Is it possible to live below your means without the feeling of inadequacy?
Experts reveal that the secret to achieving financial security lies in spending less than what you earn. Most of us assume that this means maintaining a Spartan lifestyle. On the contrary, you don’t have to feel deprived or miss out on anything since you can still enjoy yourself even as you live small. You, however, have to make some sacrifices as you focus on the benefits so that you can set yourself up for financial freedom.
Living below your means helps you save enough for the future and prevents you from running out of cash during emergencies. It is advisable that you live on 15% less than your monthly earnings. You can do this if you start by creating a plan for your funds. You should account for every dollar that you make. Divide your budget into different categories that include your wants, needs, debt repayment, and savings.
Making the right financial decisions before you receive your next paycheck can prevent you from poor spending habits once you have the money at hand. You should also consider directing most of the funds to an investment account. Automatic transfers prevent you from misusing money. Think about how investing will help you get returns in the future and prioritize it early enough.
Learn to pay yourself first before you think of settling your bills and other expenses. Most people tend to settle bills first before saving. If you have a lot of bills, you may not leave enough for your savings account. Try stashing most of your funds in a savings account and give it time to accumulate before settling bills. This does not imply that you skip on paying bills. Paying yourself first helps you remain disciplined with your finances so that you can avoid misuse.
If your household has a dual income, you can talk to your partner and agree to live off one income as you save the other partner’s income. Both of you could be working, but you don’t have to spend both your salaries. Living off one income helps you save a substantial amount in a short duration. You can make some changes in your household such that you pay the bills using one partner’s income. This can help your family achieve financial freedom. You can also use the second paycheck to save for retirement or clear off existing loans. It also gives you flexibility in case an unfortunate event occurs.
Consider cutting off unnecessary expenses. If you have been dining out every night, taking home-cooked meals can save you some costs. Eliminating some of the expenses can free up some funds that you can use more constructively. If you have high-interest loans such as a payday loan from usonly.com, look for ways to clear it.
If you have been using credit cards with high interest, you can consider consolidating your debt to save on interest. You can also refinance low-interest personal loans. If you want to buy a home, choose a fixer upper instead of settling for an expensive one. This way, you can still enjoy homeownership without dealing with the high insurance costs or taxes.