Living with your means involves cutting expenses
so that there is money left over at the end of the
month and expenses do not exceed income. Careful
budgeting can help one to enjoy the benefits of
living within your means, including reduced
interest rate charges and the ability to save
money for emergencies or special purchases.

The cornerstone of living within your means is
to develop a budget plan. You must know how much
money you are spending every month on all of your
expenses in order to determine where you may be
able to save money. Write down all of your bills,
along with all of the miscellaneous purchases that
you make every month and tally them.

Avoiding the dangers of unconscious spending can
also help you to live within your means. Many
people spend far more money than they realize on
this type of spending. These are the purchases
that that may be small in nature but add up over
time. Those impulsive buys while waiting in line,
for example, can often add up to far more money
than you might realize.

In addition, make sure you keep an eye out for fees
such as ATM fees, that commonly add up on a monthly
basis. Keep track of such fees as well as all of your
expenses. Even a small notebook or journal that you
can slip into your pocket or purse is a good way to
keep up with such expenses. Do this for about a month so
that you have a clear idea of where your money is going.

Once you know where your money is going you can then
begin working towards setting up a savings fund.
This is the second hallmark of living within your
means. When you do not have money set aside and
emergencies strike, you often feel forced to charge
items and that can make it even more difficult to live
within your means. The general rule of thumb is that
you should have a minimum of 10% of your monthly gross
income set aside for emergencies. It is simply much
smarter financially to save money for expenses or even
for special purchases than to make them by credit card.

Keep in mind that this is in addition to any funds you
may have set aside for retirement or for college savings.
The more money you are able to save now, the less you
will have to borrow later and the better you will be
able to live within your means.

Remember that even when you receive what seems like a
good rate on a credit card, it is still not free money.
You must still pay above and beyond the purchase cost
for any item you charge because of interest payments.
Although credit cards can be convenient, they can
also be expensive. The longer it takes you to pay
off a credit card, the more money you will spend over
the long run. As a result, a pizza that you charged
for $20 could end up costing you $100 or more if you
make only the minimum monthly payments and it takes
you years to pay off that bill.

The best method is to make sure that you pay for
everything you buy with cash rather than credit.
While that is not always possible, it is best to
try to stick to that goal as closely as possible.
When you must charge something on a credit card,
make a concentrated effort to pay more than the
minimum monthly payment every month. Even better,
try to pay off your credit card balance every month.
Avoid carrying more than one credit card balance
at a time to prevent balances from growing out of
control and reaching a point where you have a
difficult time making the payments.

Avoiding the rental of products can also help you
to live within your means as well. Renting an
appliance can seem like a good idea at first
because the weekly rental rates are often cheap.
Rental agreements are usually often attractive to
individuals without the best credit because no
credit checks are required for renting. Once you
add up the costs of all those weekly rental fees,
it becomes apparent that renting something actually
costs much more money than just waiting until you
can purchase it using cash.

If you find that your debt level has spiraled to
the point that you are no longer able to make your
minimum monthly payments and set aside money for
savings, consider investigating a consumer credit
counseling service to help you get matters under
control. These programs can help you to devise a
realistic repayment plan that is within your ability
to pay and offers you a way to begin paying down
your bills.

About the author:

Author: David Beart

David Beart runs the Professors House. This site contains a wealth of information about money management, raising children and relationships.

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