Hi Lauren,
Apologies for my delayed response. When setting up my collections for this blog and trying out the method, I personally preferred the second option for tracking: I only added items in when I’d done them (like marking the X on the calendar), since for me it was less about scheduling/setting up the habits and more about the visual impact of adding another item and keeping up the chain.
Regarding excess items, you could archive them at the end of the month, or perhaps use a saved filter to blend out items marked done or items from previous months so that it doesn’t visually clutter the screen. That being said, you can have 2000 items in the free plan, which is a lot of habit building, even if you don’t archive them!