Get Your Finances in Writing

“Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not; it is the first lesson that ought to be learned; and however early a man’s training begins, it is probably the last lesson that he learns thoroughly.”

Thomas H. Huxley, English biologist (1825 – 1895)

Often, the biggest challenges people face in reaching their objectives, financial or otherwise, are not external, but internal. For reasons we can’t entirely comprehend, great plans and good intentions are undone by our poor behavior.

We may blame it on a lack of willpower, a character flaw, or even a psychological condition; regardless of the explanation, we find we are our own worst enemy. And even the best among us feel the frustration. 

Paul the Apostle once wrote:

“For what I am doing, I do not understand; for I am not practicing what I would like to do, but I am doing the very thing I hate.”

At one time or another, we’ve all been there. So if some of the biggest obstacles are internal and psychological, what can be done to fix them? There are many ways to resolve these issues, and many people to help you. Yet when it comes to achieving your financial objectives, there is one simple, practical thing anyone can do to improve their chances for success:

“GET IT IN WRITING.”

Seriously. 

Whether you use a pencil or your smartphone, getting things out of your head and onto ‘paper’ increases your chances of achieving your objectives. As Will Ferrell would say in Anchorman, “It’s science.”

First, the physical act of preparing a paper or digital document requires a greater level of engagement. Thoughts and words are vapors that can easily dissipate when new distractions emerge. However, getting things in writing usually forces your brain to focus on the task at hand and encourages clarity. 

And the physical act of writing (or, to a lesser degree, typing) engenders another level of reinforcement—your thoughts take on a visual aspect, and even gain some “muscle memory.”

Second, putting your thoughts in writing leaves a trail, one that is visible to others. You’re saying “on this day, this is where I was and this is where I wanted to be.” And when you put it in writing before a spouse, partner, or financial advisor, that document becomes a common point of reference. Others can use it to understand you, help you, remind you, and challenge you.

What Should You Get in Writing?

1. Write (or type) your present financial condition.

Most people believe that they have a good idea of their current financial situation. They can tell you if they’re current with their bills, whether they’re saving money, and roughly how much they earn in a year. Yet move beyond the generalities, and you’ll find most people don’t have a good grip on what’s really going on—it’s all sort of fuzzy.

Consequently, it’s difficult to make new financial decisions with any degree of confidence. Are you sure you can afford a new car payment? What about refinancing? If you start a new life insurance program, will you be able to make the premium payments? When you’re not sure, you either make guesses or put off any decision-making, and neither of those options has a high success rate.

A Cash Flow Statement

Imagine what could happen if you committed to preparing an accurate cash-flow statement every month. First, just attempting it would improve your financial organization. Automated credit card payments could be made from the right accounts, receipts would be kept in digital files—if nothing else, you would have a record of your transactions and financial situation.

For some, making an accurate monthly cash-flow statement might be a challenging task. It might take a lot of effort to sift through various accounts and sort out your transactions, bills, and payments. If you find a cash flow statement requires too much work, start by picking one or two financial categories that need the most attention, like tracking your debt reduction progress or monitoring the monthly accumulations in your savings and investments. Focus your efforts on collecting accurate information and writing it down (or type it up).

There are a variety of tools available today that make tracking your finances a breeze. Alongside writing your goals, you can use banking apps to track your purchases and automate payments. Third-party financial apps also allow you to track all of your credit cards, other bills, and incoming and outgoing cash flow, making it very easy to check your progress on the goals you’ve set for yourself. 

In fact, some even remind you of your subscriptions—which could be costing you without your knowledge.

2. Write (or type) your financial objectives.

In general, everybody wants more money. Yet how much do you want, and for what purpose?

Everyone knows the job of the sales and marketing departments is to convince consumers to buy their products. And most people understand that these experts use a range of psychological ploys, both blunt and subtle, to compel people to make a purchase. If you’re not clear on what you really want, you are much more susceptible to being sold on something else.

Writing down what you want to accomplish makes it easier to resist the daily bombardment of sales pitches. You’ve embedded your own financial values, which allow you to see which items align with your objectives and which ones don’t. Clearly articulated objectives help you recognize that a flat-screen TV priced 50% off is a great deal—yet only if you were already planning to purchase a flat-screen TV.

By writing your financial objectives and the current state of your...

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