The One Thing to Do Today If You’re Tired of Being Bad with Money

What to Do Today If You're Bad with Money

As I’ve gotten better with money, here’s what I’ve noticed: spending money becomes less of a big deal.

For example, summer’s winding down and I’m browsing online to see what I need for fall shopping. One of the bags I’m looking at costs over $1,000. It’s the type of purchase that would make my coworkers wonder how I bought it. Even though we all make about the same amount of money.

Or spending over $1,000 on wedding favors without batting an eye. Most people like to tell you that wedding favors are a waste. But when it comes to spoiling people I love, I don’t care how much it costs.

I’m a firm believer that you can save for tomorrow AND live for today, guilt free. You don’t have to wait until you retire to have fun. There’s no way I’m waiting until I’m 65 to climb Machu Picchu.

Those are the types of things you can do when you have a solid plan for your money.

But it wasn’t always like that. I used to be careless with my money.

A few years after college, I found myself living in an expensive city, making enough to live comfortably, and yet, at the end of almost two years I had nothing to show for it. I hadn’t saved a penny. And if you asked me what I spent my money on, I couldn’t tell you. I was a Financial Unaware.

Does this sound familiar to you?

Maybe at the end of the month you look at your bank account and wonder where all your money went. You might struggle to pay off debts, scraping by just paying the credit card minimums. Money stresses you out so you avoid dealing with bills, no matter the consequences. There’s some kind of invisible safety net that’s gonna save you, right? And worst of all, you’re not saving much, despite making a decent salary.

If so, I have good news and bad news:
Bad news: You might be a Financial Unaware.
Good news: You can totally do something about it.

There’s a Good Chance It’s Not Your Fault

Before you start feeling down about yourself, remember that money is one of those secret topics that no one ever talks about in real life. When no one talks about it, then we don’t learn how to handle it. Personal finance also is rarely taught in schools, yet somehow we’re all expected to have magically figured it out as adults. With zero practice.

And if it were so easy, wouldn’t everyone be doing it right? How come nearly half of Americans don’t have an extra $400 in case something happens?

The truth is, money is downright terrifying for many people.

And having experts talk down at you from their ivory perch? That doesn’t help, either. You’ve heard the well-meaning yet frustrating advice: “Just spend less than you earn.” Ugh. If you told me that when I was just starting to save I would have hulked out at you. That would work great if we were all perfect robots. But too bad we’re flawed humans instead.

So maybe you WANT to improve, but money can be overwhelming, and you’re not sure what your first step should be. All you know is that you’re overworked, stressed, and you have no idea what happens to your money every week or how to go about trying to save more.

But you want more. Maybe you want to go on an African safari. Or to send your parents on a cruise for their anniversary. Or to finally buy that designer bag. Or maybe you just want to move across the country and not stress about money.

Note: To be clear, this post is for those with disposable income who want to save more money. This is not meant to address those who truly have unfortunate circumstances or massive school debt.

So I’ve done my market research (AKA: vetted my ideas by my husband,  a former financial newb), and I’ve got a solid first step for you. But first, let’s talk about a tactic you’ve probably tried, and why it doesn’t work.

The Problem with Budgets

Everybody tells you that if you want to be better with money then you need to start with a budget.

But I think they’re wrong.

Are budgets are a great way to proactively create a spending plan? Yes. Don’t they help you keep your eye on the prize? Also yes. I’m a fan of budgets. My husband and I made one together before I moved in, and we just tweaked it last week.

But are budgets the very first step to being getting better with money? Nah.

Budgets are great, but not if you focus on them at the wrong time.

Here’s why.

After deciding to get better with money I sat down and read a bunch of blog posts that told me to create a budget. So I did. I started entering in random numbers that I thought looked good.

Little did I know, I was setting myself up to fail. Because I had no baseline to work from. For example, under the ‘Clothing’ category I gave myself a budget of $50 per month. But I was previously spending $250 per month on clothes. Hmm, does going from $250 down to $50 right away sound realistic?

Needless to say, that budget was a total fail. What I should have done is set the budget to something more attainable, like $200.

