Living within your means has always been a wise strategy and becomes even more important during uncertain economic times. Here are some of the 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 when you know you have enough set aside to keep your basic expenses covered or get you through potential emergencies like job loss or illness. By planning ahead you can feel secure even on a modest income.
2. Improve your finances. Some people become millionaires on remarkably low 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 as a sacrifice. Brewing your own 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 try to pay your own way without burdening others.
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. Contact lenders to see if you can consolidate your debts and pay them back on more favorable terms. Avoid going into debt by saving money in advance to pay for holiday gifts and weekend trips.
3. Manage your credit cards. If you use credit cards, try to pay off the balance every month. 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 own retirement. You may be able to 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 make adjustments 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 own 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; just give yourself some time to integrate one change before you jump into the next big project.
8. Get outside help. There are many sources of free or inexpensive expert financial advice. Check the website for your local government for resources or consult the National Federation for Credit Counseling.
9. Make your own meals. Eating out takes a big bite out of the budget for many families. Pack your own lunch on workdays instead of buying mediocre sandwiches. Learn more recipes so you can enjoy fancy dinners at home.
10. Seek out cheap entertainment. Borrow free movies and books from your local library. Play croquet in your backyard. Purchase family memberships at your local museum or zoo so you can visit often and get invited to special events.
11. Comparison shop for big expenses. Researching large purchases pays off. Get the best price you can 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.