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, it 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.

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 your parents would probably tell you to do. In fact, 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. Most people realise that they are working their asses off so that they can spend all their money and have nothing to show for it, and it’s not making them happy.

What do you actually need?

Now you are ready to use your list of what you spend and work out what you need to spend. Get out a highlighter pen and start crossing off the items that you do not need to spend. There are things you absolutely cannot cross off, like rent/mortgage, car payment, and bus fare to work, but you will find many 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 unnecessary. 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, life, and time. Before you do anything, you must 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 needs 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. You will also have highlighted things that you can easily give up. They seem to have snuck into your life without you realizing it and will be easy to eliminate. For me, it was magazines. I would do the grocery shopping, see something on the front cover of a magazine, 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 than you make.  You will feel the stress coming off in layers as you do this. It is not a quick fix. You didn’t get yourself into this mess overnight, so you will not 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 your 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.

As always, live well.

Valerie