You have heard it said before, that you should, “live within your means.” Now, many people take this to mean living cheap, clipping coupons, shopping second-hand and thrifts stores, but those are all misconceptions. Living within your means does not have to entail living “cheap.” It simply means that you maintain a lifestyle that is affordable to you.

A better way to put it is this – Act your wage!

We have all seen it before, and most of us have all done it before. A significant portion of the population uses their possessions to define who they are. Expensive cars, expensive clothes, extravagant electronics and entertainment items at home – none of these things define who you are, but many people act that way. This is a major contributing factor to the economic decline in America today.

The major problem with living as if you make more money than you actually do is debt. Things like clothes, nights out, dinners, drinks, etc. are purchased on credit cards. Since most of us that live this way do not keep track of our spending, the debt slowly builds until a few nights on the town add up to tens of thousands of dollars.

Building debt leads to higher monthly payments, and longer payment terms. It does not seem like a big increase each month, but over time, your entire paycheck will be going out the door the moment it comes in.

Change Your Attitude!

Living beyond your means comes from our materialistic nature, and our need to gain the approval of others. Before you can truly transform your finances, you must accept that living to other peoples standards is not the life you want for yourself. Your expensive clothes are not impressing anyone. Your car that you cannot afford is not impressing anyone. Stop living for others, make smarter choices, and put your best interest in the long-term first.

We would all like to be living like a professional athlete or a hit pop star, but at some point, you have to accept that you are not a millionaire and you have to come up with a plan. That is not to say that becoming a millionaire, or even a multi-millionaire is out of the question, it is just not the reality right now. Act your wage. When you make a million dollars, you can spend a million dollars.

I have never met a millionaire that said he gained his riches using credit cards and debt, and I doubt you will either.

Create a Budget

The budget is the most important part of having a financial plan, and living within your means. The budget tells your money, BEFORE it arrives, where it is going and how it will be used. Filling out the budget makes it easy to prioritize and make sure things get paid on time. The budget also keeps you from over spending, and tracks any overage at the end of the month.

Either way you decide to work it, creating a budget is vital to financial success and living within your means.

Source by M. Holland