The financial events of 2009 has forced the majority of people around the world to consider the way they handle their finances. It also has put to the test a number of long-held assumptions and beliefs about what it means to handle your finances wisely. One gets to wonder too, if there is a key that could simplify the process of surviving in these trying times. Fortunately, there is. You may not be aware of it but when people talk about cutting back on that morning latte or putting off spending for later, they are actually considering one thing: living within your means.Why is living within your means a cornerstone in handling one's finances? For the simple reason that it's easier to take care of the resources (i.e. money) that you have than getting more of it. Likewise, it doesn't do you any good if you simply blow off whatever increase in resources that may come your way.
However, living within your means isn't a formula that one can hand over to you and it will work like magic every time. For one, that's a good thing. It means we won't have to take the same path to reach the same goal, and you won't have to wear the same suit that I am putting on. On the other hand, that's the challenge of it. Being a lifestyle, it requires constant attention, planning, and adjustment to make it effective as the world around us unfolds. There are key things we can consider, though, and they can act like signposts as we travel down the road.
Living within your means is NOT:
1. Being stingy. On the other hand, it should open up your doors towards generosity.
2. Living without debt. That may be good, no doubt about it. But being out of debt isn't necessarily what it is all about.
3. Spending on cash basis only. Again, a very good approach towards financial freedom. But not necessarily the goal.
4. Looking for a return for everything you spend. Sometimes you just want to have something or have fun. Living within your means should allow you to do that, rather than take the fun out of life.
5. Limiting the size of your dreams. On the contrary, you will set yourself up to systematically getting closer to them.
With that said, living within your means is really about:
1. Having a plan. Something that considers your goals and priorities in life, as well as your needs as you age, change your status, or enter a new milestone.
2. Understanding your environment. Being wide awake and aware of the impact that your decisions can make on you and your loved ones.
3. Taking life as a whole, rather than part by part. Definitely the most important thing.
So make living within your means a new year's resolution to work on. Any good resolution requires constant clarification, and through the coming posts we will attempt to do just that. We will take on some things we take for granted as true and consider them in a new light.
It will also require considerable determination. hopefully a better understanding of our finances will provide the needed inspiration.
Happy New Year Everyone!
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