“Living within our means” What does this mean? It means to spend no more than we make on a monthly basis. Ideally that means to live on cash basis and not use credit or borrowed money to provide normal living expenses. It also means the self-discipline to control spending and keep need, wants, and desires in their proper relationship.
Needs these are the purchases necessary to provide your basic requirements such as food, clothing, home, medical coverage and others. Wants involve choices about the quality of goods to be used. Dress clothes vs… work clothes, steak vs… hamburger, a new car vs… a used car. Desires these are choices that should be made only out of surplus funds after all other obligations have been met.
Obstacles to good planning social pressures to own more “things,” The attitude that “more is better” regardless of the cost, The use of credit to delay necessary decisions, No surplus available to cope with rising prices and unexpected expenses. We tend to offset increases in income by increasing our level of spending. That spending attitude is a real problem because it leads to: The danger point i will explain in step 4.
When income barely equals outgo. Break even is not a living point but a decision point. If all the income is consumed in monthly expenses and something unusual happens, such as the family car breaking down, the results is additional indebtedness. Where do we start? “glad you asked” Step one the budget: what is the present level of spending? Step two budget goals: establish the “ideal” budget. In actuality, few people ever reach the ideal. But it is possible to establish the “now” condition by reviewing the ideal.
In establishing a budget the trip will consist of comparing the present spending level with a guideline for balanced spending. The comparison will point out where adjustments should be made. Once the budget is establish, a control system must be able to sound the alarm before over spending occurs!
Things You’ll Need:
- Planner (with note paper attached)
- determined mind