Guest Post: Live Within Your Means

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(This is a guest post from one of my friends, Raymund Tamayo. Visit his blog here for his productivity, personal finance, spirituality and minimalism tips. Thanks for the awesome post, Raymund!) 

I’d like to talk more about managing our finances because I believe that proper handling of money is one way of becoming a faithful steward of the blessings God graciously gives us. Let me start by talking about the habit of spending less than you earn.

It doesn’t matter how much you earn, if you are not spending less than you are earning.

live within your means
Tea and bread are enough for my breakfast! - Lianne

Living within your means is the key to financial success. My wife and I have been applying this principle ever since we decided to become simplifiers in January 2010, and we have been blessed with a growing financial health.

A word of warning: If we don’t apply this in our financial life, we will go nowhere but be buried deep and deep into debt. And being deep in debt is not being a faithful steward of God’s resources in our life.

To spend less than you earn, you need to:

1.   Evaluate your financial habits. At this time, be honest about yourself. Most people handle money without control or care. And they usually get shocked by the end of the day about where their money went. Take time to track where and how you spend money. Knowing where your money goes makes it easier for you to manage your finances and cut back on unnecessary expenses.

2.     Make a budget. And stick to it. Use your budget as a guide to control your spending. This will make sure that you spend within your capacity to earn. As in every area of life, it will take discipline to do this. Realize the importance of budgeting to have a healthy financial life. If you don’t plan how you’ll spend your money, you’ll always end up in the same place financially: you’ll have nothing at the end of the day.

3.     Find ways to cut back on expenses. This is about being wise and frugal. There are tons of ways to do this. Realize that buying is not always the solution. Make your life count. Focus and simplify. Appreciate that the best things in life are usually free.

4.     Build an emergency fund. An emergency fund is critical for financial health. It gives you a buffer for unexpected expenses, so you don’t spend more than you earn by blowing your savings and your budget or by using credit cards. More on this in a separate article.

5.     Don’t buy on credit. I personally don’t believe in credit cards. When I want something really bad, I save up for it. I believe that our wants can wait. The only exception I feel we can enter into credit is when we use it for business, or when purchasing a non-depreciating item such as a house or land. There’s no such thing as “easy” installment payments. Believe me, every payment will be hard! One of the many traits of a truly successful life is learning delayed gratification.

6.     Learn balance. It is very important to not take anything to the extreme. Living a simple life doesn’t mean living in deprivation. There are special days when my wife and I eat in a fancy restaurant. Or we splurge on a vacation once a year. If you can see our stuff, we own less but they are not cheap, and all of high quality. The point of living a simple life is prioritizing on which are most important to you, not putting yourself into misery.

Living in Debt

Living in debt is one of the best ways to live an anxious, stressful, tension-filled life. God clearly doesn’t want us to live that way, as it is not honoring and bringing glory to Him. There are more verses in the Bible about handling money and being a faithful steward of God than it is about heaven and hell.

The Bible says in Proverbs 22:7 “Those who borrow are slaves of moneylenders.” And we know that we can’t have two masters at the same time. Our master should only be the Lord Jesus Christ.

Peace of Mind

Living within your means is more than about cutting costs and saving money – it is about peace of mind. When you spend less than you earn, you are no longer playing catch up and living a paycheck-to-paycheck life. The stress that comes from living that way and worrying about bills payments and stuff are paralyzing. Living within your means not only gives you peace of mind, it also allows you to save and invest for the future.

Live wisely,

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