Living The Examined Life: Personal Data Collection is a Powerful Tool for Change

Machines are, in some respects, much smarter than we are. Specifically, their ability to collect data about us far outpaces our own ability to know who we are and what we do.

Your computer can't tell you why you eat, spend money, sleep, or watch TV. But it can tell you with much greater accuracy than your own memory the minute, often embarrassing details of when and how you do those things.

Any regular reader of this blog is familiar with the importance of tracking the money that moves through your life. It's the first principle of many money gurus, and a nearly religious commitment for some of us who do it (myself included).

Why? Because it works. A wonderful recent article in the New York Times explores how personal data collection about any activity is a powerful tool for change. The author, Gary Wolf, looks at people tracking everything from their money to their drinking habits to the minutiae of what they do every two minutes.

A lot of these people are extreme geeks. But we normal humans have taken up personal record-keeping with new zeal since smartphones and social media have made it so darn easy to not only collect the data, but also to search it for useful information.

Perceiving patterns
People are using the power that technology puts at their fingertips to track details about their lives like:

  • how they spend money
  • how much they drink
  • what they eat and when
  • their exercise habits
  • their sleep
  • everything they do

And a variety of other things. Really, you can track anything you want to understand better.

Having that data at our fingertips is life-changing for nearly everyone who succeeds at keeping the records. Records tell you what you have done, not what you wanted to do, or meant to do, or are afraid you did. They let you answer the question, “How do I spend?” or “How do I exercise?”or “What do I do all day?”

In addition to helping you answer questions, tracking your moods and habits can help you answer questions you haven't thought to ask yet. When you see parts of your life recorded on a graph, you notice things you might have otherwise missed. Wolf likens this to finding a dollar on the street and picking it up. There are all kinds of patterns in our lives that go unnoticed.

I certainly collected a lot of dollars that were going to waste when I started tracking my spending. In addition to highlighting areas where it was easy to cut, tracking my dollars let me see how much more I was spending in some areas, like groceries, than I thought I was. It gave me a direction to focus my frugality in.

The other great thing about collecting your own data is that it is so personalized to you. By tracking your spending, you can see how small changes in health, stress, or mood affect your spending habits. Tracking your concentration might reveal that a particular supplement works well to help you focus, while another doesn't do much.

Tips for tracking
As Wolf acknowledges, though, data collection is only as good as the analysis you bring to it. Technological tools can open up new worlds of insight about how small changes affect our lives, but we need bring our very human perspective to reading that data.

Perhaps the most important piece of this is to regard the naked data about our own lives with gentleness rather than judgment. The emotional roller-coaster of blame, shame, and worry can drive you right away from tracking your spending, your eating, your exercise, or any other activity you want more information on. If you're afraid of the answers, doing the relatively simple work of recording your activities can be painful and useless.

Here are a few suggestions to handle the emotions that come up around tracking an emotionally challenging topic, which money is for many of us:

  • Make it easy. There are a lot of great programs out there that let you keep track of your income and spending with the press of a few buttons. Pick one you like, or go old school with a stack of index cards. Experiment a bit and choose a method that works for you.
  • Set aside time to look at what you've tracked. Put aside an evening to go over your spending records. If you have a spouse or partner you share finances with, make a date to do this together. Aim to be rested, fed and relaxed when you sit down to the project.
  • Breathe. Seriously. This stuff is stressful. A few deep breaths will help you stay calm and centered when dealing with it.
  • Put aside judgment. It can be challenging to look at your money history without judgment, especially if you've been spending in ways you regret. But what you have when you look at those transaction records is just information. Approaching it with gentleness can help you accept yourself in all your parts. Then you can figure out what changes will really work for you.

Looking into the mirror of your personal records can be incredibly stressful. For example: I think of myself as a non-shopper. But the truth is that I drop a few hundred dollars every couple of months on clothes, books, or household goods. It's not a lot of shopping, but it can be stressful to see those blips on my spending charts.

