Credit cards, loans, savings, and even emergency funds allow you to buy more things than your income would ordinarily allow. Unfortunately, that kind of lifestyle isn’t sustainable and, at some point, reckless spending will catch up to you. Learning to live below your means will help you avoid financial ruin and find the peace that comes with financial freedom. You also need to know how often you get paid so you can better match the timing of your income with your bills. Since most of your bills are paid monthly, you’ll need to know how much you get paid every month. Multiply weekly paychecks by four, and bi-weekly paychecks by two, to get your monthly pay. If you want to keep the process simple, try a method called “backward budgeting.” Write down your income, then start subtracting each expense you pay each month. If you get to a negative number, then you’re spending too much and need to cut back. Credit cards are unreliable since your credit card company can decrease your credit limit or even close your credit card at any time without warning. If you’re charging more than you’re paying, you’ll eventually run out of available credit. Any interest you have to pay will make it that much harder to live within your means. Use your budget to figure out what you can afford to save each month, then set up an automatic transfer to make it easier to reach your savings goal.
Keep Your Financial Future in Sight
If you’re accustomed to overspending, getting your budget back on track may sound overwhelming. But these simple first steps will help you make progress toward your goal of spending under what you make. From there, you can begin saving for your future instead of worrying about how to pay the bills.