So, budgets are a critical part of managing your money, but later down the line. Before that, you have to find those attainable numbers. Here’s the thing with money: there’s no magic-bullet solution. Managing it well is a process and you need all the motivation you can get, so don’t set yourself up to fail by setting up an unrealistic budget.

Find that $200 number. But how?

What to Do Instead: Track Your Spending

If you’re struggling to save money and spending wisely, I recommend starting with just one thing: Track every single expense and purchase by writing it down. Go about your daily life, spend like you naturally would, and try not to judge yourself. The only difference is you’d track your spending as you go. Why this as the first step?

Let me give you an example: If I wanted to improve by blog design, what would I do first? Would I look at other websites for design inspiration? Later down the line, of course. But a more effective first step would be to look at my analytics. Tracking exactly what people click on and what they don’t, seeing where they drop off the page and what internal search terms they use. I’d see how people are interacting with the site right now.

Same thing if I wanted to revamp my wardrobe. I wouldn’t all of a sudden start dressing like a celebrity because I liked her outfits. That wouldn’t be a sustainable, attainable solution. I’d look at my existing wardrobe. Look to see what I wear and what I don’t. Which colors I gravitate towards, which pieces make me feel like the best version of me. And then I’d set those colors and pieces as a core part of the new wardrobe.

What both examples have in common is focusing on identifying existing patterns and addressing the root problems. Not just covering them up with an ineffective design/budget/whatever.

Here are reasons why tracking your spending is an effective first step:

1. Awareness

A lot of people think they know their spending habits, but they really don’t. If I asked you right now, how much you spent on food this month, would you be able to pull that up in 10 minutes? We all spend more money than we think. Tracking your spending will also give you a more accurate read on any weak spots, like overspending on things you don’t really care about.

2. Curbs Impulse Buying

Impulse buying is a problem that many of us face, including me. We buy things without thinking. So, notice how I told you to write down each purchase. Yep, the lo-fi way. I remember in college one way I’d study is by copying my notes over again by hand. There’s something about the act of writing things down that makes things more concrete. Writing down each item you spend on will force you to confront each purchase and consider it for a beat or two. Example: “Yes, I AM spending $100 at Sephora right now.” When you have to consider a purchase and then have to own up to it later, you’ll most likely start spending LESS. This is important. Being more mindful about spending is exactly what happened to me when I did my first money diary.

Important note: Don’t use an automated tool, such as Mint or Personal Capital. YET. Those tools simply track your spending after the fact, and since they’re digital-based, overspending is way too easy to ignore. Keep it manual for now.

3. Sets a Realistic Baseline for Your Future Budget

Tracking your spending is the only way to create an effective budget. Think of your budget as a path forward to guide you to money enlightenment. Don’t you want to make sure you’re on the right path? To set a realistic budget, you first have to meet yourself exactly where you are.

How Long Should You Track?

Tracking your spending for three months will give you enough of a baseline to work from. I know that sounds like forever, but think about it in terms of two-week increments. Every time you get through two weeks, give yourself a fun reward to help you keep going.

Three Tools to Track Your Spending

Everybody’s different, so pick any of these you’ll think will be easiest for you.

Pen and Paper

The classic pen and paper combo. I’d pick one that’s small enough to fit into your purse or backpack so you can easily use it on the go.

A Nice Planner Notebook

Wait, why am I saying it’s OK to buy something when you’re trying to save money? Part of being good with money is being organized, and if planners like this can help you with that, then so be it. Also, I always get more motivated to exercise when I like my workout gear, so I approve of incentives to get you started. I really like this planner by Shinola.

Printable Worksheets from Yours Truly

I created two types of printables depending on your fancy: One is an open-ended monthly expense tracker if you want to just get in the habit of writing things down. You can print out as many sheets as you need. The second printable is a daily spending tracker so you have a high-level overview of spends per category. You can download both below.

BONUS CONTENT: Can’t wait to start tracking your spending? Grab my two FREE expense tracking printables, plus instructions. Sign up below to download.
Free Printables to Track Your Spending

Brace Yourself

You may be horrified by what you spend on. That’s normal. Like that time I realized my husband and I spent $8 on avocados for the week, which is $2 per pop on just one ingredient for breakfast. I know what you’re thinking: $8 is nothing. Well, it is when you don’t care that much about avocados. You see what I’m getting at? I’m trying to set you up so you spend based on the stuff you care about.

