NUMBER 2.
Live below your means.
The way to avoid debt and save money is fairly straightforward: don’t spend more than you make. This has been termed “the fundamental rule of finance,” and it’s the only way that you’ll have sufficient finances to cover your expenses and be able to save.
There are many things that can trip people up when it comes to living within their means. Some points to bear in mind are:
* Live frugally. Being willing to sacrifice today can result in benefits tomorrow. * Know the difference between
luxuries and necessities. Needs and wants are two different things, and most successful savers limit purchases that fall into the “want” category. They choose to save and build toward long-term financial stability over having temporal wants, nice-to-haves, and luxuries. * Consider your habits and routines. Many people have one
or more costly habits. It might be a daily latte, a fondness for new shoes, or meals out. Analyze all of your habits and routines to see where you can cut back in order to stay within your means or free up money toward savings.
* Avoid impulse buying. When a potential unplanned purchase comes up, wait a few days to think about whether you really need the item or not. A good friend of mine has what he calls the “three-day rule.” For any major purchases, he waits three days before making his decision. That gives time to let his emotions subside and reason to come into play so he can be sure the purchase is the best option.
* Derive your joy and contentment from God and relationships, not from things. It’s human nature to want the latest and greatest new things, but as the Beatles sang, “Money can’t buy me love.” Nor can money buy health, peace, friendship, or contentment.
* Pay with cash or debit. Research has shown that it’s easier for people to spend when making purchases on credit. People think twice when they’re handing over actual cash, so if you’re trying to tighten up financially, consider using cash. * Visualize reaching your goals. If you’re working toward building an emergency fund, saving for a specific need, or even saving toward something special, each time you’re faced with a possible purchase or financial decision, keep your financial goal in mind. If your purchase isn’t going to help you to reach your goal, ask yourself if you can do without the purchase. * Enjoy the simple, free things
in life. There are so many things to enjoy that don’t cost money. Explore and enjoy the simple things, and see how meaningful and enriching some of these “priceless” activities or shared moments can be.