Are you doing it? Living within your means?
What is it about the messages we get from society, that we think we should have every single thing we desire to purchase, right now, no matter the cost? The message that we should be getting is living within your means is the smart way to manage our finances.
To me it certainly feels like we are being set up for failure if we try to meet this expectation. That is one of the many reasons so many people these days are in debt. When you owe money, you end up paying for it dearly in the form of something called, interest. To me, paying interest is like throwing your hard earned money in the garbage!
Living within your means, entails knowing exactly what we are earning, after tax in each pay cheque and exactly what we are spending on a monthly basis. Unfortunately, most people don’t actually know either of those numbers. Most people know their pre-tax annual income, but not the after tax numbers that make it into their bank accounts on a regular basis.
Once we know how much we actually have to spend, we need to prioritize what we are spending on. Funds should first be allocated to the things that we need, then things that we want. Sometimes, people can get those confused, but if you really think about it, you can tell the difference! So please consider, you actually need or want something before you buy it, especially if you are going to go into debt to buy it.
Living within your means is one of the best ways to ensure future financial success. This way you’ll have a choice of what to do with your future income and you won’t have to allocate a portion of it to debt repayment.