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.
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:
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.
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.
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?