Tracking is a powerful tool for clearing the money fog, reducing financial anxiety and creating a healthy relationship with money.  Financial well-being is a layering process and tracking is the foundation.  The benefits of tracking are feeling in control, being ahead of online banking and experiencing the present moment with your money.  Tracking is also an antidote to magical thinking.  You’ve got to pay attention in order to understand what your money is communicating.  Many clients ask, “How long will I need to keep this up?”  It really depends on your personality.  For some people, 1-3 months of tracking is enough, but for others like me, it becomes a life-long practice.  Most people fall somewhere in between, but gear up for the long haul – it’s incredibly empowering and you might love it!  Make it personal, have an open mind and be curious – I can’t wait to hear about what you discover.

1. Choose your preferred modality – a small notebook (lined or blank), a classic checkbook register, or an app.  Where do you like taking notes?  Which option makes you feel happy and inspired?  There may be others!  Suggested apps – iPhone: Checkbook by Jeremy Jacob, iXpenseit, or Day Bank Droid: Loot, Spensa Lite or Expense Manager

2. Set it up with separate registers for each account.  At the very least, set up your primary checking account and your wallet as a cash account.  Consider adding active credit cards, regular active savings accounts, and other checking accounts.  If you’re using a notebook, each account should start on a separate page.  In a checkbook register, consider starting your cash tracking on the last page or use a paperclip to easily access the middle of the book and start a separate account there.

3. Enter the first transaction in each register – the starting (current) balance.  For your cash, literally count your cash and record it.  For the other accounts, login online and record as close to an accurate balance as possible excluding pending transactions.  Be sure to think carefully about any un-cashed checks you’ve written or any other ways the online balance might be off.

4. Start tracking!  Out and about in your daily life, record every single thing that happens to your money – debits, deposits, checks, automatic payments (you’ll have to login more frequently and pay attention to when these happen), reimbursements, refunds – all of it.  Note: transfers will affect two of your registers, for example, when withdrawing cash from the ATM, you will subtract the amount from your checking register and add the amount to your wallet register.  The same mechanics apply to credit card payments – record the transfer in both registers.

5. Do the math – I call it the courage to subtract.  Everyday, use your big-button calculator and subtract what you spent and add what you deposited.  Maintain a running balance, you should always have a current balance in each register.

Tips – If for some reason you can’t record a transaction in the moment, be sure to get a receipt.  If you’re buying fruit from the guy on the corner, write a note on a business card or napkin.  Record the day’s receipts when you get home.  Warning – do not let the receipts pile up – they will start to grow fangs in a few days!  If you choose to set up a notebook or paper checkbook register, decorate it!  I personally added glittery heart stickers to my first register and have clients who wrote affirmations on theirs with multi-colored markers.  If you lose track or the numbers stop making sense, don’t stop tracking.  Write balance adjustment under What/Who/Where, record the difference under In or Out and update the correct balance.  Move on!

Here are a few examples…

BOA Checking Account

DATE

WHO/WHAT/WHERE

OUT

IN

BALANCE

1-19-14 starting balance $89.11
1-19-14 groceries $21.08
1-19-14 paycheck – book royalty  $1,200 $1,268.03
1-20-14 coffee $4.30
1-20-14 Joie $222.22
1-20-14 car payment – auto-pay $199.46 $842.05
1-21-14 ATM $100 $742.05
1-30-14 visa payment $597.33 $144.72

Wallet Cash Account

DATE

WHO/WHAT/WHERE OUT IN

BALANCE

1-19-14 starting balance $103.19
1-19-14 babysitter $50 $53.19
1-21-14 ATM $100 $153.19

Chase Sapphire Visa

DATE

WHO/WHAT/WHERE OUT IN

BALANCE

1-19-14 starting balance $311
1-19-14 Netflix – auto-pay  $7.99
1-20-14 shoes at Bloomies  $333.33 $652.32
1-24-14 returns at B’s $597.33
1-30-14 payment for January $597.33 $0