In a situation whereby your salary is too small or you have a big responsibility, living small within your means should be so important to you.
One of the things we must avoid if we really want to live long and have a good life is avoid debt and this can only be done by living right within our income. If at all we will be borrowing, we should know it’s because of something so important or impromptu stuffs.
The following are practical ways we can live within our income to avoid debt:
1. Avoid competition
If you really want to have peace in this world, you must avoid competition at all cost. So many people have wasted their lives and days trying to meet up with the lifestyle of someone else without knowing how that other person is living his life.
Yes, you may really wish to live a glamorous life but the question Is, can your pulse fund that life?
Your friends or neighbors might drive nicer cars, have the newest technology, or take expensive vacations, but that doesn’t mean you have to do the same.
Think of it this way: Your neighbor might have taken a loan out for the Mercedes, put the new flat-screen on his credit card, or taken out a personal loan to pay for a vacation.
Sometimes living within your means might not be as glamorous, but you will be much better off for it long term.
2. Separate wants and needs
Knowing what we want and need will save a lot of us from debt and poverty. Want is that urgent thing you really need while need isn’t that urgent which means you can get it some other time. When it comes to shopping, knowing the difference between a want and a need will help keep you out of debt.
Before you make a purchase, ask yourself if you really need it. If you don’t, wait before you buy it. Try using the 48-hour rule. If you see something you want to buy but don’t think you absolutely need it, wait 48 hours before buying it. You might find that, more often than not, you change your mind.
3. Have a scale of preference
Scale of preference is how we list our needs on the level of their urgency. Yes, we may need so many things and our income can’t get them at once that is why we need scale of preference. We can list out all we need and check out the level of their importance before buying them. This is a way to guarantee peace.
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4. Keep an emergency fund
Life is unpredictable. Your car might break down, you could get sick, your bike could get stolen, and you might find yourself flying across the country to visit family. Don’t fall into debt because you haven’t built up an emergency fund. A good general principle to follow is keeping three to six months’ worth of expenses saved up. That way, when something goes wrong, you won’t have to reach for your credit card or take out a loan to pay for it.
5. Save money wherever possible
Saving money will help you stop overextending yourself financially.
Try these tips to get started:
- Never walk into the grocery store unprepared: Before you shop, be sure to pay attention to which items are on sale, or which items you can buy in bulk to save (but won’t go bad). Also, be sure to use a shopping list — it’s all too easy to accidentally buy frivolous stuff. Stick to your list and save.
- Track your hobby spending: Decide exactly how much a month you want to spend on your hobbies, like concerts or skiing, and stick to that budget.
- Bring lunch to work: If there are good restaurants near work, you’ll be tempted to buy lunch every day. Skip the pricey meals and try bringing lunch from home. It’ll add up.
- Buy secondhand: You can find incredible deals at garage sales or thrift shops.
- Open a high-yield savings account: There are plenty of banks that offer around 2% APY on savings accounts. Check these out and make sure you’re making regular contributions once you open one.
6. Cut down on expenses
If you’re still struggling to live within your means, take a hard look at your expenses. There is probably something you can cut out or at least cut down on. For example:
- Gym memberships.
- Hair and nail salons.
- Cable TV.
- Cell phone bills.
- Shopping trips.
Go through your bills and cancel any service you don’t use frequently. For the stuff you do use, call the provider and see if you can get a better deal, or at least cut it down. Maybe you only need 10 gigs of data a month rather than unlimited.