The trick to handling it, for me, is to take a deep breath and remind myself that this is just information about who I am. I buy more Stuff than I care to admit. Pretending I don't — or beating myself up for doing it — won't make it better. But I can add some shopping money into my regular budget and then feel happy when I don't spend it, instead of stressed when I do shop and spend money earmarked for something else.

This is the human angle: Am I asking my spending chart, like a magic mirror, to tell me who is the frugalist queen in all the land? Or am I using it as a map to gently show me where I tend to wander when I'm opening my wallet, so I can chart a more intentional course?

Journaling adds juice
The raw data could do either. I need to ask the right questions to make tracking my spending a useful, healthy practice. Without my perspective, it's just a frightening wall of numbers.

Maybe the best way to make data-tracking work in your life is to add personal journaling to it. Study after study has shown that personal journaling can be therapeutic. Instead of merely recording your spending, take twenty minutes a day for a week and write down your innermost feelings about money, debt, and your financial situation.

A study by James Pennebaker at the University of Texas in Austin found that mid-career professionals who were laid off from their jobs had better luck in their job searches if they wrote freely about their feelings about the layoffs. Simple record-keeping of job-hunting activities was not nearly as effective as journaling, though both activities were more successful than doing neither.

Tracking your spending, or any activity you're motivated to change, is key to successfully shifting your life habits. Journaling about the things you want to change, in addition to tracking them, can help you look more deeply and gently at yourself. Through your journal you can learn what questions you need to be asking, and then turn to your data for the answers.

Don't forget to follow Get Rich Slowly on Facebook and Twitter.

J.D.'s note: I'm a huge advocate of using data-tracking to change habits. This method helped me diagnose (and recover from) compulsive spending. And I'm using this same technique right now to lose weight. I record everything I eat and every exercise I do in an effort to document my habits. This makes it easy to see when I'm going off course. As a result, I've lost fifteen pounds this year, including five in the past month. Photo by ansik.

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steven@hundredgoals.com

I began tracking my spending on food a couple of months ago and when I first began to do this, I was shocked at how much money I was actually spending on eating out and how little was going towards groceries. I had created a budget for food, thinking X amount of dollars would be enough but when I tracked the actual spending, it was practically double what I had budgeted for myself!!! Tracking does have its benefits, though I think that a person can track way too much stuff and pick apart their lives in ways that are not… Read more »

finallygettingtoeven.com
finallygettingtoeven.com

I so agree that getting it out of your head and onto something concrete can make all the difference. It is amazing when you need to recall something how facts, figures, numbers can become a jumbled mess in your over-loaded brain. Get it out while it is fresh. While there is still meaning behind it. Then you can look at it with a new perspective. You are outside looking in. My husband is a huge charts/graphs kind of guy (engineer, figures). It used to drive me crazy and while we joke about it, the reality is the information and data… Read more »

Mike Choi
Mike Choi

The begining of this year, I started to change my diet for 60 days, I kept track of everything I ate during those 60 days via a site called the dailyburn.com. I can tell you that putting things on paper and seeing them in front of you definitely puts a different perspective on what I should eat and how much I should eat.

I can definitely see a correlation this affect has on personal finance too.

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher

Analyzing after the fact can be useful but mindful awareness is more powerful.

If you simply make conscious choices now, there is less of a need for data collection later, which can also be a time consumer.

Self-awareness is about “being here now,” not being here later… after you’ve made the purchases.

“Be master of mind, not mastered by mind.” ~ Zen Proverb

Chickybeth
Chickybeth

Funny, because on the way to work this morning, NPR had a story about a mobile app to let people track their mood to make it easier for their therapists to diagnose and treat their depression/anxiety, etc. Make it easy and people will actually do it.

http://www.npr.org/templates/story/story.php?storyId=127081326

DreamChaser57
DreamChaser57

Well-written post. A quarterly and annual analysis of my household spending has been an indipensable and powerful tool to mastering our fiscal habits. I can see in black & white where our budget busters are. How very little actually went or stayed in savings accounts *gasp* I also track household income – its surprising to see how much money actually came through our doors. I’m a firm believer that choices not income dictate success in personal finance.

