We hear that term a lot, ‘living within our means’, but what does it actually mean? How do we even know what our means are?
The definition of living in your means is ‘spending no more money than one has’. Sounds simple enough, but with the constant temptation to spend at every opportunity, it’s much easier said than done.
There are so many pitfalls too, such as increased living costs, unexpected expenses and friends that don’t really understand what ‘living in your means’ means either.
Here are 6 top tips to manage your money so your money doesn’t manage you!
Begin to budget
Living without a budget is like walking around blindfolded, sooner rather than later you’ll hit a wall. The first step to reining in your spending is to write down your income and outgoings. An easy way of doing this is keeping a daily log of how much you spend.
Now, chances are you’ll be very surprised where your money goes every week. Even little expenses such as a sandwich at lunch or a coffee in the morning creep up on you steadily. It’s very important that you don’t beat yourself up over this. You’re now aware of what you’re spending and can finally take better control of it.
Our anonymous budgeting tool Debt Remedy offers a template you can fill in online. It can send your tailored budget to you so you have a solid starting point.
Don’t let the green eyed monster push you into the red
Spending more on Saturday nights than Prince Harry in Vegas? Breaking the bank to have the very latest mobile phone? Building a budget may be the reality check you need. Don’t worry about keeping up with the Jones’s, as the chances are they’re just trying to keep up with someone else. It’s a vicious cycle and one that you can step off.
If your phone bill is a bit on the weighty side, consider reducing your phone contract or cutting back on download data. Do you honestly get through 2000 texts a month? If so, I’m impressed. You must be popular! (chances are though, like most of us, you don’t.)
Remember how exciting it was as a kid to have a sleepover with your friends? Why not relive that as an adult? Get your friends round for a film and wine night rather than going out. Cook a pizza and have a much needed catch up – no doubt your friends will value this time more than the flashing strobe lights of some expensive club.
Boost your income
Cutting back and keeping to a budget is great. But everyone could do with a boost. Are there ways you can boost your earnings? Billions of pounds of benefits go unclaimed every year. You could be entitled to tax credits or help with your council tax or rent. Our free tool offers an online benefits check.
Want it? Need it? Afford it?
The thing with living on credit is there’s a temptation to buy on impulse. Getting the latest gadget may feel good at the time but when the thrill has faded the bill lives on.
If you see something you want, always ask yourself – do you need it? If I see something I want in a shop, I always walk away from it. If I’m still thinking about it the next day, and it’s in my price range, I might go back. The amount of times I’ve seen something I want and walked away…I’ve saved myself some real impulse buyer’s guilt over time!
If you really want something bad enough but it’s outside your budget, then set yourself a saving target. You can enjoy your shiny new buy without dreading the next credit card statement.
The best, most realistic way to save is to work out what your disposable income is every month after living costs are paid. Then, divide up the cost by the number of paydays you have left. If you can comfortably put half your disposable income aside for it for a couple of months, then you’re on track.
I’d recommend www.futureme.org to email yourself a target half-way through – it could be the boost you need.
So you were on the slippery slope to debtsville. You’ve pulled your socks up, made a budget, cut-back, boosted your income and started to save. You now live within your means. What comes next is the most important…relax and enjoy!
Don’t forget to reward the new you every now and then with a treat – a little of what you fancy does you good!