I am no expert here. I didn’t invest well when I was young and I had kids then I got divorced. These were all setbacks to my wealth. Divorce and child support drained me big time. I am not making excuses, those were all my choices. I love my kids and the divorce happened.
However, all of that taught me one lesson, to live within my means. As I get older I am satisfied with what I have. Sure, I want nice things, I am human and we all want nice things. That can happen without living outside of your means.
What does “living in your means” really mean? Well, it means spend less than you earn for starters. With credit cards it’s easy to go crazy. Loans for homes and cars can bury us in no time. As you get more stuff, you have more expenses. Homes need you to spend money on insurance, property taxes, maintenance, repairs, heating, cooling, water, and so on. It all adds up. Many people get the mortgage thinking that’s the only expense they will have. Reality is brutal.
Your dream house becomes your biggest expense. If you’re lucky, when you sell it you will make money. Then you will want to buy a bigger house probably in a nicer neighborhood. The cycle repeats itself.
Then the car you drive is another expense. While we all need to get around, especially in the US because we’re so spread out. If you have an EV, you have to charge it and you still have some maintenance. Gas vehicles need gas and a lot of maintenance. Not to mention insurance.
Then you like to eat. Groceries in the US are more than ever. If you like to go out to eat, that is another expense that you can control. I am not saying don’t eat, just be wise about how much you spend going out for meals.
Then you have all those expenses for entertainment. For instance, you may have a bill for your smartphone, cable, Netflix, Amazon Prime, Kindle, Audible, iTunes, and any other subscription service that drains you. It all adds up.
So when thinking of your budget, open up and look at all your expenses. I am lucky, I can afford most of these simple luxuries. I thank GOD everyday for that.
Look at what you make, and look at what your expenses are, then spend less than you make.
What do you do with the extra money? I would suggest putting it in savings until you have a good emergency account. In life, things happen. Emergencies pop up all the time. If you can, put it somewhere where the interest rates are good. Today that could be a saving account, I have a few for 4%. It could be a CD, which if you shop you can find rates of 5%. Now your money is working for you, as it should be.
Once you have a nice emergency fund stashed away, now you should put away money for retirement. Maybe in a 401K if your company has that option. Maybe in an IRA. Anything you can take off your current taxes to put it somewhere hard to pull out. You could get it if you need it, but trust me, keep it in there in a high yield account until you retire. Your retired self will thank your younger self for thinking ahead.
If you save more money, then think about putting it in a safe fund to grow with the stock market. You can open up an account almost anywhere online. If you like to gamble, then you can risk it. However, I am at a point in my life where I find safe funds that hopefully will grow until I retire. I am derisking my investments because I don’t want to take a hit when I retire.
Make time to read about how to save and perhaps how to invest. Always use a reputable firm to invest. When reading books or articles on investing, keep in mind that the author may have their own agenda. They may want to push you one way or another. Maybe they have stock picks for you or they want you to sign up for a service. Be careful there. It could be a scam or they may be horrible investors.
It pays to be cautious if you invest.
So there you have it, an easy guide to living within your means. It’s simple, common sense really, yet so many fall for get rich schemes or just make bad decisions. Some people live for today, not thinking about tomorrow. While that sounds great, eventually you have to pay, one way or another. All I can ask you is to be smart, come up with a plan, and stick to it.
More:
- YouTube
- X formerly Twitter
- Wade Sarver Personal Blog
- Facebook Groups
Offers available:
- Need unlimited mobile service for a good price? I use Visible and I like them. Think about Visible. Check out this deal https://www.visible.com/get/?ZHfvq, not too shabby.
Looking for a new credit card? I have an Amazon Prime card because I get 5% on Amazon purchases along with 2% on restaurants and gas and 1% on everything else. I love it! Use this link to get one.