You’ve heard it said before that you should “live within your means.” Now, many people take this to mean living cheap, clipping coupons, shopping at thrift stores and thrift stores, but those are all misconceptions. Living within your means doesn’t have to mean living “on the cheap.” It simply means that you maintain an affordable lifestyle for yourself.
A better way to say it is this: act on your salary!
We’ve all seen it before, and most of us have done it before. A significant portion of the population uses their possessions to define who they are. Expensive cars, expensive clothing, fancy electronics, and home entertainment items—none of these things define who you are, but many people act that way. This is a major factor contributing to the economic decline in the United States today.
The main problem with living like you make more money than you really do is debt. Things like clothes, nights out, dinners, drinks, etc. are purchased with credit cards. Since most of us who live this way don’t keep track of our spending, debt slowly accumulates until a few nights on the town add up to tens of thousands of dollars.
Debt accumulation leads to higher monthly payments and longer payment terms. It doesn’t seem like a huge increase every month, but over time, your entire paycheck will be going out the door the moment you arrive.
Change your attitude!
Living beyond your means stems from our materialistic nature and our need to gain approval from others. Before you can truly transform your finances, you must accept that living by other people’s standards is not the life you want for yourself. Your expensive clothes don’t impress anyone. Your car that you can’t afford isn’t impressing anyone. Stop living for others, make smarter decisions, and put your long-term best interest first.
We all would like to live like a professional athlete or a pop star, but at some point, you have to accept that you are not a millionaire and you have to come up with a plan. That’s not to say that becoming a millionaire, or even a billionaire, is out of the question, it’s just not the reality right now. Act your salary. When you win a million dollars, you can spend a million dollars.
I’ve never met a millionaire who said they made their wealth using credit cards and debt, and I doubt you don’t either.
Create a budget
Budgeting is the most important part of having a financial plan and living within your means. The budget tells your money, BEFORE it arrives, where it is going and how it will be used. Completing the budget makes it easier to prioritize and ensures things get paid for on time. The budget also prevents you from overspending and keeps track of any surplus at the end of the month.
However you decide to work it out, creating a budget is vital to financial success and living within your means.
