You may be living beyond your means if you are using credit cards to pay for regular expenses, if you’re unable to save money each month, or if you’re constantly borrowing money from friends or family. If any of these apply to you, there are a few things you can improve short term.
To be able to live within your means, you can create a budget and stick to it, avoid impulse purchases, pay off debt as soon as possible, and save money where you can.
Tip #1: Create A Simple Budget
List all of your necessary expenses and income sources, then calculate how much money you have left over each month. Whether you have modest income or you are amongst the highest paid jobs in Canada, there are opportunities for improvement. This process will help you see where your money is going and where you can cut back.
Our budgeting tips guide for Canadians is a thorough resource for that.
Tip #2: Avoid Impulse Purchases
Create a list of what you need before you go shopping, and stick to that list. If you see something that isn’t on the list, resist the urge to buy it. An easy way to do this is to log out of your retail accounts on mobile and lock your credit card in one place.
Tip #3: Pay off debt as soon as possible
Make more than the minimum payment each month. Once your debt is paid off, you’ll have more money available to save or spend each month. It may sound simple, but a lot of people end up losing money and opportunity because they avoid paying debt. Debt can take a long time to pay off, and in the meantime, you’re accruing interest.
Often, debt arose because of an expensive lifestyle. Getting out of debt requires the inverse road. You need to be frugal and choose to use your extra earned money every month towards higher capital repayments on your debt. The good side of this is once you’ve completely repaid your debt, you inherit this new stream of money that you used to repay interest and capital with before.
Tip #4: Save money where you can
Look for discounts, coupons, and sales when you shop. Compare shopping online or in store and make the wisest decision – take the less expensive road.
Frugality is the key to wealth creation because it allows you to save money instead of spending it. When you have extra money saved, you can invest it and create more wealth.
You can become frugal by cutting back on unnecessary expenses, like eating out, entertainment, and superfluous clothing or electronics. You can also save money by automating your savings account so that a certain percentage of your income is deposited into it each month.
