How to Live Within Your Means

Are you that person who never has spare cash? Does the last week of each month feel like a year while you wait for payday? Are you always in debt? Do you ever wonder how other people appear to seamlessly manage their finances and always have cash?

The truth is, most people struggle to spend less than they earn without making a particular effort to focus on it. You have to make financial health a goal, with practical steps to get there, just like you would a new eating or exercise plan. If you’re spending on credit cards or taking out loans to make ends meet, then you’ll be playing catch-up at month end as new expenses and temptations pile up, while you’re still trying to pay off last month’s debts.

When you spend more than you earn, you can’t save. Changing your money behaviour so that you can start saving requires discipline and commitment. Here are some tips from independent financial advisor Candice Paine, who’s spent 20 years helping people grow wealth and achieve financial freedom.

  1. Draw up a budget

The first step is to create a budget so you know how much money is coming in and where it’s going. If you’re wanting to spend within your means you are going to have to decide which expenses you can’t live without and which ones will simply have to be dropped. You will have a great sense of relief once you understand how you are spending and where you can save. 22seven is good place to start drawing up your budget. They also have an app which sends notifications if you overspend.

  • Don’t ignore your debt

Debt doesn’t disappear unless you slowly and deliberately start paying it off and stop taking on more. You’re not living within your means until you have paid off credit card and store debt, as well as loans you may have taken from the bank or friends. Debt is a very expensive way of funding your spending and often you’ll pay almost double for the item you’ve bought on credit. Rather save up and shop with cash.  

  • It’ll take time

Once you understand what you owe, what you earn and how much your critical monthly expenses are, you’ll need patience to start paying debt off. It took a long time to build up poor habits and these don’t change overnight. It’ll take a while to maintain the discipline of not overspending each month.

  • Increase your income

Finally, if you’re still finding it difficult to stretch your money far enough each month even though you’ve cut out unnecessary spending, it may be time to look at ways of increasing your income. This may involve getting a higher paying job or even a second job. You could rent out a room in your house on AirBnB or offer extra tuition to school children. If you have skills you can monetise, use them to pay off debt and start with a clean money slate each month.

This will give you peace of mind, which will go a long way to making you feel both physically and financially well.

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