Many people struggle with their finances because they don’t live within their means. I hope you are not one of such people. If you are, then you must do well to roll yourself back into your means.
What does it mean to live within your means? Simply, it means spending only what you have earned. It implies not borrowing to spend on consumables. Living within your means also refers to spending only what you have planned to spend; not making purchases on impulse. So, how can you live within your means?
1. Confidence and Discipline: Many times, we are unable to say ‘No’ to sales persons who haunt us to patronize their wares, even when we don’t have the money to buy. Other times, when our colleagues are buying and we also want to prove that we are at par with them, we join the herd and buy even if we don’t need that particular item or don’t have the income to support that purchase. The pathetic thing is that we borrow to buy or we buy on credit. The effect is that when the time comes for us to buy the things we really need, we struggle to find the money and plunge ourselves further into debt.
To live within your means, you must have the confidence to stand and say ‘No’ to pressure. You must also have the discipline to avoid buying things (especially consumables) on impulse or on credit.
2. Controlling Your Expenditure: You must give structure to your expenditure. You must plan in advance how you want to spend the income that flows into your account. In planning your expenditure, you must always make room for what you want to put aside for a rainy day, set a portion aside for emergencies and then you can live on the rest. Be careful not to dip your hand into your savings to feed your impulsive desires.
When you plan in advance, you will have control over your finances. To be able to stay on track, put your expenditure plan on paper. Yes, write it down. Don’t just think it, write it. Keep it in your hand bag or wallet. Refer to it as often as possible and stay with it.
3. Create New Income Streams: If you need to make a major purchase such as a house or a car, you must create a new income stream that will help you to maintain that property when you finally buy it. Don’t buy any property whose maintenance expenses will be a strain on your income.
You can create new streams of income by learning to generate passive income. Passive income is income that flows in even when you do nothing. For instance if you invest in government fixed income securities, you can be assured that at maturity, some return will come into your fold.
Another way of creating a new income stream is when you are able to deploy your skills on weekends for extra income. You could also consider commercializing your hobby. These income streams help you to generate the cash flow that will finance your rising expenses.
Living within your means is a simple way of avoiding debt and having your peace of mind. If you must extend the boundaries of your expenses, then you must necessarily create additional streams or sources of income.
Author: Terry Mante, a Life Coach, Motivational Speaker and CEO of Personal Development Network. He is an author with five books published already including Life Sense in the BOOKSHOP as well as What You Don’t know Is A Big Deal. His write-ups feature prominently in the Business and Financial Times and The General Telegraph every week.
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