Start Today

Having control over your money is one of the best feelings ever. But sheer willpower to follow a budget isn’t enough. You need the good habits to back it up, so start by taking just one step today. Tracking your spending will help see the leaks in your current habits, help identify spending patterns, and will give you the data to jumpstart a budget that works for you.

Go ahead and spend. But think about each purchase for a beat or two. Write it down. And then keep going. Good luck!

Do you track your daily spending? If you used to be bad with money, what inspired you to save more?

Image: Unsplash

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  • McKenzie Rainey

    Luxe, I love this! I first started tracking my spending with the excel spreadsheet from Desiree at Half Banked, and it’s a great eye-opener. I like doing it in excel so that I can add everything up and see trends at the end of the year, but writing it down definitely makes you reflect more.
    Your blog is fantastic, and is the first personal finance blog I’ve seen that understands the desire to buy -nice- clothes and still save aggressively. Please keep writing!

    • Hey McKenzie,

      Thanks so much for stopping by and for the kind words! I’m glad you have a system that works well for you. I’m working on my own spreadsheet for a future budget post, and it will have charts and automated percentages in it. Basically, it will be beautiful! Or as beautiful as I can make an Excel chart.

      Swooning over your comments! And yes, being good at money and also liking nice stuff is NOT mutually exclusive. Hopefully, more PF blogs like mine will come out of the woodwork!

  • Awareness is the first step to solving any problem, of course. 😉 You have to be able to track your expenses *before* you set a budget. Otherwise, how do you know what limits to set on your budget?

    • Not sure if your comment is sarcastic or not, but I’m gonna go with no. Yeah, totally agree about awareness. It seems so obvious, but time and and time again I see people skip over that step! Like, the whole website redesign thing. Most people don’t think to actually look at the analytics to see what needs to be overhauled. Sigh. But then again, I’m a total data nerd.

      I’ve been on so many blogs that tell you to start with a budget and to me, budgeting is like, Step 4 in being good with money, not Step 1.

      • Oh sorry, I wasn’t being sarcastic. But yes, I agree! I think I need to clarify the advice that I give other people, too, because too often I also start off with “make a budget.” But a budget really isn’t the first step, since there’s a lot of prep you need to do before you settle into an actual budget.

  • A high quality budget notebook makes a huge difference for me to sticking to tracking. If I blow $25 on a notebook I kick myself if I were to stop using it. I didn’t outline my posts before and I brought myself some nice quality pens and long sheets of paper to encourage myself to start outlining and organizing my thoughts.

    I don’t track my daily spending (except for when I did the Zero Day Challenge) because in the mornings, I’m lucky if I find my pants in under 3 minutes. Organization is not my forte. My husband does the budgeting and I look over it afterwards.

    I have good memory and I can keep great tally on what my general spending is not never go over it – it’s not a talent at all, it’s just an “awareness.”

    • Yeah, the one I linked to is $26 and I love it! And that’s a good strategy, buying one that’s expensive enough so that you HAVE to use it. I feel like it would be good for blogging, too! I’ve been noticing your posts are a little different now, but in a good way.

      I think some people don’t really have to track their spending, especially you because you spend so little already!

  • Adventure Rich

    I remember someone telling me that writing down everything you eat is one of the most effective ways to lose weight. I completely believe that it translates to personal finance as well. Whenever I need to wake myself up to my spending, I’ll write down everything I spend on. What an eye opener! All the “little things” suddenly add up to a lot of money!

    • That’s a great comparison. We get so used to eating/spending money on things without thinking, just pausing for a second or two makes such a difference! And yes, even us bloggers benefit from writing down our spends, too. I know I always find something impulsive in there when I do it.

  • You’re right. The first step is to track your spending. It’s a pain in the @$$ but if you want to curb your spending then you absolutely must know exactly what you’re spending your money on.

