Whatever your financial goal is, in order to make it happen, you’re going to have to learn how to live within your means.
We all have our own financial goals. Some are trying to save up for a downpayment on a home, and others may be trying to save for college or pay off their debt. However, regardless of what your goal is, the only way to reach it is to first learn how to live within your means, and that can be tricky. In Part 1 of this series, we went over a few helpful tips for living within your means, so if you haven’t read it yet, check it out! Keep reading to learn more.
#4. Don’t try to keep up with the Joneses.
There’s always something new and exciting to buy. Smartphones are a great example of this. Every year, new phones come out that are slightly cooler or faster than the previous version, and the crazy part is that everyone goes out and buys one, even when their existing phones are working just fine! If your budget is unlimited, there’s no harm in buying a new phone just to buy one, but when you have a strict budget and you’re trying to reach a financial goal, ask yourself if you really need that new phone or if you’re just buying it to keep up with the Joneses.
#5. Look for opportunities to decrease your expenses.
In our last blog, we talked about identifying needs and wants. And, while there are obvious ways to cut out wants from your budget, needs can be a little more difficult to chip away at. For example, you have to buy groceries in order to feed yourself, but you don’t have to eat steak every week or buy all name brand foods. Here are a few other ideas to help you decrease your fixed expenses every month:
- Shop around for car insurance.
- Switch to a cheaper cellular company or plan.
- Don’t go to the grocery store without a list.
- Refinance your mortgage or auto loan with a lower rate.
- Keep your thermostat set at the right temperature.
- Buy non-perishable products in bulk.
- Bundle your insurance plan.
- Downgrade your phone bill.
- Trade your gym membership is for running shoes or dumbells.
These are just a few ideas to help you cut your expenses, but there are plenty of other things you can do; you just have to think outside the box a little bit.
#6. Pay in cash.
There are a lot of great credit cards out there that make it possible to get a percentage of the money you spent back in cash. These rewards cards are incredible if you are disciplined enough not to go nuts with them and pay them off right away. However, when you are already living above your means, using a credit card for everything is not going to help, and if you aren’t able to pay off your balance, you’ll only owe more and more as the interest accrues. Instead, pay for everything in cash — and, no, we do not mean with a debit card. When you only have a certain amount of physical cash in your hands, you simply can’t spend more than you intend to — it’s impossible! But, when you’re using a debit card, there’s a chance that you could accidentally spend more than you have, which will only lead to nasty overdraft fees.
Living within your means is the first step towards reaching your financial goals, and to learn more helpful tips, make sure that you stay tuned for your next blog. Until then, download our one-of-a-kind financial planning app. With Goal Plus, you can set any financial goal you want to achieve, and it has all of the tools you need to reach it. Best of all, it’s absolutely free!