The First Step to Smarter Spending: Self-Awareness

young man eyes closed fingers crossed

This is the first in a four-part series aimed at helping you take control of over spending.

There’s a lot of personal finance tools available to modern savers, but have you ever wondered what’s the most useful? It’s not automatic transfers, online bill pay, spreadsheets, or some form of financial app.

It’s a mirror.

According to a 2016 National Financial Capability Study, 76% of people think they have a high level of financial knowledge and yet testing showed only 37% actually do.

Self-awareness is one of the most elusive qualities among those who struggle with their finances. And let’s face it, self-awareness can be a struggle in many other areas of life too.

I didn’t realize I was a bad singer until I heard a recording of my voice. I didn’t realize I rarely say “please” until my oldest child pointed it out. I often don’t realize my writing mistakes until my editor corrects them.

The good news is there are ways to remove the fog and see yourself and your finances more clearly.

Keep an Open Mind

There is a proverb in the Tao Te Ching that states the reason the ocean is the biggest and greatest body of water is because it is open and welcoming to all other sources of water.

The best savers and investors are those that are open to fresh ideas, even if it means admitting you’ve been doing it wrong all along.

If you’re willing to accept help from others with an open mind, your bank accounts are more likely to be an ocean, growing and collecting your income, rather than a river, with money flowing somewhere else.

Ask for a Trusted Opinion.

Your friends were likely by your side the last time you shopped with abandon. Your family likely knows the ins and outs of your income and monthly bills.

Ask someone you trust if they know how you could improve your finances. You might be surprised they’ve been waiting for the opportunity to help.

Perform an Audit

You don’t have to break out your tax returns and receipts and go through your budget with a calculator and pencil, but there are easy ways to audit your spending.

Consider peeking in your trash can. You might be throwing money away.

By looking at the contents, you’ll see where a large portion of your disposable income is spent.

See lots of carryout containers? Perhaps you eat out too often. See lots of food remnants? Perhaps you’re overcooking. Find lots of packaging? Perhaps you should be buying in bulk.

If that idea sounds like a load of garbage, a cleaner way to audit your personal spending is to analyze your credit and debit card statements. Not only will this help you pinpoint where your money is going, if you find any late or missed payments, it points to additional financial weaknesses.

Once you’re able to clearly see those financial weaknesses, you’ll be able to improve them, which we’ll cover in the next installment of this smart spending series. And the next time you look in a mirror, you’ll see a smile.


Adam Lucas holds a Finance degree and an MBA from the University of Kentucky. His work has appeared in many major outlets including and