    I only tracked my spending for three months when I HAD TO submit a budget as part of my military retirement finance class. It was mandatory before I would be allowed to transition out of the military. I do not like tracking expenses so I let Personal Capital do it for me with a few tweaks. I only get ball-park figures but it’s good enough for me and doesn’t require any extra time or effort other than 30 mins a month, tops.

    I’d love to see a tool that actually breaks down your receipts and classifies everything into more specific categories. We don’t always get just groceries when we go to Costco, for example.

    • Oh, there was a tool called OneReceipt that would break out your receipt but I think they went under. Yeah, categorizing is definitely a pain I go through too, especially since I shop at Amazon a lot. But I do think you need to go through a little pain to get results! #nopainnogain

      Wow, a required finance class seems awesome and I’m sure set you off on the right path. It’s funny. Last night, my husband said he knows someone who has manually written down his spending for 40 YEARS. The man is killing it at money. Food for thought.

  • This. Is. Amazing.

    I mean, I did notice when I was getting my money stuff straightened out (at the tender age of 28, lol) that tracking helped a ton, but I never stopped to figure out why I felt that way. I’ve become a bit more lax at tracking these days but thank you for the reminder to keep at it.

    I should add I love the overall tone of this post. Non-judgmental, very down-to-earth (unlike those experts on high who will not be named), and just feels like I had a coffee with a friend who’s really good with her money. 👍

    • Hi Daisy,

      I didn’t start saving until my mid-twenties, so yeah, not everyone’s a super saver since they were in high school. Tracking your spending is a really good first step in case you find yourself overspending. And I was tired of seeing articles telling people to just start a budget and stick with it. It’s not that simple. You just have to start with one thing, and try to figure out WHY you’re spending (like you said).

      And I feel like talking down to people is never the way to motivate people, so thanks for noticing that!

  • Loved reading this. My first job really opened my eyes to how terribly I was spending and how difficult it was to balance paying off student loans, paying for groceries, and living my life. Towards the end when I wanted to leave that job I decided to start saving but honestly I should have done it from the very beginning. But honestly that was my motivation because I wanted to get out of there. I keep a notebook next to me and always manually calculate everything and when I see the numbers on paper, it really puts me in some kind of action mode whether that be go ahead and spend or save.

    Schools really should teach young people how to manage their finances because then they’re expected to know how to do that in college? I could go on a ramble about what they teach in school versus what adults actually need in the real world…

    This was such a good read. Your posts literally get me excited to save money.

    • So glad my posts get your excited to save money! Money gets such a bad rap, so that makes my day.

      You hit upon a good point–that you need to be motivated to save, because it will make things a million times easier. And saving money opens up so many more options, like leaving your job. When I first moved to NY I wanted to try working in fashion so I took an unpaid internship. Couldn’t do that if I hadn’t had money saved up.

      Ha, I know, not sure anything I learned in school is helping me out in life so far! And when you don’t have parents with the right knowledge to teach you stuff it’s even worse. If I hadn’t grown up in the era of blogs, who knows where I’d be now!

  • Mr. Groovy

    Excellent advice, LS. Mrs Groovy and I have been retired for almost a year now and we still track our spending. It’s the only way to tell if your actual spending aligns with your priorities and values. Indispensable tool to either righting your financial ship or staying the course if you’re heading in the right financial direction.

    • Hey, Mr. Groovy, thanks for stopping by. So awesome you guys still track your spending. My husband actually knows someone who has done it for 40 years, on paper. That person is a multi-millionaire.

  • What a great post! I agree with you 100%. It is very important for you to understand how your money works before you can set a budget, or at least do research and see what you can afford before laying out a plan. I have so many friends that ask me to help them create a budget, but don’t understand why I ask for 3 month averages. I even do quarterly reviews for myself even though I have an established budget because things changes and I honestly need that reality check sometimes! LOL!

    I look forward to reading more of your posts!!

    • I love budgets and use them myself, but I think too often they’re viewed as “quick fix.” “Just stick to the budget,” they say. And then people fail to stick to them, get frustrated, and go back to their old ways. So all I’m saying is do just the one thing that will help you curb the impulse spending behavior, so start to address the root problem instead of relying on willpower.

      Thanks for stopping by and for the comment! Look forward to seeing you around here.