It seems that as a nation that we have a love of spending and racking up credit card debts. When you are buying things that you can’t really afford to be buying, then it can have a negative long-term impact. Learning how to live within your means is something that needs to be addressed, as it isn’t something that everyone is taught how to do. Some people are naturally good at it, and conscious of where their money is going. Others are a little less careful, and just ‘add to cart’ and hope for the best.
So with that in mind, if you are someone who needs a little help and guidance, then knowing how to live within your means, and how to budget properly and clear debts are important. Otherwise, the people or companies that you owe money to, could look for a collection agency who can just come to your home and claim back what you owe. So taking steps now can help things down the line. So here are some things to consider.
Know your income and expenses
One of the first things that you need to think about is what money is coming in, and what money is going out. It is important to have a clear list, whether in a notebook or on a spreadsheet, which has clear numbers of the money that comes in. Think about wages, pension, side hustles, and other means of income. The next step is to make a list of all of the bills that you have. Anything from your rent or mortgage to your monthly Netflix payment. These are the kinds of things that are fixed, and that you do have little control over.
Other spending, such as recreation, groceries, entertainment, and gas for your car, can all be edited and reduced if needed. If you spend a lot on food, for example, then there are things that will help you to spend less, such as eating less meat, avoiding takeout, and buying and cooking in bulk. So monitor the variable expenditure, as that is where things can get a little out of control.
Separate wants and needs
When you shop for things and want to live within your means, then you really need to work out the difference between what needs are and what wants are. If you find something that you like, then you need to take some to think it through. Even giving yourself a day to think about it can help to reduce the impulsivity, and give you some clarity to the urgency of the item. You might want some new shoes as another pair broke, but do you need them? If you still have other shoes to wear, then you don’t need to replace the pair.
Keep an emergency fund
Life can come up with some pretty unpredictable circumstances. You might have a car that breaks down or a house that needs repairs. You don’t want to get into debt for these kinds of things, simply because you didn’t have an emergency fund to fall back on. Having money saved up, at least three months’ worth of spending saved, if not more, can make such a difference.