Being financially responsible is important for your health and your financial life. To “live within your means” means that what you spend each month is less than or at least equal to the amount of money you bring in each month. For many people, it’s a lot easier said than done.
When your lifestyle exceeds your income, you’ll be dealing with financial problems that could have been easily avoided if you had started off with living within your means. Credit cards, loans, savings, and even emergency funds allow you to buy more things than your income would ordinarily allow. Unfortunately, that kind of lifestyle isn’t sustainable and, at some point, reckless spending will catch up to you.
Here are three simple ways that may help you:
1 KNOW HOW MUCH YOU MAKE
If you want to live within your means, you have to know what your means are. But simply knowing your annual salary or hourly rate isn’t enough to help you live below your means. You need to know the net income that appears on your paychecks—the amount you actually have to spend.
2 SPEND LESS MONEY THAN YOU BRING IN
Once you know how much you make, you can focus on reducing your spending to fit your income. If you don’t have one already, create a budget to plan your expenses and use it to keep your spending on track. If you’ve already tried budgeting and it didn’t work, try it again. Often you just need to make some minor changes to your budget to get it to be effective.
3 DON’T TRY TO KEEP UP WITH THE JONESES OR HILTONS
Resist the pressure to have the same material things as the people around you or, worse, the people on television. You may be able to use credit cards and loans to fake wealth for a short period of time, but you’ll pay for it later—and you’ll end up paying more since interest is added to your balance each month.