From Financial Integrity
Here are some tips and inspirations from long-time practitioners, speakers, and hosts regarding Step 2 - Tracking, collected in the summers of 2008 and 2010. Add your tracking wisdom!
Linda, Florida, USA
I highly recommend Quicken--you can personalize the categories as well as use the standard preset ones (good for those who are new to Quicken). I use my credit card for all most all purchases and put the receipts in a special drawer. When I receive my statement at the end of the month I match up the receipts to the listed transactions and then manually categorize and enter into Q. (Quicken will import directly from my credit card but doing it manually forces me to pay closer attention to both my statement and my spending).
Many folks are nervous about using their credit cards for all purchase for fear of a "surprise" bill at months end. However, after nearly 20 years of tracking my expenses I have a built in barometer and automatically know when I've hit my "set point" for the month and I'm always within a few $ of my target (and I get FF miles and/or gift certificates for gas and stores I frequent.
Tracking my expenses on Quicken has also yielded other advantages. 1--As I review my statement each month and match up my receipts, I note the amount of sales tax I spend per month and then jot this down on a separate post it. At years end I quickly add the 12 months total and have found that it often exceeds the standard deduction for sales tax on my Federal income tax form. This takes me about 10 min. a month to record and has generated hundreds of dollars in refunds since I started keeping track--not much "life energy" for such a big reward. (Since I'm debt free I can't always itemize; however, if I pay 2 years real estate taxes in 1 year--Jan 1 for preceding year and Dec 31 of current year--I will have enough deductions along with my charitable contributions to file the long form in alternate years).
The other benefit from using Quicken occurred when I kept noticing discrepancies in the deposits to my retirement funds accounts versus what was recorded on my monthly direct deposit paycheck stubs. Over a two year period this amounted to over a $5000 loss to me which the company did not want to pay because of their 90 day window of liability for correcting errors. However, since I had kept track of all the phone calls and people whom I spoke with they eventually paid up after I threatened to contact the SEC. The sad fact is that I work for a large college and the local rep told me "off the record" that there were multiple people whose accounts had been incorrectly entered but because these folks "failed to report the error" no remedy was forthcoming; only those of us who complained got the funds restored to our accounts.
The moral of this story is that tracking has multiple layers--like most other things in life. Those of us who are right brained by nature can do well by training our left brain to pay attention to the fine details of our financial lives and to endure the tedium required to learn software programs and/or track by hand. In my pre- Quicken days (at least for tracking my investments) I was happy enough to open my quarterly statements and note that my funds had increased--now I know better and keep better tabs on my money so that I can remain financially independent.
Using Quicken also allows me to have a clear historical record of all my income and expenses. Recently, I pulled a report and discovered that I had "earned" over $8,000 in 10 years from rebates and by using coupons. Also, my brother had a massive stroke in January and is now paralyzed from the neck down. Since I manage his money for him, I was easily able to pull up the 5 years required financial history needed to qualify him for long term medical care and SS disability payments.
Jonathan, Missouri, USA
I use an old accounting package from when I was considering starting a business. Before that I was using a word processor with a fixed width font and a 4 function calculator to do the math. That is, categorization on electronic paper... ;-)
I encourage people to put everything in Miscellaneous until they decide they want to track a particular item for some reason. It makes no sense to have a bunch of categories unless you are going to evaluate the contents of each category and possibly change your behavior based on what you see.
The other reason to have a category is to remove spending from Miscellaneous. This is typically for items you plan to make no decisions about because you have little or no control over them or you've already decided they fit and you don't want to waste much time tracking them. Call it Fixed Expenses if you like. Then Miscellaneous starts to reflect choice spending more. Things like Taxes, House payment, Car payment, etc., where the outflow is typically fixed on a monthly basis and you plan to be unconscious of this spending - you've already decided to spend it and there is little or no chance of changing it. Getting all wrapped up in putting each of these payments into it's own category is a waste of energy better spent looking at categories where your daily decisions are perhaps more hurtful and difficult to manage
I still think one ought to look at the Fixed Expenses category regularly to make sure things in it are really fixed. But that's likely to be a quarterly or annual event, not monthly. The other thing I try to impress on people is that it will take a while for their categories to "settle down". Perhaps as long as two years. Reviewing (the actual list of) categories should be an annual exercise or as your life changes - I had to add two categories when we bought our new house. When the old one is finally out of our life, then I'll get rid of those two new ones.
