16 Ways to Live Below Your Means

What exactly does it mean to live below your means (LBYM)? Simply put, it is a concentrated effort to save and spend your money wisely. It means understanding the difference between needs and wants. Why would anyone want to lbym? Well unless you know when you are going to die then you should be planning for your future and with the advancement of medical technology your chances of living an entire century is a very real possibility. LBYM can allow you finance items such as college expenses, a new car, retirement and gifts to charitable organizations. LBYM is a concept that can apply to all income levels. Here are my suggestions for LBYM and creating the life you want.

Change your belief. I can give you the most detailed plan on saving money; however, if you have a poverty mentality then you will not appreciate what I am sharing with you. You have to change the way you think about money. Earning more is not the key, keeping as much of it as you can if what counts. Money is your friend, respect it!

Become financially literate. This may be a first for you but if you want to gain control of your finances you need learn the language of money. What does your financial statement say about you? If you don’t know then this is the time to learn. A financial statement looks at your income, expenses, assets and liabilities. Go to www.myfico.com and order your fico score. This three digit number will determine your ability to borrow money and the cost of borrowing money.

Have a written budget. Every month is unique to itself and needs its own written budget. Account for every penny before it is spent. This way you tell your money where to go instead of the other way. If you find you don’t have enough, take care of your shelter, food, utilities, and transportation first. Go a step further and write your annual and lifetime financial goals.

Cash is Queen. If you can’t afford to pay cash, then you cannot afford it. If you don’t have the immediate cash, then save for your purchase. I’ve noticed that layaway has made a comeback, just be cautious of hidden fees. If you must use your credit card then make sure you pay the full balance at the end of the month.

Don’t pay retail. I didn’t say you can’t buy your labels but who says you have to purchase at the beginning of every season? First check your inventory and decide what few key pieces you need then purchase them off season. You are the only person that knows.

Balance the books. Save all your receipts and file them accordingly. This way they are neatly prepared and ready for tax time. Pick a day and time that you can commit to recording all your expenditures. I recommend ever week not less monthly. Whenever you swipe your debit card make sure you record the transaction in your checkbook ledger…ever time.

Turn off the television. We are bombarded by millions of images everyday trying to convince us to buy this that or the other. Turn off the television and spend time doing something that will increase your income. Start the business you’ve been meaning to. Attend a personal finance seminar. Just do something proactive.

Eat in. Or at least don’t eat out as often as you currently do. If you do eat out do so during lunch as prices are often cheaper. Can’t cook? Learn! If you can read then you can follow a simple recipe. Pick a theme, organize a monthly pot luck with friends and enjoy the company.

Get Minty. Mint.com is a free online personal finance tool. I recently discovered this site and find it very easy to use. I love it because it does not ask for any personal information. No social security, bank accounts, or pin numbers. Set up takes less than ten minutes and you are able to see exactly where you are spending your hard earned money. Did I mention that it is free?

Stop competing. Who are you trying to impress? Your children? They don’t care, they just want your time and love. Your family and friends? They need a financial bailout too. They Joneses? Must I go on? At the end of the day, what does your financial statement say about you?

Never lease a car. Low down payments and low monthly fees sound very appealing but will keep you in the poor house. If you really want a new car then save for it and pay cash. It is very doable but requires you to be patient and intelligent about your purchase.

Make sure you’re covered. Don’t be cheap! The least expensive insurance is not necessarily the one you need to have. Make sure your policy covers everything you need. Compare costs and benefits.

Have an emergency fund. To be on the safe side I recommend eight to twelve months in a liquid account, meaning you can get to it in a hurry. All the money that you are saving in other areas can go into this account. So when an emergency does come up you won’t panic about how to handle it because you will have prepared for it.

Mind your business. You get up every day and work hard making someone else rich. Why not put at least half of that energy into building your own business? In case you haven’t noticed, there is no such thing as job security so figure out what you love to do and do it. Take a class, write a book, stop making excuses.

Stop faking it. Ladies and gentlemen, we are adults. Be honest with your family, friends, and most important, with yourself. If the gang is going out for dinner and drinks and you did not budget for it, then gracefully pass. If getting out of debt is important to you then make it a priority!

Get involved. When you feel like you are without that is not the time to feel sorry for yourself. Instead that is the time to give. Give of your time, talent, or money. When you give without the expectation of receiving that is when you will be blessed. You can take that to the bank!

by Golda Smith

“The poor and middle class work for money. The rich have money work for them.”

-Rich Dad, Poor Dad