Living Within Your Means: What Does it Really Mean?

We sure have heard this financial advice before. We even have a proverb that supports it: If the blanket is short, learn to bend. But what does "live within your means" really mean in financial terms? And how best can we epitomize this good money habit in achieving financial freedom?

We will cover it all up in this article. We will also help you come up with money basics and hacks that can help you attain your financial goals sooner rather than later.

What You Need to Know About "Living Within Your Means"

In simple terms, living within your means means spending less than you earn. Regard your income as the means, and so you should only spend your money based on how much you earn. Ideally, the majority of your salary must go to your needs, and to your wants only at the barest minimum. And don't forget to allocate money for savings and emergency funds.

Achieving this is easier said than done, of course, but there are ways you can attain a more comfortable financial future by living within your means. Achieve financial independence before your retirement age with these helpful tips:

Monitor your spending habits

In order to ensure you're not mismanaging your finances, monitor your spending habits. Are you able to prioritize paying for your living expenses? Did you overspend this month? How much money have you spent that's not part of your original budget plan? This can be quite a daunting and time-consuming task, but it will legitimately help you to be conscious about your spending habits and minimize splurging in the process.

Pay off all your debts first, if any

Lead a debt-free lifestyle and pay off your debts before anything else. Not all debts are bad debts. It could be paying off your car payments or your property's monthly amortization. To borrow money is normal if it is spent on essential things, but it could take a financial toll on you if you fail to make payments on time, which will adversely affect your credit score and ruin your chances of availing of other loans in the future.

Consider the 50-30-20 budget allocation

The 50-30-20 strategy could be perfect for you: 50 percent of your monthly income to your necessary expenses or needs, 30 percent to your wants, and 20 percent to savings. You can also switch out wants and savings and allocate 30 percent to the latter and 20 percent to the former. This is reasonable enough to be able to pay off all your needs without depriving yourself of your wants, and all the while still having extra cash left from your disposable income that can go to your savings account.

Prioritize saving than spending

It's alright to treat and spoil yourself sometimes as long as it does not compromise your saving money goals. You can ensure to prioritize saving over spending by having your salary automatically deduct a portion that will go directly to your savings account. And whenever you're short on a budget, do not decrease the fund allotted to your savings. Instead, live within your means by not spending more than you can and should.

Wait for sales promos

During sales season, stores, supermarkets, and online shops offer discounts and other exciting promos that you must take advantage of. If you don't need it urgently, be willing to wait until your preferred shopping store will put their products on sale. This could be clothes, footwear, and grocery items.

Learn the art of haggling

The art of haggling or negotiating product prices on the market is something that our mothers have definitely mastered, and you should too! You can do some smart bargaining by, first, giving a seller the impression that you are a well-informed buyer. And instead of saying, "That's too expensive" to a bad offer, respond with silence instead. That could prompt the seller to offer a better deal. This tactic can even be applied to a down payment if you're to buy an affordable house and lot for sale in the near future.

Resist impulse buying

Impulse buying is the culprit of all overspending habits. It refers to spending your money on something that you just came across in the spur of the moment. It's not part of the original budget and, if you acted on this impulse, this will negatively impact your cash flow. When on the verge of buying something you don't really need at the moment, and that it's just an item that you currently wanted but will likely regret buying in the future, think about your current financial life and your goal to save more money. This should help you refrain from falling prey to impulse buying.

To sum up, living within your means is a good financial practice that will help you to manage your finances and save money without leaving nothing for yourself. Living within your means, moreover, does not mean you have to completely deprive yourself of buying your wants. You can still do so, but not as a top priority.

In a few years' time, you definitely can afford to buy your dream house and lot in the Philippines with a higher down payment amount to reduce your monthly amortization rates. This is a result of living within your means and saving enough money to fund an affordable house and lot investment!

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In addition, Lumina Homes communities from Luzon, Visayas, and Mindanao are all conveniently located in relative proximity to elementary, secondary, and higher education schools, hospitals and clinics, supermarkets and shopping centers, leisure and tourist spots, and accessible means of public transportation for commuting homeowners.

Spend your savings wisely to a quality yet affordable housing with our award-winning brand. Invest in Lumina Homes and attain comfort and convenience in your future Lumina neighborhood.