Jef, Georgia, USA
I still use paper, pencil, and an HP-48 RPN calculator to track and categorize my spending. Although it takes more time to do the calculations "by hand", I find that that time is worth it...it forces me to pause, to think through my expenses, to consider whether I've truly captured all expenditures, to ponder categories, etc.
In other words, I find that the "contemplative" aspect of tracking and categorizing is, in itself, a worthy pastime from multiple perspectives.
And, yes, I'm aware of the many programs available for helping with the process. And, I'm no Luddite...I use Excel regularly, and although I've never "gotten into" Quicken, I understand the advantages its use can bring to the tasks involved. I suppose what's most important to me is to cast the entire tracking/categorizing process as an exercise in awareness, in keeping the mind sharp, in clarifying what's going on in one's life with money, with time, with life energy. Are there times when I'd rather be doing something else? Of course! But, I can say the same thing of taking time to pray, or doing chores around the house, or attending an event that I am not that interested in, but that I feel called to support. Nevertheless, all of these activities are important, and all offer us blessings in proportionto how we approach them. As Thérèse de Lisieux's said with her dyingbreath, "Grace is everywhere." So, paper, pencil, and calculator for me.... ;-)
Rose, Washington State, USA
In general, my tracking method involves collecting receipts and entering at least every few days in accounting software. I heartily dislike going to large one-stop-shopping stores, and much prefer the quality, service, and local-economy-building of small, locally owned shops, but that makes for a lot more transactions. Since I now work down at the Pike Place Public Market twice a week, I usually give myself a cash allotment of $40, run around from stall to stall until that's exhausted, and track it as one transaction: $40 groceries.
This week, I forgot to get cash out at the bank, and loathe to give an ATM company $2.00, I used my debit card at each stall. To my great dismay, not only was it harder to keep track of how much I was spending, but I realized I had 6 different receipts to be entered -- and I wasn't done shopping!
I think the moral of this story is that even the "simple living" practice of locally-based shopping can make for a daunting tracking situation, unless you adapt your system and lighten up a bit. So my tracking system varies with the type of purchasing I'm doing: corporate shopping that I don’t trust, I use cards that make it easy to do returns and I track meticulously. Local-owner shopping, I follow the "cash envelope" method and record lump sums.
Suzanne, North Carolina, USA
My husband and I do track from time to time - saving every receipt for a few months and then comparing them to get an average of our expenses for various things. Most importantly we have learned to live on less than we make so we don't even have to worry about tracking - we do that just for our own interest.
Two years ago my husband got laid off - we have been able to stay afloat in our home while we both adjust to new working arrangements. I have 3 children 13, 10 and 8. I only work part time.
We are not suffering, we do not live a skimpy life by any means. We eat mostly organic food and grow some in a community garden near by. We have very low health insurance premiums and we usually pay our way at the doctor because it is way less expensive than paying for insurance that mostly never gets used. We have an emergency policy in the event of a big accident. My husband and I are in our mid-40's and mid-50's and neither of us take medication for anything. My husband did have a very serious motorcycle accident when he was young and he does get a small stipend from workman's compensation. He also has to have his hip replaced every ten years or so - we are on hip number 3. We both do a moderate amount of exercise.
I think tracking is very important for people who live unconsciously 'til they get an idea of where their money is going. And then you have to respond to the information you gather and adjust your life so that you can find room to save - it's as fundamental as eating well for it provides security, and an element of mental health in knowing that you are in control of your own destiny.
Caroline, Massachusetts, USA
When I asked my husband about resistance to tracking, he said immediately that the emphasis on 'every penny' is not helpful. Most people just don't want to live like that. Years ago, as part of my method of bringing him on board with tracking, I streamlined our tracking to better suit him and it's been a success.
We use round numbers. We track cash as best we can but don't make a fetish of it. At the beginning of each month we note the amount of cash we have on hand and at the end of the month, I add up what we've been able to account for as cash spending and deduct it from the cash on hand + the amount we withdrew from the ATM over the month. Sure, this style almost inevitably means we have unaccounted for cash. I've added a category for that. Sometimes there's almost nothing there, sometimes after a complicated month there might be as much as $200 there--which used to drive me crazy, but now doesn't. Here's why--interestingly, Keith has begun to watch that number and really try to get it down to a trivial or at least reasonable amount. Seeing a large number there has gotten his attention about being more aware of his spending far more effectively than all the talk, argument, FI reading, etc. ever did. I'm pleased.
Another strategy I've suggested to resistant trackers is to select one or two categories they really understand and want to know about and can see some compelling reason to track. For example, what does your car and housing cost you? Especially now, people can wrap their minds around the usefulness of that kind of data.
