Written by Sherrie Brann, Central Region Workforce Specialist
Living “within your means” is basically spending less than you earn. In today’s society, it is easy to develop a lifestyle of living beyond our means. This can be due to easy access to credit cards and loans or not paying close attention to our spending. Eventually, this lifestyle leads to financial stress, which is why many of us would like to simplify.
10 Steps to Start Living Within Your Means:
- Determine exactly what your take-home income is each month. If you are paid weekly, do this by multiplying your weekly pay by 4.3 weeks.
- Track your spending for a month to get a clear picture of where your money goes. Often you will discover leaks in your budget you hadn’t noticed.
- Create a written budget or spending plan.
- If your budget shows you can’t pay for all your monthly expenses, find ways to trim expenses, increase income, or both.
- Build a savings account to cover unexpected expenses.
- Set a savings goal you are excited about. With some changes in spending habits, you can reach your goal faster.
- Set the maximum amount you plan to spend each week in different categories, then stick with your plan.
- Avoid letting a sale or coupon tempt you to buy something you don’t really need that isn’t in your plan. It’s only a good deal if you were going to buy the item anyway.
- Pay attention to the interest you are paying if you use credit. It can feel good to purchase something now and pay later. However, you end up paying extra because the longer it takes to pay off, the more interest you pay.
- Be true to yourself—don’t compare what you have to what others appear to have. Some people create a false impression of wealth while actually deeply in debt.
Get Started Today.
There are many resources available if you want to learn more about managing your money in a way that works for your household. One place to start is with a money management class at New Ventures Maine.