How to live within your means

March 10, 2017 | Ben Lemoine

Photo of a confident couple with note book and laptop managing their money.

One could easily argue that we live in a consumer society. New technologies, cars and fashionable items are advertised heavily through many different channels that we come across in our daily lives. As consumers, it is important that we are able to recognize this targeted advertising to moderate our expenses and avoid any unnecessary debt to make sure we are living within our means.

Here are some money management best practices that can help you put a lid on our spending and expenses:

  1. Understand your sources of monthly income and the percentage of that income that will be allocated to fixed costs. Fixed costs may include rent/mortgage, car payments, utility bills, insurance and other regular monthly expenses. Whatever is left over after paying for these expenses can be considered discretionary income. From that discretionary income, it is financially responsible to save or invest a portion for short and long-term goals. If you make saving part of your fixed “costs” you can curb any temptations to skip a month here and there. Plus, you’ll enjoy spending and any leftover income more, because you’ll know all of your bases are covered and your savings are growing.
  2. Make a budget. Making a budget can give you a better understanding of where your money is being spent. From there, it is easier to cut down unnecessary expenses. This does not mean you have to cut out all the things that you enjoy, but rather keep them in moderation. There is nothing wrong with buying the new fashionable sunglasses or going out to a trendy restaurant, as long as it’s done within your means. Allocating some money to send on what we enjoy is the financially responsible way of enjoying the fruits of our labor.
  3. Paying with technology. Using your smart device or shopping online can affect and obscure your spending habits as we’re now able to pay for purchases with a quick swipe of our Credit Cards, phones and even watches. Many studies suggest that the use of cash reduces consumer spending. Having to physically go into your wallet and remove cash can help consumers think twice about their purchases. And unlike a Credit Card or e-payment where it may feel like you have unlimited spending power, you only have so much cash in your wallet. Using cash when going out or shopping can help you spend in moderation.
  4. Build an emergency fund. Expenses can sometimes be unpredictable and we need to be able to weather the storm. Having 3-6 months’ worth of income saved for a “rainy day” will help avoid going into debt. If you do need to use a Credit Card, make sure you pay the balance off monthly or at least more than the minimum. Mission Fed offers Credit Cards with low rates. Putting money aside can be tough, especially when things are tight. Options can be limited to asking for a raise at your current job, finding an additional income source, or cutting expenses. But with a little discipline, it can be done.
  5. Spending less and saving money go hand-in-hand. Our society conditions us to accept the prices that are given to us, but a lot of our expenses can be negotiated. I recently traveled to China and I was told that everything is negotiable there, including your meal at a restaurant. Generally speaking, one can sit at a table and negotiate the price of the meal with the waiter in most areas of China. This gave me a new perspective on how we purchase things here. Now I’m not saying to go to Bertrand at Mr. A’s and try to negotiate the filet mignon with the Maître D, as we live in very different society norms, but you may be surprised when telling a store manager that you would buy the item if it were 10% or 20% cheaper. Cable companies, clothing stores and electronic stores will all negotiate their items if you are willing to walk away from the sale. It may require you showing a lower price on Amazon, coming back the following week when the item goes on sale, or simply asking for some kind of promotion or discount available. Larger expenses such as cars and homes should not be purchased without negotiation. For these large purchases, by rule of thumb, if the seller accepts your first offer, you paid too much.

We spend a lot of our time working to afford providing for our families and our lifestyles, so it makes sense that we try to purchase everything at its cheapest available price. When it comes down to it, goods and services are only worth what we’re willing to pay for them. Your finances and happiness are important to us and that’s why your success is our bottom line.

The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.

Ben Lemoine

Ben Lemoine

Ben Lemoine is VP, Finance and Treasury Manager at Mission Federal Credit Union. He has over 12 years of experience in Investment Portfolio Management, Asset Liability Management, and Capital Markets. Ben received a Bachelor of Business Administration degree in Economics and a Master of Business Administration in Finance, both from the University of Georgia’s Terry College of Business. He also holds FINRA Series 7 and Series 63 licenses. Ben is fluent in French and German.

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