More often than not, humans are guilty of lacking the financial discipline they need to manage their finances and live within their means successfully. Instead of striking a careful balance between cash inflow and outflow, we, most times, try to focus more on things we need. And eventually we go out of our ways to get them, consequences are damned! Not only is it wrong for someone to lead a life above their means, but it is an act that has the potential for damaging such person’s financial freedom, and invariably leading him or her to debt. As a rule, one should always strive towards achieving a lifestyle that is based on self-preservation and self-sustenance and to achieve that, one needs to learn to live within their means. Simply put, if you want to live largely; ensure your income sources are large too; otherwise, learn to stay within your financial reach. In that light, here are a few great tips to get you started on your effort to strike a healthy balance within your financial life.
Understand your income
Want to live within your financial ability? First, you need to know how much you make; that is, you need to know what exactly your means are. And this isn’t even about determining your monthly paycheck or hourly wage, but knowing what your net income is. This is also about understanding the timing of your income. How often do you get paid? What is the usual date? This will help you strike a balance between your income payment and your bill payment. Many, who get this step wrong from the get-go, often bite more than they can chew. Such people end up using their credit cards to finance the purchase of expenses, clear bills, and lead a normal expensive life with the hope of using an expected income to pay up their credit card bills. A good practice would be to understand what your income means are; then, you can structure your “expensive” or “average” lifestyle based on that.
Spend less than you make
The whole point of living within one’s means is characterized by this singular tip: spending less than you make. The moment you find yourself struggling to cope with your expenses, then, it means that you really couldn’t afford those expenses in the first place. A wise man once said, and I quote, “If you cannot afford it twice, don’t buy it.” In simple terms, understanding your income sources isn’t enough; you also need to spend less than what your sources are providing. For instance, if your net income totals $1,000 every month, living within your means would mean spending a certain percentage of that on your expenses, while you also make room for savings, long-term goals, and other financial obligations. But the moment you find yourself spending an almost equivalent of $1000 or more on your expenses, then, it means that you’ve been living outside your means.
Boost your income
If your financial goal is to live by your means, then, you need to find alternative income sources. Sticking with the bare minimum income wouldn’t suffice for today’s expenses, would it? Indeed, expenses don’t back down these days, and the bills never stop rolling in. To stay on top of the situation, one needs to find alternative income streams. For starters, there are many opportunities, side-hustle, and gigs available online today – from freelancing to online business, trading to offering online services, all you need is tap into these endless pools of opportunities. If you think you don’t have the skill needed to earn an income from these internet opportunities, you may want to stick with trading. It certainly doesn’t require having any foreknowledge about it; all you need do is find the best trading platforms and the best CFD brokers (say, for instance, you want to engage in CFD trading) to work with.
Stop relying on credit cards
Using credit cards to fund your bills and other expenses is not living within your means. When you plan your budget at the beginning of every month, completely rule out credit cards as a way to make ends meet. If possible, don’t go out with your credit cards at all; instead, plan to tackle all your financial obligations through whatever income you get to make.
Avoid keeping up with the Joneses or the Hiltons
Try as much as possible to resist the urge to own or buy things you see with or on your friends and celebrities on TV. It is not uncommon to see people use credit cards, auto loans, and personal loans to fake wealth and show-off, but eventually, it all blows in their faces, and they end up running into debt.
Save up for purchases instead of putting them on credit
People sometimes try to use credit cards to make large purchases they can’t afford outright. This is not a good practice at all. The fact that you cannot afford to make the payment outright shows that you simply don’t have the financial muscle to shoulder the responsibility. So going ahead to buy them anyway is not living within your means. Instead, save up until you’ve raised enough to make your large purchases outright.