for it e.g. cash, debit or credit card. If you forget to carry your spending diary with you make sure you keep receipts for the items you have bought and enter the information into your spending diary at the end of the day.
Every time money leaves you, write down the date, the exact amount, and the expense category. Plan to record your transactions for at least a month. If you carry around a little notebook or smartphone, you can log your transactions as they happen.
There's plenty to learn about personal financial topics, but breaking them down can help simplify things. To start expanding your financial literacy, consider these five areas: budgeting, building and improving credit, saving, borrowing and repaying debt, and investing.
The three golden rules of accounting are (1) debit all expenses and losses, credit all incomes and gains, (2) debit the receiver, credit the giver, and (3) debit what comes in, credit what goes out.
All in all, keeping a money journal can be a useful tool for organising your finances in order to attain financial freedom. You can improve your understanding of your spending patterns and find areas where you can save by keeping track of your income and expenses.
Print a monthly calendar for each month and insert them in each monthly section. Create a monthly budget of your income and expenses in a spreadsheet. Convert your spreadsheet to a PDF and print one for each month. Insert your monthly budget spreadsheets into your binder.
What is the dark side of journaling?
Self-Indulgence and Rumination: Mulling over negative thoughts and emotions repeatedly by writing them down may reinforce them instead of aiding in their resolution. Instead of processing and moving forward, some individuals become trapped in a cycle of self-pity and negativity.
Often it's whiny. Sometimes I do wonder whether it's a waste of time, paper, and ink. I worry that I'm being petty and selfish to write about things that don't seem to matter. And yet, I've learned the value of making space for the mundane.
Being overly critical or harsh with yourself can be counterproductive. Avoid negative self-talk: While it's important to acknowledge your mistakes and challenges, don't use your journal to berate yourself. Focus on constructive reflection.
While both are used to keep personal records, diaries tend to deal with day-to-day activities, more data collection really, and journals with bigger picture reflection/aspiration and can be used to explore broader themes.
Some journal can be very specific on what the writer is using the journal for. An example of this would be, if the writer wants to write about all the places they visited, they would start a travel journal. If someone likes to write about the type of food they cook or eat, they would start a food journal.
