Live Below Your Means

I recently purchased Suze Orman’s new book The Money Class, and I have to first say I couldn’t agree with her more regarding the focus for the entire book – we must all live in our truth.  We must get real.  We must look honestly at what we will need to live on in the future and get real about how we handle money today in order to attain it.  With that said, she begins in chapter 2 by reminding us to live below our means.

In today’s culture, that may come as a slap in the face, but think about it this way.  When we retire we will live on approximately 75% of what we live on today (if we have been diligent about our retirement savings). Becoming used to living below our means will provide less shock in the future and allow us to save now for a grand future when we do retire.

So how do we do this? How does one live below their means?  Here are a few of her suggestions to consider:

1. If your mortgage payments surpass 35% of your monthly income, consider living in a smaller house.  It was always suggested that a mortgage payment be 33% of your income or less, but with the financial housing crisis, many are paying easily 50%.  If you exceed the 35% try getting creative on how to downsize. It might take some time, but will save income today, so that you can save for tomorrow.

2. Take care of the car you have. Leasing a new car every 2 years simply to keep up with your neighbors will not bring true contentment, but it will strap your monthly budget.  Find contentment within yourself by pursuing a life that is truly fulfilling to you that does not need to be validated by anyone else.  By simply taking your current vehicle in for oil changes and tire rotations every 3 months and overall service, you can have a car that runs efficiently and is paid off so that you save yourself hundreds of dollars each month.

3. Eat out less. There are many benefits to deciding to eat meals at home beginning with your hard earned cash – more of it stays in your pocket!  Not only are you saving money, but you are aware of what you are eating and promoting an environment within your home of strong family relationships.  Saving those special occasions for taking the family out to eat will create a more grateful attitude and possibly produce children and spouses who love to cook in the kitchen with you.

4. Eliminate the excess. Take a moment and look at your monthly expenditures.  Where is your money going? Suze offers a great tool upon purchasing the book that allows you to go online and enter all of your expenses. She goes over your expenses and income numbers (well a computer system does) and reveals where she thinks you can reduce, add more to savings or are doing well.   After walking myself through this, I realized I have extra money which should be going toward my savings cushion (which will increase the amount I am already adding).

With these four suggestions and living more consciously, reminding ourselves that we give money power, ask yourself today, what power am I giving to my money?  At the end of your life, be the person who can say, I took advantage of the power of the money I earned and put it to great use for myself, my family which ultimately created a peace of mind for the present and for our future. Take back your power and purchase peace of mind, not more stuff.

Image: Southern Sophisticate