“Live within your means.”
What does that mean really? It means living a lifestyle that reflects your income. I remember in my twenties, I was working steady, but not really making a lot of money. I had enough to pay rent, light bill, gas for my car, church dues, grocery, car insurance, and payment on some furniture I purchased at a rent to own store (remember those!). I say I had enough, but there were times when some of those bills went only partially paid.
Once I completed my degree and began to make more money, I realized I had not really learned great financial habits. I had symptoms of what my consultant husband calls Post-Poverty Behavior. I purchased money orders instead of managing a checking account. When I cashed my check, I had no long-term plan. I paid most of my bills on pay day, but I spent without saving addressing my boredom. At one point, I woke up to my financial status and changed my actions. I hope you find the following points helpful as you consider your own financial situation.
Know Your Budget
The very first thing to know is what you are working with. This is where you get the paper and pen out and write down all the bills that you have. You may want to obtain your free annual credit report to see a list of all the financial debt obligations you have. It is federal law that you are entitled to one free report per year. You have to ask for it though. Beware of pay services. The absolutely free version is at Annual Credit Report (http://www.annualcreditreport.com).
Yes! Include your credit cards are bills too. I think this is worth emphasizing because credit cards are (too!) easy to get. They give you a real sense of spending power with a deluded sense of buying power and a diminished sense of impulse control. Credit cards are not income. They allow you to spend borrowed money on borrowed time. You have to pay every dime back and then some. Especially beware of department store credit cards.
If you have to pay for garbage pick-up, school lunches, parking, hair care, hygiene products, memberships at the gym, or anything that requires you to pay out funds, write it down. Like I tell my daughter, nothing is free. If they say it is free, you better look a little closer.
Next, write down all the places where you get money with the amount next to it. Everything is fair game, it does not matter how it comes in (cash, child support, disability, etc.) or how regular it is (income tax, birthday gift, holiday bonus, etc.). While working on your budget, you may find yourself surprised at what you actually live on or how much money you actually have. I like it too because it provides the chance to see how much we spend on things we really cannot afford.
Overall, there are a few insights to be realized. Once you know the honest income and what needs to be paid out, you are ready to revise your budget to get you moving forward and sustain you in the long term. No need to make statements like “I’m going to starve,” or “My life is over.” You have not starved thus far. What you may be feeling is let down because of the discipline you need in place to live within your means. Another realization is finding that you have the basic needs met (food, water and shelter). You are living better than you think. If you find coming up with a budget too challenging to do yourself, you may need to have someone help you. Be sure it is someone you trust, someone who has your best interests at heart. Again, maintain your control in moving forward.
Learn the Discipline of No
I will not tell you that you do not deserve that Tory Burch handbag or those Valentino shoes. The problem is that a Tory Burch handbag can cost $450-$650, Valentino are the same. After all, they are material things that come with a price tag. Looking at your own money situation, the only question is can you afford it? When my income was $14,000/year, the answer was no. Now, that my income has grown, I add another question: “Do I really want that and why?” As you reach different income levels, your internal conversation about spending differs as well. When you are living within your means and you feel you can barely keep it together the answer to most purchases that really do not serve to provide the basic needs is “No.”
Saying no to yourself, spouse, kids, friends or other members in your family can be challenging, but there are ways to do it. One way is to inform your immediate family (those living in the household) about the financial state. Share what needs to be done to keep things running smoothly. You might even give them a role to play like making sure the lights are off when they are not being used, and explain how that cuts down on the electric bill. If you are struggling to pay a monthly cable bill consider reducing the services or getting rid of it for the time being. Saying no to a friend who says “Let’s go vacation in Vegas for a week” should not be the end of a friendship. Vegas-on-a-whim is just not where you are right now. Sure, you could put it all on a credit card, but remember you still would have to pay out of money you do not have to pay it back, which will set you back.
The key for moving forward is realizing where you are with income and knowing that this level is not forever. As you continue to work and progress you are able to do more. You must be wise and honest throughout the process or you could really put yourself in a situation where you are always digging yourself out of a hole.
No one wants to say that they only go to work and home. Everyone has that inclination to spend in order to spice life up a bit. Have you ever tried to satisfy being bored with spending money? When you are working to live within your means spending to increase your mood will set you back. Number one reason: you do not have the means to spend on a whim like that.
Your boredom is worth figuring out. When I hear “I’m bored,” I think it means having nothing interesting to do. I have been there before. What I realized at some point is that “boredom” does not allow you to focus on the real problem. My goals were to build myself and to satisfy a need, but a focus on boredom does not contribute to those.
Spend money I do not have? NO! Focus on my goals? YES
The solution is to focus on your goals, learn skills, improve them, and enjoy the process. When a rich person uses money to satisfy their boredom they may not have to suffer the consequences of paying it back or having a setback. But, that is why it is important to realize where you are in your own life. Maybe what you need is a change in scenery. Window shopping may work. Maybe you need a reminder of what you working toward. Review your financial plan. Maybe you need to get out of the house. Look for free events at the public library, the park, or volunteer opportunities. The idea is to think of things that keep you honest to your budget. You are not always going to want to work on your projects. That is normal. The challenge is finding acts that are sustainable and that do not sacrifice your future to address “boredom” in your present.
[Taunya is a registered nurse, an author, and a mother to three children. This post is an excerpt from a non-fiction text Taunya is working on periodically entitled From Me to You: A Mother’s Legacy to Her Daughters. Find her author page at facebook.com/authorTSW]