One Must Do Action to Improve Your Financial Situation

By Karen Whaley

October 11, 2018


Honest, lasting personal finance improvement takes time and requires many actions. However, in my book, there is still only one must do action to improve your financial situation.  Even if you do all the other “responsible actions” with your finances, without this one action your finances will never be as awesome (or satisfying) as they could be.

No, I’m not talking about budgets.

Improving your credit score.

Automating savings.

Or paying off your credit card debt.

Don’t get me wrong, those actions matter too.

Yet, if you are only going to do one thing with your money, the one must do financial action is to track your spending. This singular action alone has the ability to highlight the cause of your financial woes and inspire changes to improve your financial situation.

Not thrilling or glamorous. I get that. This is not a one-time heartrate jumping, magic solution to all your financial pains. However, knowing where all your pennies are spent month-after-month creates awareness and with awareness comes power.


Awareness of your spending creates natural motivation to change and improve your financial situation for a more satisfying life.


Sure it might be painful at first.

It may downright suck to see the numbers on the page. (Yes, you really did spend $345.78 eating out last month but claimed you couldn’t support the local school fundraiser for $25 or save $50 for a fun vacation with friends.)

Understanding your spending now creates the motivation, eases the way, and gets you from where you are to where you want to be – with or without any other financial actions.

Let me explain.

http://https://youtu.be/_7kCjtBwb4c

It’s Only a “Little Bit” – of Motivation

We often tell ourselves when spending, “It’s only a little bit of money.” Yet, this belief tends to bite us in the butt day after unsatisfying spending day. (Or maybe the lack of satisfaction rears it’s head when you review the size of your debt payments compared to your retirement accounts.)

I’ve lost track of the number of times people from my classes or clients have told me, “I don’t spend that much money on [blank].” Sometimes people even readily acknowledge the amount being spent in a certain area is significant. What they don’t realize is just how significant until the number is in black and white on the page.

I recall one specific instance of a man who knew he spent a good amount of money each month to feed his smoking habit. After tracking his spending for a month – a month, people – he came back to class and announced he stopped smoking.

Number one, kudos on going cold turkey with smoking.

Number two, he did it because he became aware his spending on smoking was more than his monthly truck payment. Ouch!

Awareness of how much he actually spent a month on cigarettes gave him the motivation to change his course of action. Smoking was less important to him than getting rid of his truck payment. If he had never tracked his spending, he may never have had the motivation to shift his spending to reflect his life priorities.


That which gets measured gets managed.


Most people know how much they spend on major fixed expenses like housing, debt payments, and childcare. What they don’t always fully understand is how much the “little bits” of variable spending add up.

What variable spending are you not aware of?

The “little bits” often add up to large bites out of our money. By tracking your spending you will realize exactly how large. Being aware of the sum of the “little bits” is a jumpstart to complete other financial actions.

More Bang for Your Buck (When Shifting Spending)

In addition to being aware of the true value of the “little bits”, tracking your spending means you reap more bang for your buck when you do take other financial actions to change your life.

Often folks attending my classes know they want to save money on basic expenses for a whole host of excellent reasons. They come seeking the one great insight or silver-savings-bullet to achieve their dreams.

They falsely believe there is some amazing savings idea they haven’t yet discovered which will yield massive savings and solve all their money problems.

These folks tend to be off put when I ask, “What is your largest discretionary or variable spending area right now?” I always get a few deer-in-the-headlight looks.

Would you be put off by my question?

Without knowing where your money is going now, any efforts to take other financial actions have high potential:

  • to rob you of precious time
  • leave you frustrated with the lack of measurable savings
  • emotionally drain your desire to continue pursuing financial change

You can implement hundreds of ways to save pennies in entertainment, pet care, and transportation. However, if those spending areas are not a significant portion of your overall spending, your efforts are going to be greater than the savings impact and increase the odds of less spending satisfaction.

