I know, I know, living within your means is so dull. Just the thought of it takes all the air out of your hot air balloon. Denying ourselves the pleasures of life can make anyone throw up their hands and shout, “YOLO!” (You only live once). Our desire to have it all versus the amount of money in the bank can cause real conflict in our financial lives. The struggles of the not-rich-yet are real.
Living within your means has always been a wise strategy and becomes even more critical during uncertain economic times. Here are some major advantages of spending less than you earn and relatively painless strategies for sticking with this positive habit.
Advantages of Living Within Your Means
1. Reduce stress. You’ll feel calmer knowing you have enough to cover your basic expenses or get through potential emergencies like job loss or illness. By planning, you can feel secure even on a modest income.
2. Improve your finances. Some people become millionaires on meager salaries. Whatever you earn, you can increase your net worth by saving, spending, and investing wisely.
3. Reach your goals. Make frugality more pleasant by viewing it as a way to attain your goals rather than a sacrifice. Brewing your coffee for your morning commute can help pay for your summer vacation or the down payment on a home.
4. Contribute to a better society. The Occupy Wall Street movement dramatizes the impact our choices may have on other people. While predicting all future events is impossible, you can pay your way without burdening others.
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Strategies for Living Within Your Means
1. Create a budget. Get familiar with your monthly income and expenses. Include automatic payments you may rarely think about, like bank fees and insurance.
2. Pay down debt. Avoid debt by saving money in advance to pay for holiday gifts and weekend trips. I utilize this strategy for travel. Each year I set money aside in a savings account dedicated to travel. It allows me to enjoy travel without using credit cards. To pay down your debt quicker, contact lenders to see if you can consolidate your debts and pay them back more favorably.
3. Manage your credit cards. If you use credit cards, try paying off the balance monthly. If your balance has already accumulated, consolidate it onto a single card with the best rate you can find.
4. Save more. Motivate yourself to save by remembering the purpose, whether it’s your kid’s education or your retirement. You can deduct money from every paycheck before you even see it. This way, your savings are set aside before you have any temptation to spend them.
5. Earn more. Of course, earnings are the other side of the equation. Consider any classes or certifications that could help you qualify for a more lucrative position. Make money off your hobby, such as giving piano lessons or selling crafts.
6. Remain flexible. Life events are likely to interfere with your budget from time to time. Indulge yourself occasionally or adjust for unusual expenses, like if your house needs a new roof.
7. Tackle one habit at a time. Be patient while you’re changing your old ways. Once you get used to growing your vegetables, you can move on to learning basic home repair. For some of us, even keeping a budget is a new habit. That’s okay; give yourself time to integrate one change before jumping into the next big project.
8. Get outside help. There are many sources of free or inexpensive expert financial advice. Check your local government’s website for resources, or consult the National Federation for Credit Counseling.
Food, Entertainment and Shopping Strategies
1. Make your meals. Eating out takes a big bite out of the budget for many families. Pack your lunch on workdays instead of buying mediocre sandwiches. Learn more recipes so you can enjoy fancy dinners at home.
2. Seek out cheap entertainment. Borrow free movies and books from your local library. Purchase family memberships at your local museum or zoo so you can visit often and get invited to special events. Play croquet in your backyard.
3. Comparison shop for big expenses. If you’re anything like me, you love a bargain. Feed that bargain fetish by researching large purchases. Get the best price on major expenses like appliances and auto insurance.
Living within your means is good for your mental and financial health. Build a better future by putting yourself on a budget that you can sustain.