Suggestions for Living on Less Than You Earn
One way to build up wealth is to slowely decrease your liabilities (debts and expenses for example) by paying them off and increase your assets by saving and investing. Here are a couple of helpful suggestions to consider using in order to live on less than you earn:
- Create a monthly budget to live off of or a Personal Profit Margin (PPM). Budgets help all of us to not spend more than we earn or to live within our means. MPM's are good for those who are not big spenders but need to be aware of what they are spending by running the numbers on income and expenses from a few categories (food, gas, utilities, etc.)
- Use coupons when it makes sense and choose selectively where you shop.
What I've found is tioletries, simple snacks, some drinks like boxed tea for example, batteries, and some cleaning supplies can be purchased inexpesively at simple dollar stores. If you pay for these items in the grocery store you could end up spending more than twice as much on some. The downside of dollar stores are the narrow aisles and sometimes longer lines. Shopping here just requires some patience.
Wholesalers are only useful if you shop on a regular basis, are in the area, have a big special purchase, have space to store all the items bought, or a combination of the previous.
Looking for sales is definitely helpful if you have the time to read newspapers or if you listen to radio, etc. If you shop for Christmas or gifts for other holidays you have the option of shopping throughout the year for these gifts when they are on sale and keep them if they are not perishable gifts until your holiday.
- It helps reduce the monthly utility bills if you are diligent about little things like not leaving lights on when you leave or running fans when no one is there. It also helps to evaluate on an annual basis costs and switch utility providers when the cost is less expensive and service is the same or adequate.
- Over the years I've come across various books and courses on saving money. Some were helpful, some partially helpful, and some not so helpful. One book I will never forget suggested making your own cleaners out of ingredients such as baking soda, vinegar, etc. The cleaner I made out of baking soda and vinegar was a disaster because it left streaks of white residue all over the surfaces cleaned. It also took a fair amount of time to make when I could have purchased a bottle of similar "gritty cleaner" at the dollar store for only a dollar and saved the time making my own. Humorous Lesson for me: know when it makes more sense to buy something verses taking the time to make it yourself.
- Repair only when necessary or if it makes sense. For example, I have small cracks on my kitchen counter. Would it make sense to replace the whole counter now or to invest in paying off other debt?
- Understand the difference between investments and expenses. For example, paying a couple of extra dollars for organic apples vs. nonorganic could be seen as an investment in your health. Buying items like CD's and books to educate and inspire could be seen as an investment in your own knowledge, mental health, growth, and livelihood.
- Pay yourself and give in faith first if applicable. Some of us are people of faith and believe in giving to God and/or a cause. Another "side of the same coin" to me is paying yourself first. When I say "paying yourself first" what I mean is to pay off your debts completely and invest in assets like businesses that produce or will produce a profit or other investments that grow in value over time.
Summing It Up
Putting it all together in order to live on less than you earn you need to consider some of these things: Use a budget or PPM, use coupons when it makes sense and selectively chose where you shop, watch habits with utility usage and evaluate annually providers, know when it makes sense to buy something vs. making it yourself, repair only when necessary, understand the difference between investments and expenses, and pay yourself and give in faith first if applicable.
Now You Can Do It
So what are your "takeaways" from this article? Do you need to work on a budget or PPM? Do you need to start using coupons and be more selective where you shop? Are you watching your utility usage and evaluating providers annually? Do you know when to buy something and when to make it yourself? Do you repair only when necessary? Do you understand the difference between investments and expenses? Do you pay yourself and give in faith first if applicable?