Hannah
Hannah

If you leave yourself room for guessing and rounding when you’re trying to meet a specific goal, whether it’s money or weight loss, you’re setting yourself up for failure. I second the recommendation of DailyBurn.com for tracking what you eat. If you’d like to lose weight but you’re not ready to commit to anything else yet, just start by using this site to track what you’re eating. You don’t have to change anything, just keep an honest record of your daily intake. Once you have some data, you won’t have to guess how many calories you need to cut out… Read more »

Sam
Sam

I was interviewed by NYT personal finance writer Ron Lieber for his recent article on Net Worth Obsession. The interview process really focused my attention on why I track our net worth via NetWorthIQ along with the other tools I use for tracking (Quicken) and what I/we get out of it. Lieber’s focus seemed to be more on whether people track their net worth to compare their standing to others, whether it was a competition. For me, tracking out net worth and tracking our personal finances via Quicken (something we also do), along with tracking our savings goals via an… Read more »

allie
allie

This year we’ve been undertaking hardcore spend tracking. Every item individually itemized and categorized for evaluation. With regards to Kent @ The Financial Philosopher comment I think that simply the knowledge that when you get home you’ll need to record the purchase and be accountable for it that it forces you to consider the ‘now’ aspect. We are now 5 months in and without even setting budget rules based on our data yet we’ve already seen improvements in our spending habits. For us it has been about moderation. We still want to be able to enjoy the little expenses that… Read more »

Jackie
Jackie

Tracking really can be life-changing. Suddenly instead of feeling frustrated that things aren’t going the way you’d like, or having this vague feeling of discontent, you have real insight — plus you’re empowered to change. You can also SEE what a difference even small changes make.

Brian
Brian

Hey J.D. – I’m a longtime reader who hasn’t commented until now. I did a post about this a couple weeks ago that I think you might like to check out. There are also some links to great tools that can help you with the data tracking and number crunching: http://pedanticposts.com/personal-informatics-what-gets-measured-gets-managed/

elisabeth
elisabeth

i haven’t read the NYTimes article yet, so don’t know if it discusses the possibility that for some people tracking of this type is a kind of obsessive-compulsive disorder. I can imagine that too much tracking could become a kind of replacement for direct experience. Also, there are is the concepts “observer effect” — when you start tracking anything, it does have various effects, and its unclear if the effects remain after the observation stops and “observer bias.” I know that when I was using an on-line food and nutrition tracker, it took a long time to input food I… Read more »

SF_UK
SF_UK

I think that tracking has its place, but there is a point at which you have to: a) stop just tracking and start *doing* – just tracking doesn’t change anything b) accept, in some cases, that the tracking is taking over your life, and is actively preventing you from making changes that are needed I say this because I’ve seen a friend fall into the trap of problem-solving-by-data-entry. That is, solving a problem by collecting data and entering it on a spreadsheet/database. Except that the data entry bit lags behind… a lot… Data entry is good if it’s timely and… Read more »

jeffeb3
jeffeb3

You’re missing the author block at the top of this article (unless J.D. considers himself a frugalist queen of them all).

Todd Eddy
Todd Eddy

Another couple tips is to make the tracking “simple” (for whatever it is your tracking) and it should be readily available (again, for what you’re tracking). If you are tracking expenses I’d carry around a mini notebook with a small pen clipped to it and write it down immediately. More tech savvy way is Evernote if your phone supports it. Tracking something like your dvd collection could be relgated to a spreadsheet on your home computer since that’s where your dvd’s are.