I refer to this spending shift (savings) approach as shotgun savings (a phrase I made up). The danger of not understanding where the most money is being spent fosters a yo-yo money diet environment instead of lasting, satisfying financial changes.

Such an approach may even cause long-term harm because you are less likely to try managing your money again due to all the negative feelings generated by shotgun savings.

When you know where the money is going, you enable yourself to make changes with the largest impact and least amount of effort. This eases the process of financial changes. You are no longer shooting in the savings dark hoping you hit something big. You already know where the big spending is and wisely spend your time finding ways to shift spending in those specific areas.

Reach Your Destination By Knowing Where You Are

Knowing the value of the little bits and making fewer spending changes with greater impact is huge. But the biggest reason tracking your spending is the must do action, is you have to know where you are to get to where you want to be.

A handful of years ago, my uncle was the brave soul who taught me to drive. During one of our adventures on the backroads of rural America, I clearly recall asking him which way to turn to get to our final destination. Much to my frustration, he would not give me a specific set of directions. I’m sure you can understand my frustration!

Instead, he told me our destination was roughly to the northeast of us so, “just head in that general direction.”

The problem with “just head in that general direction” means I had to know where I was at that moment and always be aware of where I was in relation to the “northeast.” Not an easy feat for a directionally challenged individual like myself.

If at any point in time I stopped being aware of my general location, I would have been lost. I could have overshot my destination or gotten completely spun around; both actions resulting in never reaching my destination at all. I had to remain vigilant in my awareness of my present location in relation to the destination.


Most people understand the need to know where you are on a map when traveling or how many calories you are currently eating when starting a diet. Yet they fail to apply the same concepts to their financial lives.


You know where it is you want to be financially. By knowing where you are right now, you are empowered to make changes ensuring you reach your desired life. When you track your spending, you maintain your awareness of where you are in relation to where you want to be.

Yes, you can gain a general understanding of your financial situation by tallying your net worth or reviewing your investments. Yet, meaningful and satisfying movement in your financial situation only comes with a full understanding of where you are presently spending. There is a lot of spending drift potential when you only check your net worth or investment every couple of months.

What tracking your spending would look like as a roadmap.

Tracking your spending brings awareness and, subsequently, natural motivation to change to your finances to reflect what you want in life.

Pairing knowledge of your spending to any other financial action like budgets, increased credit scores, or debt reduction will super-charge your life journey. But even without those things, knowing where you are on your financial path gives you awareness and thus power. Power to change for the better.

Your path to your desired life may look more like a meandering road trip on Route 66 versus a highspeed straight shot on the Autobahn – but both approaches will get you where you want to be. However, you still need to know where you are right now so you can “just head in that general direction.”

How to Track Your Spending

So now you know the power of awareness to improve your financial situation, you may be wondering what is the “best way” to track your pennies.

Here’s the deal – there is no “best way”. What works for you won’t work for someone else.


The true secret to tracking spending is to just start!


If the first way doesn’t work, try tracking your spending another way. And another. And another, until you find a method that works for you.

The three basic steps to tracking your spending are:

  1. Keep all receipts
  2. Define spending categories
  3. Total all your receipts for each category on a regular basis

You can do this with pen and paper, spreadsheets, or fancy technology.

The four main ways I have personally tracked my spending are:

  • Custom Excel spreadsheets
  • Mint.com
  • Quicken
  • Personal Capital

And these are just the four technology-centric ways I have tracked my spending in the past. There are hundreds of software and app options to track your money. Pick one and go!

Bring spending awareness to your life. Doing so, you reward yourself with motivation, easier spending changes, and a clear picture of your present spending location. Tracking your spending is a singular action to improve your financial situation.


What spending insights and changes have you made after tracking your spending?

Karen Whaley

About the author

Karen Whaley

Financial Lifestyle Coach
Certified Financial Instructor


I help clients use money to live - not live for money. If that sounds appealing, you are in the right place my friend!

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