Irrespective of where you live in this world, society has demands and expectations. It is easy to be caught up in the fitting in. When your neighbors are going for expensive vacations, acquiring new cars and the best technology, it is difficult to overlook but not impossible. You can decide to resist being driven by what others are doing. Obviously, we all want a better car, better house, travel to the furthest continent and buy the latest iPhone but finances may not always allow us.
Sadly, this is the definition of “making it” or success in life. Everyone is striving to match up; while some are comfortable, most people are struggling to fit into societal expectations. Struggle in this case means straining and compromising on quality and probably happiness in life for material things or status.
The people you are trying to emulate are most likely living on credit cards. The smart screen is out of debt, the vacation is only possible because of a loan. Emulating such is blindly following people to a ditch.
You would be happier and contented without sleepless nights worrying about debts
Evaluate your income and expenses
Before you spend, you need to know what you earn. It is more than basic salary from the employer or your businesses. If you have several sources of income, combine and find a total monthly income. Also, make a list of your expenses, fixed expenses. These are unavoidable monthly costs. They include house rent, car insurance, car payment, bills, and payments you need to make monthly. Note the word “need.” Subtract the fixed expenses from your total income; what remains is what you can control.
Most people have enough to cover fixed expenses, the variety of expenses is what derails the rest. People often get this out of control by sometimes prioritizing the discretionary expenses.
You can live within your means if you know the amount you can control and stick to the limits.
The sound of this is never pleasant. Whether you like it or not, it is the number one tip to financial management and a sure way to live within your means. A budget is not depriving yourself, of course, your budget on what you have and what you can afford not what you want and hope to get. It helps to restrict your spending and keep tabs of your expenses.
Most people do not budget because they think of the tedious process of writing down everything you spent on particular dates and comparing with totals. It is much easier with online budgeting. Actually, there are mobile apps to track your expenses.
You need to know where your money is going and evaluate whether it is relevant or not. Tracking your expenses is the only way to identify the cause of overspending and cut them down.
Wants and needs
You need to distinguish the two. Before you buy anything, pause and think whether it is necessary. If it is for luxury, it must be within your plan. There are many things we buy that we can do without or end up never using them.
I know it can be difficult to separate your wants and needs, because of interests and hobbies. Consider the 48-hour rule; if you see something you want to buy but not sure whether you need it or not, wait for 48 hours before making the decision. In most occasions, you will change your mind.
Avoid pulling out the plastic whenever you are out shopping or think you need something urgently. If you are moving out the first on your own, there is often a temptation to furnish your house immediately. At least, buying a TV. If you don’t have the money, don’t buy it. Don’t use the credit card. Don’t allow the credit card syndrome to cloud your decisions. The interest rates will significantly increase the cost of TV. You better wait and pay in cash.
For a TV case, you can watch it on your laptop as you work on money for a TV. Purchases are never too urgent, keep the credit away.
Most people fall into the trap of keeping up with society or fitting in. There are no standards to living, find your lane and operate within your means. Competing with neighbors colleagues on simple things like designer clothes builds a habit that will extend to where you live, the car you drive, and type of vacations. This will cost you a lot! Because you can’t afford the kind of lifestyle, you will be forced to exceed your discretionary expenses amount and borrow to fit.
The sad thing about the competition on lifestyle is you will never be satisfied. Every day you will see a friend, or colleague or relative to a new car or more money and strive to be there. It’s no life!
Boost your income
If you cannot cut down on expenses or be disciplined with your finances, this is an easy option. Find other sources of income. Start a business or work for a promotion at your workplace. Use your hobby to make money.