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher

@ #9, allie: You are quite correct! Many people do not easily acquire self-awareness by simply deciding they will become aware. The data gathering process, for many, is the “awakening” that creates the awareness. As J.D. mentions in his book, tracking expenses need not be a permanent practice. Good habits form over time and the data gathering can eventually end or be minimized… “As a single footstep will not make a path on the earth, so a single thought will not make a pathway in the mind. To make a deep physical path, we walk again and again. To make… Read more »

Rylie
Rylie

This post could not have come at a better time. I have been reading blogs about personal finance since Jan and saving every bit I can and spending (what I thought) was a lot less. Last night I loaded all of my spending into Mint.com and was first surprised at what thorough tool it was, and secondly utterly shocked at how much I was spending on Food and Dining. It was really depressing after trying so hard to save since the new year and I was feeling kind of down this morning. But then I opened my inbox to this… Read more »

Brian
Brian

An amazing article, I tried and keep a life journal like this, but I am interested in how to keep track of numbers. I use Evernote and a private blog, but for making statistics from the numbers (as the author does in the NYTimes article), is there a good way out there to journal in that context?

Thanks!

Project Management Tools That Work
Project Management Tools That Work

The “journal” has been used for a long time for this. Runners, dieters, astronomers, etc., have used it for a long time so as to “get to know” what is really going on. For me, the Palm Pilot was the first real tool, that made personal stats tracking easier and more automated to do (finance, running, etc.). I write often on my site that to really understanding your organization, we need to track and analyze key information. The secret is always to keep the list of things tracked, short and simple. We can transform our own lives, the same way… Read more »

chacha1
chacha1

Tracking is well-established as a winning strategy for weight management but one of the key things trainers recommend (and this applies to PF too) is to make it part of a process. Tracking, as the author and others have noted, isn’t an end in itself – it’s a tool.

I would be lost without my various lists, journals, indices, and budgets!

Everyday Tips
Everyday Tips

J.D. – Congrats on your weight loss!

Sierra – The more I have been thinking, the more I realize that the one thing missing in my progression forward in a couple areas is keeping better records. Yes, the judgment part may be hard to get past, but it may be just what I need.

Thanks for the motivation!

Tyler Tervooren
Tyler Tervooren

I bounce back and forth between super geek and super flake on the data tracking spectrum.

They’re both useful for different stages of life.

Does everyone know about http://rescueetime.com? When I was starting a big new project in February, I used it to track the time I actually spent working and, sure enough, I was embarrassingly lazy.

Using their program for about a month made me really think twice when I got frustrated or distracted and started doing something else.

Totally changed my habits.

Brian
Brian

Thanks for posting this – it motivated me. I had been thinking it would be useful to have a service to track my diet, exercise, and other factors to find their effects on my mood and energy level. This set me off on a search. I found a pretty good free tracking website – http://www.medhelp.org – and got started today. They have trackers for just about anything you can think of in terms of health. Hopefully soon a service out there will offer apps for all kinds of smartphones to make it easier to update on the go, so it’s… Read more »

david/yourfinances101
david/yourfinances101

When I decided to get out of debt, I chose not to track my spending. I was already deep in the hole, why depress myself further by realizing the true extent of it.

Rather, I just concentrated on identifying and eliminating all areas of unnecessary spending.

That habit has stayed with me till this day and is the true reason behind my escape from my debt problems.

Ace @ aceofwealth.com
Ace @ aceofwealth.com

This is a great article. Not only do you get into the reasoning of why we should, but you get into the psychological reasons of why it can help us, and I couldn’t agree with you more! To track my spending I use a combination of mint.com and YNAB3. I think that they do a wonderful job of aggregating my spending habits and presenting it to me in ways that I can digest. For those unfamiliar with YNAB 3 I have a review here: http://aceofwealth.com/2010/02/you-need-a-budget-3/ Beyond having the tools, it can be overwhelming once we get the data to fully… Read more »

Budgeting in the Fun Stuff
Budgeting in the Fun Stuff

Tracking helps so much! I love following and updating our budget. I also have only ever lost weight by recording my daily calories.

Nacho Jordi
Nacho Jordi

I think there is a saying, “what is measured improves”. I like to experiment a lot with tracking; for example, lately I have been tracking how many “stupid travels” I did around the house -you know, when you have to go twice to the same room because you picked A but forgot to pick B-. I won’t tell you my rates ;), but it has certainly improved my focus…

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