Living within a budget is not so much about how much you make, but about how much you spend. There are people who make $25,000 who tithe, save and meet all their expenses (I know, I’ve done it). And people who make $1 million a year and go in debt!
Here are the FIRST 3 of 12 ways to keep your expenses below your income that my wife and I have lived out over the past 25-years . . .
1) RECORD all of your spending. It’s very difficult to fully understand where your money is going until you can see where it is going. Record everything. What you buy with cash, what you purchase online. Everything.
2) USE CASH for as many expenses as possible. Set it aside in an envelope at the beginning of the month. When it is gone – it’s gone. We’ve found this especially helpful with entertainment money, groceries & clothing [One of our newly married daughters adds that she and her husband buy restaurant cards with their eating out money and that way they have it set aside and don’t go over.]
3) DON’T buy a NEW CAR (*caveat: until your retirement is fully funded and you have the ability to buy it with cash).
Did you know that on average a new car depreciates 11% the moment you drive it off the lot!! (see Edmunds.com, bankrate.com, money-zine.com) During the first 5 years it depreciates between 15% & 25% a year. By the end of 5 years on average it is worth 37% of what you paid for it at the dealership.
All of us like new cars. So do I. I just let someone else buy them and drive them for the expensive years (first 3-5 years) and then buy it from them and drive it during the cheap years. The result – I’ve never had a car payment.
Next 3 coming . . .