YOU CAN ONLY SPEND IT ONCE ….
How do you live within your means? How do you make your money go further in order to invest what you don’t spend at the end of the month?
We live is a society that is driven by desire: the latest gadgets, the latest mobile phones, the latest flat screen, curved screen, view from any angle OLED QLED TV, to mention but a few of the phrases that have come into my awareness over the last few months. But is it necessary to have the latest of everything as it comes out? I suppose the answer to that will be different depending on who is answering it and what their circumstances are.
I am a landlord. That means I have tenants. I don’t think of them as tenants, I think of them as customers. They are the income stream of my business. They need somewhere to live and I have somewhere they want to live. That’s good business – supply and demand. But their level of being able to enjoy life varies enormously. Some tenants work and have a wage or a salary. Some tenants are on benefits and have to live on a tighter budget, but there is a strange thing that I have noticed. The ones on the tighter budgets always seem to have the latest technology, the most expensive and largest TV screens.
I have come to realise that we, as a society, are a product of our upbringing. Money and its management was never taught in schools. Call me cynical but I think this was by design. The people who dreamt up the school system weren’t looking out for our enjoyment of life. They wanted a workforce to go into their factories. We, the proletariat, were never meant to have wealth of our own and it was never on the agenda of things for us to learn. We are not taught how to use our money wisely. We are not taught how to invest it if we come into a few quid. We are little fish swimming in shark infested waters when it comes to looking after our wealth.
Maybe you consider that you have no money so there is nothing for you to worry about. I hope not because that is a very dangerous way of thinking and it will condemn you to a life of poverty in the future. So, if we want to turn our lives around, financially speaking, we have to start thinking differently. In order to get a different result we need to take a different course of action. I remember one of my tenants, let’s call him Dave, talking about his neighbour in the next flat. It was winter. Both of these tenants were short of money but one paid for their electric by means of a top up meter. If money was short and they were cold, they put on an extra jumper. Dave was saying “I could never do that”. Dave had the luxury of receiving an electric bill (which he never had the money to pay). As a result, he never really appreciated the value of what of he was spending and the fact that he was living outside his means.
In order to start appreciating what our money can do for us let’s do an exercise. Let’s say we have £20 and no responsibilities, what can this £20 buy us? A take away meal? A taxi drive into town? A night at the cinema with a friend? Now, let’s assume this £20 has to last us all week and it’s the only money we have to live on until our next money comes in 7 days’ time. It has to buy all our meals, potentially buy electricity and gas if we have a “pay as you go” meter. That puts a very different complexion on the matter. You can only spend it once; how do you prioritise? Robert Kiyosaki, a well-known millionaire business man, spent time living in his car and showering at friends’ houses in his early days because he was keen to cut down on his expenses in order to become financially free. Personally, I think that’s a bit extreme but, if you only have yourself to fend for and you are prepared to go through the pain you can live within your means and become financially free a lot sooner.
The whole point of living within your means is to become debt free in the short term and financially free in the long term. Making little changes here and there can have a cumulative effect. The important thing is to pay yourself first and treat this action like you would any other bill. Set up a standing order to come out on pay day. Remove the money from your bill paying account. Ten percent of your total income is a good figure to aim for. Not everyone can do this to begin with so begin with what you can afford. Read my previous article on how to make your money go further if you need steps on how to do this.
Please leave a comment below and let me know your little money saving tips to help other readers make their money go further.