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One of the most important aspects of financial stability is to simply watch what you’re spending and bare your income in mind. I know, easier said than done, but in this article I will go into some good habits to get into in order to live within your means.

So what exactly does that mean, live within your means? Well, very basically it means don’t spend more than you make, but in fact, your main target should be to be spending less than you bring in as net spending money and the bigger the gap between expenditure and income the better.

So for example, if you are on a salary of say, £35,000, you should try to live like you only earn £30,000. Now I understand that it isn’t as simple as just spending less, I know a lot of people would like to spend less, but have financial commitments and have pretty much all of their income vanishing almost straight away.

However, for the most part, a lot of expenditure can be avoided as quite a lot of people tend to feel like they need to spend money on leisure activities like, an annual holiday, some drinks at the weekend, new clothes after a few months of the same wardrobe, but the fact is that in most people’s lives there are outgoing payments that could be avoided, or at least delayed.

Many people’s past decisions and financial commitments will prevent them from being able to considerably cut down their spend, but if they had lived within or beneath their means from day one, then they would be sitting on a nice saving by now and have relative financial freedom.

If you are in one of these situations then obviously the ideal solution would be some sort of time machine, but unfortunately we are fresh out of those so instead, try to use the vision of what your life could be like now if you had lived beneath your means as inspiration to work towards a new standard of living in five or ten years time, even if it means a lower living standard in the mean time.

One of the biggest errors you can make is paying for things on a credit card, even if you calculate that you will be able to pay it off next month, only in the most desperate of circumstances should you ever use a credit card because if you use one regularly, this means your still ‘chasing zero’, i.e. you will be in debt until next month when you pay it, but you’ll have used that month’s money to pay last month’s debt, and so you’ll have to get yourself in some new debt this month. It is always better to avoid paying for things on a credit card because it can easily turn into a never ending downward spiral.

Although not using your credit card appears to be shrinking your bank balance faster, in the long term it will be highly beneficial. If you endeavour only to spend your own money and not the bank’s by living as if you earn only 75% of what you really do and really thinking about whether or not you NEED absolutely everything you go to buy, then you will watch your overall debt begin to fall away and you will be on your way financial freedom.

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There is a state of mind that is extremely beneficial to have if you’re in debt or are just generally looking to be in a better financial position, and that is to live as if you make around 75% of the money you actually make, or to live within/beneath your means.

So what does living within your means entail? In the most basic of terms it means don’t spend more than you earn, but what you should be aiming for is to spend less than what you bring in as household spending money.

If for example you were on a salary of £40,000, your aim should be to live as if you only earn £35,000 if not less. Lot’s of people will read this and feel that they can’t simply stop spending that much money or they would have done by now, but there is some advice for you to have.

Most people in financial difficulty could in fact avoid a lot of their spending as many people consider non-essential purchases to be essential. Some examples of these are holidays, new clothes, weekend drinks and generally replacing household items before they absolutely need to be replaced, however the fact is that most, if not all of these type of purchases could be avoided or at the very least deferred for a while, and if you really think about it, these type of purchases could make up a large portion of your overall spend.

The reason many people are suffering from financial difficulties is that they have made decisions in the past that now restrict them from making any real savings, but if they had thought about living below their means at the time, then by now they might have had a nice slice of wealth to sit on.

Of course the best solution for this problem is some manner of time travel device, but seeing as we don’t have access to one of those, try to use the vision of what your life could be like now if you’d lived below your means from the beginning as inspiration to not buy something that may have tempted you before, for the prospect of a better life in years to come, rather than struggle through and stay in basically the same position.

Credit cards play a huge role in most people’s financial problems, only in the most dire circumstances should a credit card ever be used to buy anything, even if you know you’ll be able to pay it off next month. This is because if you get into this habit, you end up ‘chasing zero’ i.e. you are always in debt and as soon as you pay it off one month, you have no money left for that month so you have to go back into the red. Paying for things on a credit card can easily turn into a slippery slope of debt and rising interest rates.

Not using your credit card can appear to be having the wrong effect on your bank balance, but in the long term it will benefit you greatly as you won’t have a credit card bill to pay off. You should try wherever you can to spend you own money and not the banks by trying to live as if you only make around 70-75% of your actual wage and really thoroughly think about every single purchase you make and if you don’t definitely 100% need to buy something, then don’t and although your standard of living may drop, if you think about the long term it will be well worth it and eventually you will start to see your debts fall away.

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Living within your means is extremely important if you want to clear your debts or just gain greater financial stability. Of course it is a lot more difficult than it sounds but there are a few good habits to get into.

Living within your means in simple terms means, spending less than what you bring in. Obviously it will vary from person to person how much less than your income you can spend, but the bigger the gap the better.

So if you were earning £25,000 a year, you should be living like you only earn £20,000 if not less. Lot’s of people’s immediate reaction to this is that they can’t simply stop spending money that they need or they would have done it by now, but you’d be surprised at what you can cut down on if you really try.

A lot of people could cut out quite a chunk of their expenditure as people tend to think of certain leisure purchases as essential when in fact they could go without them. This includes things like holidays, new clothes if you’ve still got clothes in your wardrobe, trips to the pub or buying replacement household items when they don’t really need replacing. A lot of these little expenditures could be avoided or at least put off for a while.

The reason for lots of people’s financial difficulty is the financial decisions and commitments that they have made in the past. Regular payments to your financial commitments can be a terrible burden, but think about if they’d lived below their means from the beginning, they would probably now have some considerable savings and be financially comfortable at least.

A good way of combating this situation is to try and envision what your life would be like if you had lived within or beneath your means from the beginning and use that as inspiration to create new shopping restrictions for yourself in order to create that vision in the future.

Most people who are in financial trouble will have a credit card and this simply adds to the problem (if it didn’t create it in the first place.) Credit cards are a way for banks to suck money out of you and if you get into a habit of paying for things on a credit card, then you could quickly find yourself “chasing zero” i.e. paying off one month, then having no money so you get in more debt that month, then paying that off the next month, then having no money again for that month and as interest rates rise you will find yourself getting into more and more debt if you follow this pattern, so unless there is absolutely no alternative, credit cards should not be used.

Although not using a credit card can be a scary concept in that you’ll have to take your own money rather than the banks ‘safe’ money, but it will all end up coming from your pocket anyway, and if you use the bank’s money, they will only ask for more back and so effectively, everything you buy with a credit card is more expensive. If you live underneath your means i.e. get into the mindset and completely live as if you only make around 75% of what you really do and really strenuously think about whether or not you absolutely need to buy the things you go to buy. If you follow these steps then over time you will start to feel the burden of debt easing off, followed by a better life.

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