Learning to overcome the misconception that living below your means is equivalent to not having any fun in life is a worthy goal. It doesn’t mean that you can’t spend money on what you want. It does mean that you make the effort to save and find alternatives to costly habits, as well as switching routine bills to a competitor. You may be able to save some money by finding a more affordable car insurance or homeowner’s policy, so you can put that money where it counts the most.
If you lived above your means it would mean that you were spending more money than you made. Living at your means puts you at an even distribution of spending exactly the amount of money you make. Living below your means allows you to save money and still find a way to live well. It might take you a little bit longer to save for something you really want, but in the end you’ll have saved money and appreciate the journey more.
Track Your Spending
Smart phones make it easy to download apps and keep track of your expenditures. Just like counting calories to stay on a healthy diet, when you track what you spend you tend to think twice about every purchase. Some great budgeting apps include:
Rethink Credit Cards
Credit cards inflate your sense of spending power. Many Americans have $5,000 or more in credit card debt, and only about 1/3 of Americans have no credit card debt whatsoever. Overuse can affect your credit score negatively – it’s recommended to have 30% utilization or below. If your credit limit is $6,000, you should only have a balance of $2,000 or less at any given time.
If you don’t have money for a particular purchase without using your credit card, be patient and save instead. It can become a habit to swipe the card and you’ll soon find yourself with too much debt to successfully live below your means.
Do I Need This?
Before buying anything, ask yourself the question, “Do I need this?” Give yourself time – at least 24 hours – to decide if you really want the item. Chances are good you will reconsider because you’ve forgotten about it entirely or you think of other things your money will be better spent on.
In addition to purchases on the spot, think about where your money is going right now, too. Where can you trim and save?
- Buying a brand new car is satisfying on many levels but leasing or buying last year’s model (or earlier) can give you much more purchasing power.
- Hulu, Netflix, Showtime, the list of streaming media memberships goes on and on. If you’re not watching carefully, you could find that you have more memberships than you really need; after all, there is only so much time in a day!
- Learn how to mend the clothes you have and when you do need something new, visit a consignment or second hand store to replenish your supply.
- Going out to dinner costs the average person 5x more than making their meal at home. Find discounts and promotions when possible or simply make a celebratory meal at home more special by adding candles, a tablecloth and soft music.
Pay Yourself First
Before you pay bills or spend money on other types of purchases, take a designated amount from your paycheck and funnel it directly into an emergency fund or special savings account. Taking that money right off the top will force you to disseminate the remaining amount for bills and entertainment.
If at all possible, have this process automated with direct deposit. When you don’t see the transfer, you won’t have the opportunity to be tempted to spend it.
click here – Understanding Compliance and Business
Consider Your Goals & Dreams
Sit down and make a list of your goals and dreams for the future. These might include:
- Continuing education
- Exotic vacation
- Newer car
- Moving residence
- Getting married
Now, attach a timeline to each goal and determine how much money each week you can direct toward that goal. If you’re able to, set up a separate savings account for each (and label them with your goal). This will make your future more of a reality and will inspire you to add more money to each account as opposed to buying another pair of expensive shoes.
When you take control of your spending and direct money toward what you really need and want in the future, you create a healthy sustainability and learn to appreciate what you have and wait for you want.