How to Keep More Of What You Make
I remember reading that article and thinking that financial planning is the same way. No matter what investment vehicle you are using, or what money saving tactics you include in your budget, successful financial planning requires you to spend less money than you bring in. We call it, "living below your means." The larger the gap between what you make and what you spend, the more money you will accumulate. The smaller that gap (or, heaven forbid that gap be negative), the less money you will accumulate.
The key to financial and physical health lies in the balance between what you take in, and what you burn. It sounds very simple, but for anyone who has tried to lose weight, especially around the holidays, we know that goal is anything but easy.
I can't help much with the weight loss side, but I can give you a few tips to help you manage your financial balance, and help you better live below your means and keep the math of in the in vs out equation working in your favor.
Here are a few tips.
1. Live Off of Just One Income
For dual-income families, it can be very tempting to use both incomes to buy a bigger house, get better cars, and spend more money on all sorts of things. But if you really want to live within your means, you should choose to live off of only one of those incomes. By doing that, you can focus on putting a lot of money into savings or toward paying off debt. That can help you and your partner live better for a longer period of time, because you will have a higher level of financial security. Sure, there are some sacrifices to be made when you choose to live on only one income, but it can be well worth those small adjustments in order to make sure you're protecting your financial future by living within your means now.
2. Choose to Drive Used, Instead of New
That new car smell may be really nice, but it doesn't last forever. Once it's gone, you're just driving your car to work, school, and other places. Why not buy used, and save yourself all that depreciation? Cars drop in value significantly as soon as they are titled over and driven off the lot. Because of that, you can choose to buy a used car that's still in really nice shape, and get it for a lot less than you would pay for a new car of the same type. Even a car that's only a model year or two old can be far lower in price than a new one, and you'll be able to live within your means a lot more easily by saving that money.
3. Be the Boss of Your Money
You need to know where your money is going, and you also need to understand why it's going there, too. If you don't have strong control over your money, and you can't account for every dollar of it, you need to stop and take stock of the money you have both coming into your household and going out of it. You're the boss, and it's time you act like it. If you aren't sure about your money, that's the place to start. It's very hard to live within your means if you don't know what those means are and how close you may be to living within them already.
4. Write Down What Really Matters to You
The things that are most important to you in life should be the things you save for, strive for, and spend your money on. What matters to you? Think carefully about those things, and write them down. Look at them, and then look at your current spending patterns. Do they match? If not, it's time to make some changes.
5. Save Money Right Off the Top
When you have money pulled directly from your paycheck, you can keep from spending it. You never see that money, so you don't have to worry about stopping yourself from using it. Instead, it just disappears into your savings account or another designated area. At that point, you can rest assured that you won't end up spending more than you should.
6. Get Rid of Those Meaningless Expenses
If you have a lot of expenses, or even just a few, that you don't really pay attention to, it's time to change things. You don't have to buy that expensive coffee every day just because you've been doing it for a while now. You can pack your lunch instead of buying it out every day. All those cable channels you don't watch? Maybe it's time to get a less expensive plan. There are plenty of ways to lower expenses without feeling deprived.
Im going to end this article on a similar note that the original weight loss article did. As with any balance, the key to obtaining and, most importantly, maintaining a healthy financial lifestyle is to find a routine and a balance that you feel comfortable with. If you are not able to stick to your strategy for the long term, things will look great for a few weeks, or even months, but you will end up unhappy with the results in the long run.
This content created by David Gaylor in conjunction with Fusion Capital Management.
Questions? Comments? Ask David!
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by radical promoting and their editorial staff based on the original articles written by jeff cutter in the falmouth enterprise. This article has been rewritten for David Gaylorand the readers of David's Family Finance. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.