The best plan to have real financial freedom, take control of the financial situation and reduce the stress of budgeting is to live below your means. If you don’t want to be controlled by your money and if you don’t want to have unmanageable debt, living below your means is a necessary skill set. On the other hand, if you are in debt already, you can eliminate the debt more quickly by living below your means. This skillset will also allow you to save more.
There are quite a number of ways to learn how to live below your means but most of these ways have guidelines that must be followed. This article will explain what it means to live below one’s means and how you can work towards gaining financial independence. It is also important you know that you might not find it easy to implement all the guidelines and principles at once but with patience, the desired aim will be achieved. Don’t let initial difficulties discourage you.
What does it mean actualy?
This phrase is an obvious phrase but there are misconceptions about the meaning. Living below your means doesn’t mean you shouldn’t spend on things you love or things that make you happy, it also doesn’t mean you should live like a poor person. Living below your means is a strategy that allows you to maximize your happiness and financial well-being over time.
In short, living below your means simply means you should not spend more than you earn. This looks simpler on paper than it is in practice because spending less than what you make involves dedication and discipline and you can never become perfect overnight. The good news is that once you start, you realize it is worth it.
The immediate benefit of living below your means is that you get rid of the stress that comes with unplanned finances. Leaving finance unmanaged is always very stressful but being able to afford them makes you feel no stress. Living below your means will help you cut down your expenses and when you have unforeseen expenses, you will be prepared.
Different credit and loan options make it easy to get tempted to spend more than one earn but the general rule is that debt is not a good thing to have. Debt can sometimes be unavoidable but living below your means doesn’t mean you should pretend like the debt doesn’t exist. It rather entails not taking unnecessary debt.
One of the important benefits of living below your means is that you are free to start saving money rather than impulse spending. The key to affording valuable things rather than things that come your way is living below your means.
Sit back and think about things you could afford daily if you start spending more wisely.
Things to do to start living below your means:
The things you need to do are straightforward but at the same time not as easy as you might see it. Try to put the practice into place and you will be glad you took the step.
Understand what you earn monthly
The first and most important step is to understand what you earn monthly. The average of what you earn monthly will be the starting point. Try to stay far below what you earn monthly to maximize financial freedom.
Control your spending habit
Once you know your monthly income, the next step is to control how you spend by examining closely what you spend on, where you spend and when you spend. Think about things you can cut comfortably from your spending and take note of them.
Track small purchases
It’s quite surprising that you might realize you have spent more money on buying small things. Small purchases add up easily and the best thing to do is to eliminate things you don’t need.
Try to cut out things that you feel are not very important that you do monthly. Also cut down your budget partially or entirely so you will be spending on important things.
Increase your income
After you have been able to control your spending, the next step is to ensure you are earning more than what you are spending per month(having a discipline). This should be a priority or else you might end up being in debt. Increasing your income also means you might need to direct your attention from saving money to making more money. This task might seem daunting but it is worth the effort and time.
Once you can successfully complete the 5 steps above, the journey of living below your means have begun and ensured you don’t forget you need to stick to your budget. Keep track of your spending and keep cutting unnecessary expenses.
On a final note, don’t be discouraged if you get tempted or make mistakes. All habits take time and the only way to improve is to ensure you don’t give up. Be organized and disciplined and you will live happily below your means.