29 Jul
2010

It’s a financial truth that everyone knows at heart: to get ahead financially, you need to spend less than you earn. Spending less than you earn allows you to stay out of consumer debt and allows you to stash cash away in a buffer account. If you’re not living below your income level, you are likely living paycheck to paycheck or even relying on payday advances or credit cards to see you through to your next payday. The stress and money wasted is just not worth it.

If you want to spend less than you earn, the first step is to look around your neighborhood. Are you surrounded by people in a higher income bracket? If so, you are probably paying more than you can afford for housing (your largest expense!). Look for an affordable home and work to pay off your mortgage (if you own your home) as quickly as possible. The equity you will build will give you a nice security blanket.

Next, look at your clothes, transportation, and habits. Are you trying to impress and buying things that you have to charge or finance slowly? Maybe it’s time to rethink your purchases. You are not your possessions. By choosing more affordable options, you’re not impressing anyone less – and you’re making financial choices that will protect you in the long run.