Can you get through the month without spending more than you earn?
A credit card can be a lifesaver when times are tough. But if it starts making an appearance at the end of every single month, it may be time to start making some changes.
Find out how to live below your means and find a balance that suits your lifestyle and your bank account with these 5 simple tips…
Living on a budget is an art. With most of us struggling to get by on only our monthly income, it seems living on credit has become the norm.
But with a bit of discipline and dedication, we can all live a bit more frugally.
How nice would it be to have cash left over at the end of the month? To have that extra bit of money to put towards your debt. To save for a holiday. Or even put money into getting an extra qualification…
“The art is not in making money, but in keeping it.” – Proverb
Here are 5 simple tips to help you discover the art of ‘living within your means’.
1. Manage your costs
Know what you have left after you’ve paid all your fixed costs. These are things like car finance, medical aid, your mortgage or rent. Your fixed costs stay the same every month. After you’ve paid your fixed costs what do you have left for food, petrol, electricity and so forth? These are called fluid costs, meaning they can change depending on how well you manage them.
This is the secret to living below your means. Save on your fluid costs. Shop for cheaper food brands, turn lights out when you don’t need them and take a more fuel-efficient route to work to save.
Set a personal goal and create a spending budget for your fluid costs that won’t leave you broke at the end of every month. If you usually spend 2000 rand per person on food, set a personal goal to spend no more than 1500 per person.
Stay within your spending budget as much as possible. And do your best to stay away from that plastic money. You don’t need to create debt when you don’t have to.
Make sure your biggest monthly fixed expenses are automated. Try to set your payment to go off on the day you get paid.
The last thing you want is to spend all your money before those big payments are made. You’ll be in debt before you can say ‘Howzit’.
This will help you stick to your budget and avoid spending any money that you don’t have.
2. Save now spend later
Everyone likes getting paid. So why don’t you start paying yourself? Try to put away 10% of your income each month.
Save for the things you really want rather than using credit to get the things you think you want now. Know how much you earn and how much you can spend and save. Then work on your financial goals. Start planning a savings strategy that works for you.
3. Ditch the millionaire’s mindset
Stop buying material things that don’t have any value. Even millionaires don’t purchase the newest and greatest whatever. And neither should you. Millionaires know how to manage their money successfully. Check out how the rich manage their money and maybe one day you can join the millionaires club.
Many of us tend to spend beyond our means. Distinguish what you really need and what you want.
We all need a roof over our heads. But just because we need somewhere to call home, does not mean we should be living in a mansion (unless we can really afford it). Living somewhere that is affordable and practical, is still a blessing.
There’s a simple trick you can follow that will help you be more frugal.
Before making any purchase, big or small, ask yourself “is this something I really need right now, or is it something I can save for and purchase later?”
4. Build an emergency fund, for the future
An emergency fund will prevent you from using credit. Only use this fund when you really need to. If you can, build up an emergency fund that amounts to six months of salary. It’s called an emergency fund for a season. So, don’t use it unless you’re in an emergency.
This fund is for future emergency payments like possible car repairs, hospital bills, property maintenance etc. Or maybe you lose your job. How are you going to pay for the basics?
This fund is there to get you out of a sticky situation when you have no other options available.
5. Financial freedom mood-board
What does financial freedom look like to you? You might want to own a house one day or even get a new car. Or maybe you want to retire by the beach. Whatever it is. Define it and be specific.
Create goals for yourself. Be as detailed as possible and challenge yourself. Make sure that these are goals that you can achieve and that they mean something you.
Create a financial mood-board for yourself. Set out your goals visually. This will prevent you from spending any money carelessly.
Look at your mood-board every time you want to make a big purchase. Ask yourself if the purchase you want to make is something you need or if it is something that you just want.
If the purchase is not pushing you closer towards your goals, it’s probably not worth it.
Living within your means, is an achievement.
Remember that the whole point of budgeting and living within your means, is to spend less than what you earn. By the end of each month, your income must be more than your expenditure.
Using credit month on month to survive will only end up in disaster. All we’re doing is building unmanageable debt and moving further away from our financial goals.
We challenge you to take on the rest of this year to live below your means. With as little debt as possible.
You’ll do a celebration dance at the end of the year, when you look back at a simpler and less stressful life.
If you are struggling to pay off your debt and you just can’t seem to break away from that minus number. Contact us today and we’ll help you get rid of your debt and put you one step closer to living within your means.