Do you know how to live within your means? Living within your means implies that your spending on monthly basis is less than or equal to your monthly total income. If it exceeds it, then you are no longer living within your means Unfortunately, credit cards and loans make a lot of people live above their means. They make you spend what you do not have and come later to pay. What can you do to live within your means?
How To Live Within Your Means : Know Your Income
Know your net income that appears on your paychecks, how often you get paid and all about your earnings. Know your total monthly earnings. This will help you to make a budget about your spending.
How To Live Within Your Means : Spend Less Than You Earn
Since you already know how much you make, try very well to spend below your income. With a budget, plan your expenses correctly. If writing a budget is hard, write down your income and subtract your expenses within the month. However, the expenses should not reach or exceed the income.
How To Live Within Your Means : Work Harder To Increase Your Income
If your income is low that your total monthly expenses is equal to it or more than it, then you can work harder. You can get a second job, a higher paying job or turn your hobby into a source of income. Apply for a tax refund, you may adjust your tax withholding to get more money in your paycheck. Sign up for the right health, disability, and other company provided benefits.
Save Emergency Fund
As far as you can, set some cash aside on monthly basis. This will help you when there is an emergency. You will not need to use your credit card to settle such situations. You can save about $30 to 50 monthly, if your salary or income increases, you can increase the emergency fund. The best way to go about this however is to set up an automatic transfer to make it easier to reach your savings goal.
Avoid Using Your Card To Buy Very Expensive Items
Many card holders fall victim of this. They use their card to buy things that in real life they cannot afford. Instead, save some money on monthly basis to buy it. Purchasing such items like Television, Speakers, Laptops, and many more will increase your debt can’t afford to buy it.
Do Not Depend On Credit Cards
Stop using your credit cards to pay your bills. Using credit cards to pay bills is not ideal since you MUST still pay the credit card issuer with an interest. Your credit card company may decide to close your card or reduce your credit limit due to overspending. Use the cash at your disposal to take care of your bills.
It is not easy to live within your means, you may often have to avoid some unnecessary expenses or cut down on entertainment. The effort is worth it. It will give you freedom from debt and some peace of mind.