A Note from Karen McCall

The following article continues our mini-series on how to take the first steps in healing your relationship with money. If you’re already well on your way to financial recovery, you may want to forward this email to someone you know who is struggling with money issues.

My intention is to send you information that is immediately useful to you, so please let me know if there is a certain topic, challenge or issue you’d like to read about.

Thank you!


The Truth About Money: 3 Steps to Track Your Way Out of the Financial Fog

Have you ever wondered why casinos make you turn your cash into chips in order to play their games? Some say it’s for security reasons, but think about it. If you were tossing real money onto the table, wouldn’t you be much more cautious? And if the thrill of the game stopped outweighing the disappointment of losing, you might not play at all.

But when you play with colorful chips, it’s so much easier to get lost in a “financial fog” and become completely detached from the fact that each of those chips cost represents real money. Unfortunately, even if you’ve never set foot in a casino, you can still be lost in your own financial fog. Credit cards, ATMs and even checks become casino chips that distance us from the real consequence of our spending.

Have you ever opened your credit card statement and gasped because the balance was in multiples of what you expected? Are you only vaguely aware of your current checking and savings balances? Do you keep stopping at the ATM because your cash seems to just disappear? These are all indications that you could be in a financial fog.

If you’ve been in a financial fog for a long time, the thought of taking a clear, honest look at your financial situation and spending patterns might feel very frightening. But until you face the truth and look at your situation in the bright light of day, your situation only gets worse.

 Tracking Your Way Out of the Financial Fog

One of the most powerful tools for getting out of your financial fog is tracking. Simply put, tracking involves noting all the money that comes in and all that goes out. Every time you spend or receive money, you write it down, whether you’re paying or receiving money with cash, check, or a debit or credit card. Here’s a simple way to get started.

  1. Decide whether you’d like to track manually — that is, by writing your transactions into paper registers — or electronically via applications on your smartphone, PDA or computer. For each expenditure, you’ll need to record three simple things: the amount, to whom you’re paying the money, and for what it was spent. For income, you’ll note where the money came from, and the amount.
  2. Start with three types of tracking registers — one for cash, one for each checking account, and one for credit card transactions. Label each register to reflect the type of transaction. It’s important to track cash, credit card, and checking transactions separately to keep yourself out of the financial fog.
  1. Now, every time you spend or receive money, write or type it in the appropriate register. This includes all income and other money that comes in, such as gifts, loans, or refunds. For instance, if you’re paid in cash, note it in the register for cash. If you receive or write a check into your checking account, note it in your check register. If you buy something with your credit card, note it in your credit card register. Likewise, if you return items and receive a refund to your credit card account, be sure to record that as well.

A Word About Resistance

If the idea of tracking each and every monetary transaction makes you squirm and silently say “No way!” you’re not alone. Many people resist the idea, at first. But the rewards of tracking will quickly outdo any initial resistance you may feel. Most of my clients are shocked and delighted when they realize how this simple process starts to change their lives. By becoming and remaining mindful about their everyday interaction with money, they receive important feedback about their money behaviors and have the chance to alter them.

Remember, the purpose of money mindfulness is not to punish you for “bad” spending but to empower you to make informed choices about where your money goes.

If you want more tips on how to use tracking to transform your relationship with money, check out Chapter Four in my new book, Financial Recovery:  Developing a Healthy Relationship with Money (see side bar for link), or visit http://www.FinancialRecovery.com.

July 11th, 2012 by Karen McCall