Living Within Your Means

No matter how much money you make, you can get yourself into financial trouble. It seems to happen without us even noticing, but as our income goes up, so does our spending. In fact is seems that our expenses grow to match our income and we end up needing more and more just to survive. So we seek to make more money, only to find our expenses increase again. It is a never ending circle of work, stress and consumption where nothing is ever enough and we always feel behind and dissatisfied with our life.

Ever feel life you just want to get off?

The only way to stop the cycle is to start living within your means. I know it doesn’t sound sexy and it is something you parents would probably tell you to do. It fatc it sounds quite boring and old fashioned. But really, it’s one of the most powerful things you can do for yourself. It is a true secret to happiness. Imagine a life where you had enough money, did not need to work more, could in fact work less and had no financial stress. Sound good? Well,l you can have it just by changing the way you look at things.

Companies like My Budget are probably doing a roaring trade helping people live within their means, but they charge a fee for doing this. I looked at their website and could not get any idea of how much this fee is so that always makes me feel uncomfortable, but you can do this for yourself for free.

So what is the basic problem people who live beyond their means have? Well, it is never just one thing, so let’s have a look at the situation.

Do you know what your expenses are?

Most people don’t even know what their expenses are compared to their income. The first thing to do is to sit down with a pad of paper and a pen, or at your computer, and write a list of all your expenses. Some people find a weekly expense list easier to work with, while others do better with a month’s budget. Whatever suits you better is fine. I like the weekly list myself. This list may take some time to complete and don’t be surprised to find that you continue to add to it over the next week or two as you find more things you are spending money on that are not immediately apparent.

Once your list of expenses is complete, compare it to your income. If you are shocked to see how much you are spending compared to your income, join the club. This is the most common reaction. What most people realize is that they are working their ass off so that they can spend all their money, have nothing to show for it, and it’s not making them happy.

What do you actually need?

Now you are ready to use the list you made of what you spend and work out what you actually need to spend. Get out a highlighter pen and start crossing off the items that you do not need to spend. There are things that you absolutely cannot cross off like rent/mortgage, car payment, bus fair to work, but you will find lots of items on the list that you do not need to spend. They are discretionary expenses that you can do without. Don’t panic. I am not saying that you have to give up everything that is not a necessity. I am just trying to get you to look at the difference between need and want.

This is the first step to regaining control of your finances, your life and your time. Before you do anything, you have to have the information to make informed decisions. Are you going to have to reduce your spending to live within your means? Yes. Once you have your list of expenses, and you have separated them into need and wants, you are ready for the next step.

What can I not spend and still be happy?

Now it is time to reign in some of that spending. There will be things that you have highlighted that you really love and while you might need to let them go, you are not ready yet. There will also be things you have highlighted that you can easily give up. They just seem to have snuck into your life without you realizing it and they will be easy to get rid of. For me it was magazines. I would be doing the grocery shopping and see something on the front cover of a magazine and think, that looks good and buy it. Maybe you got Netflix so you could watch a certain program and now that it is done and over, you still have Netflix, which you have not used in ages. Do you really need Netflix and Stan?

This is going to be a work in progress. Just work on that list and cut, cut, cut, until you are spending less that you make.  As you do this you will feel the stress coming off in layers. It is not a quick fix. You didn’t get yourself into this mess overnight and so you are not going to get yourself out of it overnight. Once you have arrived at spending less than you make, it is time to tackle the next problem, debt. If you have been living beyond your means you have probably been using credit cards and other forms of finance. Well they all have to be paid back and now that you are living within your means and your expenses are less than you income, you can start paying them off. But you can’t do that until you stop spending more than you make. That really is the first step to taking back control of your life.


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