LIVE BELOW YOUR MEANS
Seems simple enough doesn't it? This basically means, ensure that your lifestyle costs much less than your true financial wherewithal. Do this for many years and you'll find yourself in a very good position financially.
We often hear the phrase 'Live Below Your Means' espoused by several personal finance pundits but what does this really mean?
Here are some of the most important specifics that I feel define what it is to LIVE BELOW YOUR MEANS:
- Do Not Purchase a Home for Nearly the Amount that your Lender Pre-approves You For. Lenders obviously want you to borrow as much money as you can theoretically handle based on your income. This figure is usually ridiculous when you consider the fact that you do need money for other items aside from your mortgage, property tax and other related home expenses. Write up a monthly budget and actually examine where your money will go in reality before purchasing a new home. You'll find that your lender would like you to lead a house-poor lifestyle of stress and worry.
- Save First, Then Spend. "I would save money but there is nothing left at the end of the month". This is a common excuse. Until you adopt the habit to put money aside as savings before you even think about paying bills or buying things, you'll feel like a hamster on a financial treadmill. Automate this by setting up an automatic money transfer to a separate account and it's fool proof. Save at least 15-20% of your gross income and you'll be well on your way.
- Forget About The Jones'. You might as well face it, your friends and relatives your age will live above their means and you will look poor when compared to them. Until you resign to this fact, you will be extremely tempted to veer off course, following the herd by making irresponsible financial decisions that lead into debt and stress. Let others become house-poor, live paycheque to paycheque, drive overpriced SUVs they can't afford, and take vacations on credit while you manage your finances responsibly by sticking to your plan. Remember, the Canadian banks own the Jones', while you can own the Canadian banks if you choose.
Want the technical trading edge? Try INO Free! - Get your favorite symbols' Trend Analysis TODAY! Click Here
7 comments:
Thank you for that refresher course. It's nice to get back to the basics once in a while. See where you're at; take a breath; set up new auto savings acct with ING.
...keep on givin' er!
another great post!
MG,
You forgot the most important part - saving is important but what you do with those savings is what will determine whether you die a rich man or a tight twisted miser :-)
I would say invest in dividend paying stocks, but I know you are already doing that :-)
All basic, but important and necessary steps to building wealth and stability! It seems simple, and yet many people do not follow these basic principles.
The points are simple and sensible. Once established as habits, you're set.
It's important to invest what you save. This is implied, but worth stating.
Be sure to invest in yourself too (time and money). By learning more you can be earning more. If you learn the right things.
I like the last sentence, "own the bank, don't let them own you". A simple statement but huge implications.
Post a Comment