What is the Single Best Way to Change Your Relationship with Money?

Meet the Money Book

The single best way to change your relationship with money and your outlook on your financial future lies in one cheap little notebook.

Hear it here, hear it forever: The key to financial freedom is in basic record-keeping.

What is a Money Book?

A money book is a pocket sized journal you take everywhere. It is the place where you record everything you spend and everything you earn. Every week takes up two pages in the book, and you can set up your pages to look like this:


On the left hand page you list each day with a spot for earning and expenses, and a total at the bottom of the page for earned and spent.

On the right hand page you list:

  • Week’s Net Loss/Profit
  • Year’s Net Loss/Profit
  • Net Worth

How To Use A Money Book:

1. Every day, write down everything you buy. Every single expense. Anything that you pay for in cash, anything you pay for with a credit card. $2 coffee? Write it down. $5,000 Gucci hand bag? Write it down. Every single expense needs to get written down. And you must note what you spent the money on! i.e. do not write $5,000. do write $5,000 Gucci handbag.

2. Then write down what you earn. For people with consistent incomes, this would mean dividing your annual salary after taxes by 52 weeks in the year. For freelancers or those without one solid number, write down what you earn as it comes in. Make sure to also write down any other amount coming into your bank account (do not forget cash gifts, tax refunds, interest earned on savings,etc).

3. Once a week, tally up what you earned and spent that week to determine the Week’s Net Loss/Profit. Add that weekly number to your ongoing annual tally of Year’s Net Loss/Profit. Then add that number into the overarching Net Worth number.

You can interpret this Net Worth number however you like. Some people like to include their investments and property, but some prefer simply referencing liquid cash or available savings in this number. Think about what is best for you.

If you have never kept a money book before, and are new at record keeping, you may not be able to calculate your Net Worth overnight. I would encourage you to simply start with a Net Worth of 0 as of the date you began your money book until you can figure out a good estimate. Then you can retroactively add that in.

4. Once a month, transfer these numbers into a simple running list of expenses and income either on your computer (I recommend many simply pre-made budgets in Excel) or on paper. The idea is that at the end of the year you will have an itemized list of exactly how much you spent in what categories all year.

What are the Biggest Benefits of Keeping A Money Book?

The reasons are endless. Although I had dabbled in expense and income record-keeping for years, it wasn’t until I went on one 8 month trip around the world (during which I had to seriously count pennies) that I become converted to the idea of writing down every single expense. At the end of that trip, I felt that I had finally taken control of my life. The liberation in knowing exactly how much you need to live well is astounding. Some of the other benefits of keeping a money book:

  • You have a year by year account of what your money is spent on. This is one of the best motivators I know of lowering a given spending category.
  • You also have a year by year account of your salary in simple black and white combined with the grand total that you “earn” outside of your salary (gifts, interest, windfalls, product returns, rebates, etc). No more digging through bank statements to figure out if Granny is still giving out $20 at Christmas.
  • At the end of the year, doing taxes are a breeze.

If there is one thing you do this year to improve your financial situation, let it be this: get a money book. The key to financial freedom is in the record keeping. I promise;)

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