The Unbearable Lightness of Money Diaries

Americans loathe talking about money. But money diaries can help people open up about it.

To put that historical abhorrence into perspective, imagine you’re at a dinner party with 100 people and the host says everyone has to share details about their political beliefs, romantic relationships, religion, medical conditions, credit scores, and income. Forty-three of those 100 guests wouldn’t mind sharing whether they’re Democrat or Republican. Thirty-seven revelers would be willing to profess their medical diagnoses. Only 20 would disclose their credit score. And a scant 11 would feel comfortable declaring how much money they made. All of those numbers are according to a 2018 Lexington Law survey.

Many people tend to clam up even around the people they love. In three in 10 couples, one partner doesn’t know the other’s salary, according to a Policygenius survey, while a quarter don’t share a financial account such as a credit card. Another 20% of couples have someone who is actively hiding an account from a partner.

This aversion to greenback chitchat might be an American quirk, much like people’s passion for the NFL and peanut butter. But it also comes with consequences.

Nearly half of American adults don’t have enough money in their savings account to cover a $400 unexpected emergency (PDF) and lack the retirement savings (PDF) to pay for the final third of their lives.

The prevailing belief is that if people were to talk more about money, especially in relatable stories rather than dry statistics, they would be more likely to engage in better financial behavior. That’s where the money confessionals come in.

If you read a weeklong diary, for instance, perhaps you’ll be inspired to start tracking your own purchases, which may cut down unwanted spending and lessen the odds you’ll fall into credit card debt. Maybe you’ll adopt our pick for the best budgeting app. Maybe you’ll then feel able to save 10% to 15% of your salary in a 401(k).

Transparency might set you free. And if money diaries help you achieve that, more power to them.

The landmark sociological findings by Samuel Stouffer and his colleagues (PDF) from World War II demonstrate a major downside of the money confessional.

Stouffer asked various members of the military the following question: Do you think a soldier with ability has a good chance for promotion in the army? (In modern parlance, “ability” may be better described as skill or competence.) In the survey, military members with less education were more optimistic than those with greater schooling, and military police felt better about their prospects than Air Corps troops.

This result was surprising because troops with more schooling and Air Corps members were actually more likely to be promoted. Yet they were more pessimistic.

Stouffer’s explanation of this result was that Air Corps members and troops with better education had higher expectations for advancement than what they actually experienced. An Air Corps member didn’t compare himself with military policemen but rather with people like him.

What does that have to do with money diaries? Well, satisfaction with your lot in life is relative. (Stouffer called the concept “relative deprivation.”) If you compare yourself with diarists whose lives otherwise resemble yours, and who you perceive to be living a better life—even if they get that life through advantages beyond your reach—you may be less inclined to take the positive lessons from their financial transparency.

Take a particularly infamous entry from Refinery29: In this one, a 21-year-old intern makes $3,000 to $3,500 a month in income but lives a lavish life in New York thanks to her family’s benevolence. Although she spends $373.53 during the week, including $266.23 on food and drink, her parents pay her portion of the rent ($2,100) and give her an additional $800 a month. (Her grandpa also chips in $300 a month.)

Imagine you’re a college grad living in New York on the same base pay this intern makes, living in a cramped room and struggling to get by, and you read this post. You’re now comparing your situation against that of this anonymous person, and perhaps growing angry and resentful that this person enjoys perks that you don’t receive. Will a tiny sliver of insight into this person’s life really inspire you to save?

The Internet outrage machine kicked into gear for the intern post. But there’s another reason to dislike these types of articles: The act of writing and reading these things may not actually help people with their finances.

This problem is exemplified by another confessor, whom Refinery29 asked to reflect on her life after her diary posted online (she now earns $69,000 a year). She says she appreciated the experience of documenting her spending because she learned that it’s all right to talk about money, even if that involves mistakes. She also says she feels newly empowered.

And what of her financial situation since?

“[U]nfortunately I made some frivolous spending mistakes and fell behind on student loan payments, maxing out my credit cards for birthdays, experiences, and travel. Now I’m working to rebuild my savings and get back on track for the new year.”

If you don’t learn from transparency, what’s the point?

When it comes to the weighty issue of how much you should save and what you can afford to spend, you shouldn’t just look to other people’s money confessionals.

If you’re not into fancy apps or actuarial spreadsheets, consult this index card, which offers a terse accounting of tried-and-true advice such as paying off your credit cards in full each month. It’s a great place to start. Maybe get a little creative and convince your friends to join you in a tanda.

If you enjoy being a financial voyeur, imagine the diarist as a fictional character rather than anyone you might encounter in the real world. In doing so you’ll create a little distance from the author, since very few people would compare their spending with a money diary written by, say, Bruce Wayne.

If you find yourself feeling bad after reading these diaries, they may not be the best use of your time, especially if they don’t offer any real help.

Financial security and confidence, rather than transparency, is the goal.