Know Your Income and Expenses
The first thing you need to know is what comes in and what goes out. Make a list of any and all income you have from your job, side work, pension or anywhere else. Then make a list of every bills you have, from rent to car payment (don’t forget bills that may not arrive monthly, like car insurance). These are your fixed expenses-the ones you have a limited control over.
The difference between your income and fixed expenses is what is left for the expenses you control-you variable and discretionary expenses.
Most of us have sufficient income to cover our fixed expenses. After all, we wouldn’t have taken on obligations we couldn’t pay. It is the the variable and discretionary expenses that so often get out of control.
Track Your Expenses
A spending plan, otherwise known as a budget, is the single best way to ensure you live within your means.
A spending plan is exactly what the name implies: It lays out what you plan to spend. To keep a tab on your progress, or lack thereof, you’ll need to track your money as you spend it. this used to involve the laborious process of writing down everything you spent, dividing the expenditures into categories, adding them up, and comparing those totals with your plan. These days, online budgeting services make the process easy.
If you want to live within your means and reach your goals, you have to track where your money is going. It is the only way to nib problems in the bud.
Separate Wants and Needs
When it comes to shopping, knowing the difference between a want a need will help keep you you out of debt.
Before you make a purchase, ask yourself if you really need it. If you don’t, wait before you buy it. I use the 48-hour rule. If I see something I want to buy but don’t think I absolutely need, I’ll wait 48 hours before I buy it. More often than not I change my mind.
Don’t Compete
Don’t fall victim to the “Keeping up with Joneses” mentality. Sure your friends or neighbors might drive nicer cars, have the newest technology or take expensive vacations, but that doesn’t mean you have to do the same. Think of it this way: Your neighbor might have financed that Mercedes, put the new flat-screen on his credit card, and taken out a personal loan to pay for a vacation. You’re not lemming; don’t follow the group off a cliff.
Cut Down On Expenses
If you’re still struggling to live within your means, take a hard look at your expenses. There is probably something you can cut out or at least cut down on. For example: Gym membership, hair and nails salons, cable TV, cell-phone bills and shopping trips.
Go through your bills and cancel any service you don’t use frequently. For the stuff you do use, call the provider and see if you can get a better deal.
Boost Your Income
If all else fails, boost your income. The simplest and most gratifying way is to make more from your current job by getting a raise. If that’s not in cards and you routinely find yourself struggling to make ends meet, it’s time to look for a better-paying job.
You have no right to complain about being underpaid if you’re not at least looking for better alternatives.
Of course, there are many other ways to increase your income, from selling your stuff to side jobs to turning a hobby into business. Where there is a will, there is usually a way.
Don’t Deprive Yourself
While this is the last tip, it is the most important. You can live within your means and still enjoy life. The trick? Substituting imagination for money. Think about what you really enjoy, then find a way to get it for less.
Culled from www.moneytalksnews.com
