To live within your means simply means spending less money than you make. If you live above your means, you are spending more than you make and incurring debts. If you live at your means, you spend as much as you make. You are able to pay all of your bills, but you’re not able to set any money aside for the future. If you live below your means, you are spending less than you make. You are able to comfortably pay any bills and even able to save money for the future.
While the concept of spending less than you make seems simple, even obvious, an alarming majority of people live AT or ABOVE their means. There are several reasons we struggle to live within our means. Scarce job opportunities could mean taking a job that pays less than you need to cover your basic living expenses. High college tuitions leave many people starting their working years in debt. Pressure to buy now and pay later also leaves many people with houses or cars they cannot afford. If this is you, don’t despair. There are steps you can take to improve your financial wellness and start living within your means.
Steps To Live Within Your Means
Understand Your Spending
Begin by making a list. Start with all of your fixed expenses. These are the expenses you cannot easily change and must pay regularly, like your rent or mortgage, insurance, and utilities. Then list all of your variable expenses. These are expenses that fluctuate month to month and you have the most control over, like clothing, entertainment, and even transportation costs. To live within your means you will primarily focus on what you spend for variable expenses.
Change Your Spending Habits
Start small and be honest. If you pay a monthly fee for a gym membership but haven’t been to the gym in 8 months, CANCEL your membership. Commit yourself to a free exercise routine, like walking 20 minutes during lunch or getting a morning workout while watching a YouTube aerobics video. Once you have committed to a free exercise regime you can consider whether it makes sense to renew the gym membership. If your morning isn’t complete without a stop at Starbucks, it’s time to ditch the $4 lattes. While you’re at it, try to brown bag your lunch. You don’t have to sacrifice everything. If you eat out four nights each week try limiting yourself to twice each week. If you’re in the habit of watching movies opening weekend at the theatre, try occasionally catching the release when it comes to Netflix or Prime. And while we’re being honest, let’s just agree that buying a lottery ticket in the hopes of paying off all of your debt and retiring to someplace tropical, is not a realistic financial plan. Please, please, please skip the lottery tickets, even $1 or $2 each week adds up.
Make Larger Changes Temporary
What if you’ve eliminated all of your extra spending and you are still in debt? It may be time to consider some larger changes. I understand it is VERY HARD to change even small habits so when you face a larger adjustment in your spending approach it as a temporary change. We all want the luxury of an extra bedroom for guests or a home office, but if you’re living AT or ABOVE your means, it may be time to make that extra space more affordable. If you have an extra room consider renting to a college student for a semester, it might be the boost you need to finally pay off that credit card balance. Mom can sleep on the couch when she visits and that home office can just be a desk in the corner of the living room.
Don’t focus on what you are giving up, but rather what you are gaining. Attaining financial wellness reduces stress which boosts overall health and happiness. Living within your means will bring the financial comfort you’ve been wishing for, but it will also give you the confidence that comes with self-reliance. Be proud of yourself, you have mastered a skill that many people struggle to with.
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