Living within your means may not sound like a blast but the alternative (living off of debt), can lose its appeal pretty quickly. Since it’s not a sustainable lifestyle it can catch up to you in a hurry.
Living within your means means you’re spending equal, or preferably less, than the amount of money you bring in each month. Doing so doesn’t entail having to cut out all the fun stuff. If you’re smart and methodical with your finances you can not only live, but flourish, within your means.
Here are 5 tips that can improve your overall financial situation:
1. Create a monthly budget
Sitting down and figuring out exactly how much money you bring in, spend, and save can be a real eye-opener. Setting a budget will help you balance your income with your expenses to help you reach whatever your financial goals may be.
2. Don’t treat your credit card like cash
There is a time and a place for credit cards, but they are not extra income. Use them to collect reward points and strengthen your credit score, but be wary of excessively high limits and cash advances or carrying a balance.
3. Track and cut back on unnecessary spending
Don’t be afraid to treat yourself now and again, but do your best to curb frivolous spending. Set aside the amount of “fun” money you can afford to spend every week, and spend only that. If you’re having a hard time with this, try putting your “allowance” in an envelope and pay for everything in cash.
4. Evaluate your credit report regularly
Check in on yourself! The Government of Canada has all the information you need to request a free credit report any time you like.
5. Set up an emergency fund
Life doesn’t usually give you a heads up before your car breaks down, your dog breaks a leg, or your company makes cut backs. It’s important to have a healthy emergency fund for unexpected situations. Aim to set aside enough to get you through 3 to 6 months without pay.
Looking for more information to help you build your financial knowledge, skills, and confidence? Check out Vancity’s Each One, Teach One program and find out when the next free financial literacy workshop is happening.