Readers, a reminder: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life. If you haven't yet read the book, you're going to need to read along to know what I'm talking about. Join us! You can buy YMOYL here, and you can find the first post in the series here.
What gets measured gets controlled.
Those five words explain everything. They explain why The Daily Money Log is YMOYL's most powerful tool, and why recording your spending--every cent of your spending--is a critical step toward taking back your power over money.
But if it's such a critical step, why then do many readers refuse to take it? After all, it's ridiculously easy to come up with a long list of objections:
Tracking every penny just seems like too much of a pain in the ass...
Only total losers track their money like this...
I'll feel bad seeing how much money I spend...
My money log might reveal something embarrassing about my spending...
I'll feel dumb keeping track of my spending to this level of detail...
I'm just not that preoccupied with money...
I'm admitting weakness (or incompetence) if I do this...
I'll have to face the fact that I've been a failure with money...
...and so on.
These objections, and the fact that they're so easy to make, are why I'm deeply interested to learn from readers what internal resistance you experienced when you read this part of YMOYL.
So let me ask you: What were your initial thoughts about keeping a daily money log? Were those thoughts negative or positive? Did you catch your ego spouting any of the objections above? What helped you get over yourself and get past your objections?
I've got a hunch that your thoughts may give other readers the encouragement they need to examine and overcome their resistance too.
Our experience(s) with the daily money log: This is the second time we've kept a daily money log. When we read YMOYL for the first time in 2002, we tracked our spending for an entire year. And it was one of the most enlightening and financially empowering experiences of our lives.
But it's not like we became instant money buddhas the day we started keeping track. We had our own psychological resistance to work through, and honestly, the daily money log at first seemed kind of silly to us. Worse, during our first few weeks we often devolved into conversations like this:
"And how much did YOU spend today, darling?"
"I spent nine dollars and twenty-nine cents. Aaaaaaannnnnd you?"
"I spent two hundred four dollars and sixteen cents. [pause] Darling."
[Stunned silence, followed by passive-aggressive annoyed stare.]
My memory gets hazy at times, so I might be exaggerating a little. But I doubt it. Clearly, we struggled with our own baggage and objections too.
The mechanics of the daily money log: There's obviously lots of ways to keep a daily money log, but we opted for the simplest solution. We just kept a sheet of legal paper on our kitchen table, and each day we'd (separately) write down what we spent. At the end of the month I totalled everything up, and then we'd start a new month on a new sheet of paper.
At first we kept track in kind of a half-assed way. Our hearts were (sort of) in the right place, but it took a little while for our data collecting habits to follow. We'd occasionally "forget" to record our spending, and then misremember it (in our favor, naturally) when we got around to writing it down. We still have our daily money log from back then--every single page of it--and you can clearly see our records were erratic during our first few weeks.
But we were simply building a new habit. It just took us a little while to fully groove this new daily pattern--and to stop feeling slightly silly about it.
After a few stumbles (and passive-aggressive stares) during our first few weeks, Laura and I got better at this new habit. We were soon keeping far better records of our spending, and taking a fraction of the time to do it. Soon enough, it became a simple 30-second exercise: the minute either of us walked in the door, we'd walk over to our daily money log, jot down our spending, and get on with our day. Simple. Within three weeks we were doing it without baggage and without a second thought.
After a few months, we started noticing some surprising side benefits: for one thing, we'd taken a quantum leap in our ability to collectively discuss and decide financial matters. This process of keeping track actually taught us how to collaborate on our money challenges.
So let's back up for a second and take another look at the list of objections above. And let me make a confession. It was easy for me to come up with all of those objections, because those objections used to be my objections. Every single one of them. And it was the process of keeping our daily money log that ended up curing me of them.
It was all exactly backwards from what I expected. I thought the daily money log would cause these fears and concerns. It turns out that it annihilated them. All that baggage and embarrassment we thought we'd feel turned out to exist only in our minds.
A few final thoughts:
Why is keeping track of every penny so important? Two quotes from YMOYL explain why. First:
Because it's the best way to become conscious of how money actually comes and goes in your life as opposed to how you think it comes and goes.
We'll get deeper into this idea in Chapter 3. And then:
People who have achieved a high net worth relative to income know how much they are spending on clothes, travel, housing, transportation, etc., and those who don't achieve high net worth relative to income have no idea how much they spend.
This is your life energy we're talking about here. Give it the attention it deserves.
"Every penny? That's ridiculous. I'm sorry, I'm not gonna do that." Yes, once again, that's your ego talking. And once again it's shielding you from the truth.
What's your ego afraid of? Is it afraid that you'll know more about your spending? And are you telling me your financial affairs can't survive a little scrutiny? Don't let your ego sidetrack you from the most financially empowering tool in this entire book.
What's the proper length of time to keep a daily money log? It depends, but I'd say at least six months. Clearly, you'll need multiple months of data to be able to look through various large expenses (like your auto insurance bill, annual professional dues or whatever) that aren't monthly in nature.
We didn't start our 2002 money log with a specific timeframe in mind. But after six months or so we really had our arms around our spending, and after a full year we made the decision to shut it down. While the book gives examples of readers who tracked their spending for many years, you clearly do not have to do this forever. [Edit: That was 2002. Since we re-read YMOYL in 2012, we've been tracking our spending ever since, more than four years now. With our second go-around with the book, we decided to keep our daily money log (and wall chart) habit for the long term, and it's been far more useful than we dreamed. We're finding it valuable to be able to look at multiple years of spending, to have the added context of seeing trends over extended periods. And one of the most *stimulating* trends that's increasingly visible over a period of years is a rapid and highly encouraging increase in your investment income as you save more and more money. But I'm getting ahead of myself. We'll have much more on this later in the series.]
Your money log doesn't have to contain the detail that the book suggests. On page 70, our intrepid authors give an example of a typical day's money log. I'll confess: Laura and I never went into that much detail. We would simply list the spending for the day with a one or two word explanation, like "food," "gas," "mortgage," "cable bill" or whatever. Again, what we did was rarely more than a 30 second exercise. It was enough.
What if I can't get my significant other on board? This is a tough question, and quite frankly I don't know the answer. Laura and I were fortunate: we both wanted to take back our power over our money, and we were both seeking alternatives to consumerism and "making a dying." Readers, any advice on how to manage a daily money log with spouses who aren't on the same financial page?
1) Stop picking on my ego! I hope by now most readers can see what I'm really doing with my repeated references to battling our egos. It's a rhetorical device, and I'm using it for the sole purpose of scaring off the readers who aren't ready to take ownership of their financial lives. I want those readers to go away. That way, I can focus on the readers who are here to make real changes.
2) Applying "what get measured gets controlled" beyond YMOYL: Note that the what gets measured gets controlled concept has applications far beyond money. You can apply it to practically every area of life.
Some examples. Take the calories you consume in your diet. Carefully measure and record them and you'll consume fewer. What about the calories you burn while exercising? Measure them, and you'll burn more.
Your weight. Your blood pressure. Your cholesterol level. Your fitness. The number of pushups and situps you can do. All of these things improve when you actively measure them. It's like Shrodinger's cat:* the mere act of observation significantly impacts the results.
Next in our series: YMOYL Chapter 3: Where Is It All Going?
* Readers, try to ignore the inconvenient fact that Shrodinger's cat dies half the time. I probably should have picked a better analogy.