Spending less than you earn is the key to living debt-free and creating financial freedom. Not only will the stress of overwhelming debt disappear, but you’ll be able to enjoy the advantages of excellent credit, you’ll be able to borrow money when you actually need it and you’ll be able to start saving money for the things you really want or need – including retirement! Although living within your means seems like a simple concept, it requires serious commitment and planning. But once you change your habits and commit to spending less, debt will become a thing of the past.
Don’t make the mistake of seeing your income as the problem and spending your energy trying to make more instead of focusing on the real issue of overspending. While there’s obviously nothing wrong with making more money, it won’t make spending less easier.
Follow these tips and begin developing new habits that will help you spend less than you earn:
- Seperate Your Wants and Needs
Distinguishing between your wants and needs is a simple process. What doesn’t fall into the category of food, clothing or shelter is a want. As much as we may enjoy eating out, watching cable TV or having multiple cell phone services in our homes, none of these are essentials for living. It may help you determine wants from needs by considering what you would need if a crisis were to occur and you had limited finances.
- Set Your Priorities for Non-Essentials
We all have a standard of living that we hope to maintain. Life is full of choices, and many of your desires are non-essential. When the car won’t start, and it’s your only source of transportation, it stands to reason that you’ll have it repaired. But what do you do when one of your TV’s break? Evaluating the things that you bring you fulfillment and those that are superficial will help you spend less.
- Acknowledge Your Weaknesses
It’s important to identity the areas that you may struggle when trying to get your finances under control. For some of us it’s eating out less or shopping as a source of entertainment. When you admit the areas that you are weakest, you have taken the first step in forming new money saving habits.
- Don’t Forget the Small Things
Don’t overlook or take for granted the small things you can do. Everything counts – even the small stuff! The old clique ‘a penny saved is a penny earned’ is still applicable. For example, brew your morning coffee at home instead of buying it on your way to work and save $1 per day – $40 per month!
- Admit to Your Mistakes
If you made a mistake, be honest with yourself and don’t ignore the problem. If credit cards are the source of your troubles, get rid of them, or at the least stow them away for emergencies only. If you love to read and regularly buy books, check out the local library and read for free. Remove the temptation to spend impulsively by making a list every time you go to the store.
While a lot of your spending won’t require monitoring, like your car payment or mortgage, big gains can be made by focusing on those areas that you have some control over. Planning, discipline and self-control will help you lower spending and bring financial freedom from debt.
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