Still using the same excel sheet for tracking that I've used almost from the very beginning (categories have shifted, form hasn't). I print it out and fold it in half and have found it fits in every wallet Loren or I have had... I’m currently in transition from the Excel spreadsheet to using Quicken for the month-end summary and questions.
Robert & Maria, NSW, Australia
I would like to share some of the things that have kept us at it for the past 17 years since we first heard the tapes (Dominguez; Transforming Your Relationship With Money) and started on this journey.
The main thing is maintaining a vision of a life that is free from the burden of "having" to work for money for anything from a quarter to a half of your waking life, and being free to spend your time doing things that are important to you and for which you are not likely to be paid much, if anything, of even doing things of service to others for which you would not want to be paid.
Another thing that kept and keeps me at it was Joe's observation that "consciousness keeps ahead of inflation I have always had a great uneasiness about inflation, and having lived in Germany and talked with people who lived through their horrendous inflation of the 1920's I have felt the need not to have my financial boat be swamped by that wave. So a second aspect of our vision is having at least some control of our financial situation, regardless of what happens around us. A third aspect of our vision is living a life which does as little damage to the planet as possible, and our society's overconsumption is well on the way to make the planet uninhabitable for many, both human and non human (and has actually led to many species not even existing any more).
We have taught the principles (of the nine steps) to many people over the past dozen years or so. People pick it up to various extents and it appears to us that those who do the most effective work with what they have learned from the program share some aspects of the vision we have. I don't believe that others need to share our vision in order to engage in tracking, but if you don't have a vision of some sort to which your unconscious spending is a block, then keeping track of your spending makes no sense.
We live on a very modest level, but we do have a reasonably active financial life since we operate a business (facilitation and training) and are active with many groups and organisations, and these activities cost some money at times. We pay a lot of the expenses of our business from our cash and credit cards, and then reimburse ourselves at the end of the month. We also operate our own pension fund, and I do all the accounting for that as well. So our monthly accounting is reasonably complex. But I can do all of it, our business and personal accounting and transactions between the business and ourselves in about one day, which I feel is pretty reasonable, especially since it helps me be clear on how we are doing with respect to fulfilling our vision.
We managed to reach crossover (see Step 8) ten years ago, and consider everything we have received from using the program to be a great blessing, but we still track. There's still inflation going on, and our financial independence would easily be lost if we did not keep track of what is going on. Besides, knowing our limits produces great creativity. We still do our business, which is for us very much a part of carrying out our life purpose. It is a source of considerable joy to us that we can basically put the profits as well as the work we do at the service of others.
It seems to us that it is especially important that people be very clear on why they want to have the financial integrity, intelligence and even independence that this program offers. Otherwise tracking does just become a pointless exercise in anal-retentive obsessive compulsive behaviour.
Fred, Colorado, USA
I don't feel that tracking the flow of money in my life has gotten any harder or easier than it was in 1992. Even with my background as a software engineer, I have tracked my finances on paper from the start. Nothing has changed that way of doing things.
As changes happen in my life, some changes are hard to integrate into the Steps. How would I track the financial flow of a divorce? How about the death of both parents, five years apart? How about interstate and international moves? How about living and working in another country?
I've been through all this since starting the program, and kept tracking the whole way through. Along the way I finally reached financial independence, too. :-)
I find that tracking my financial flow is more onerous when life is too complicated. It's a symptom, not a problem in and of itself. It's not that anything became more difficult over the years; it's that I've sometimes made my life overly complicated and difficult. When that happens, I consciously work to simplify my life, get rid of excess stuff, and calm it down to a dull roar again. I like an interesting life, but only so long as it remains relaxing and fun, ya know?
I liken personal financial tracking and FI thinking to weight loss and fitness. I haven't only transformed my own life financially; I've also lost 100 pounds and gotten myself in shape to run 100-mile ultra-marathons. I made both these substantial changes in the same way: lifestyle change. In the same way that weight loss and fitness isn't achieved by dieting, financial integrity isn't achieved by budgeting.
Instead, it's a matter of shifting how we live each day, as a matter of course. It's an entirely different way of living. You can call it holistic, centered, conscious, or just plain ol' long-term thinking. It's the same thing -- it's living each day with the intentional plan to create a long-term future of health and happiness in our lives.
I don't think it's any more difficult now than it was in 1992. This way of life involved swimming upstream in our culture back then, and it still does now. We have to be willing to be the "weirdos" to live this way. :-) Happily weird (and weirdly happy!)
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