You always hear about living within your means. What’s it really all about? Why do personal finance dudes always talk about living within your means. I think that living within your means is an interesting topic that deserves to be explored. I want to throw out to you guys what my thoughts are on living withing your means:
If you lose sleep over a specific purchase you probably shouldn’t have made it. What’s the point of making a purchase, if you can’t fully enjoy it after. I’m not about being a miser that never spends a dime. I fully believe in spending money consciously so that you don’t feel bad after the purchase.
Alright so you’re thinking, “define realistic spending, smartass.” In my opinion, realistic spending is all dependent on your income. It’s a tough pill to swallow, but the guy making $40,000 a year can’t drive the same car that the dude making $100,000 a year does. Once you accept this reality internally, you can become realistic with your spending.
Avoid lifestyle inflation.
We all want what we can’t have. Unfortunately, credit cards allow us to have what we probably shouldn’t have. I’ve been there many times. Why would I want the $15 t-shirt, when I can have the way more cooler $100 t-shirt? It’s really easy to come up with excuses and to justify spending. We’ve all done it.
“I finally got that raise. I deserve to buy a new wardrobe now.”
“My iPhone is old now, I need the newer version to improve my networking.”
Making more money allows us to have more money for the things we enjoy in life. I love making more money because I see it as a chance to travel more or to focus on the things that bring me immense pleasure. Unfortunately, an increase in income usually leads to an increase in unnecessary expenses.
Associate with people in similar financial situations.
It’s cool to have rich friends, but do you really want to be going to night clubs with a $50 cover when you earn $35,000 at your entry level position? I find that your group of friends will have a major impact on your financial decisions. Instead of living a life that you know isn’t right for you, surround yourself with positive and like-minded people that will help you on your financial journey.
Keep your old car as long as possible.
I just wanted to throw this in here. A car has gone from a necessity that allows you to get from point A to point B to a mega expense plaguing this generation. I would love to impress chicks by driving around in a BMW with Gucci shades on all day. Unfortunately, I don’t think any of these chicks would stay around after seeing my credit card bill. I’ve seen too many of my friends finance a car that’s completely out of their price range. As you graduate from college, progress through your career, and begin making more money, try to avoid buying that luxury car until your salary justifies it.
Any other tips for living within your means? Are you living within your means?
(Note: Don’t worry guys, I’m not turning Studenomics into a frugality blog. I wanted to touch upon this topic today, but in the coming weeks I’ll be writing more about the making-some-damn-more-money equation of personal finance.)