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How do I start living within my means

Disposable incomes are increasingly under pressure due to low wage growth
Thato* wants to live a more responsible lifestyle with regard to his money.

He has heard this term about “living within your means” and is not sure how to apply the concept to his life. Does this mean he has to be tight-fisted with his money? Thato* is usually a generous man who likes to share what he has.

The idea that he now needs to be mean; stingy to his friends and family, skimp with his own needs and desires is not appealing. Is this what it really means?

No, luckily this is not what it means. Simply put, it means that if you can’t afford to buy something now, then you can’t buy it. If you did decide to buy it anyway through other means, you would be living beyond your means, not within them. 

It means never spending more than you can afford, and never taking credit to buy things that should be paid for from your available income.

 How can you make sure you stay “within your means”?

The best way to work out what you can afford is to budget your money by planning your monthly income and expenditure.

“Remember: It is important to keep coming back to the basics with your money”

When you plan for your money, you must account for every responsibility you have. You must make a list, by writing down your income, and then all your expenses, making sure you have enough money for all your commitments. Once you have prioritised your commitments, making sure all your needs have been met, then and only then can you spoil yourself with the luxuries you want.

 How will I know what is a Luxury vs. a Necessity?

The financial commitments that you are responsible for in order for yourself, your spouse and your children to be safe, housed, healthy and educated; fed

and clothed, are items of necessity. Make sure you can afford them!

The luxury items are your extra expenses that you can live without if you don’t have the money, such as treats, new electronics, social events, fancy cars, holidays, etc. 

 Savings and Insurance

Savings and Insurance are very important in our financial lives. They are not considered luxuries, but necessary expenses in our daily lives and must take priority over frivolous spending. 

If you get lost along the way, start your plan again, and then commit yourself to the goal of “Living Within your Means”. 

It’s as simple as this –

l “Write Down Your Budget – Your first step to Living Within your Means

l Stick to your Budget – Your Financial Life Rules to follow

l Manage your Debts – Pay what you owe on time.

l Don’t Get into More Debt – Buy only what you can afford to pay cash for

l Be a Smart Shopper – seek discounts, don’t buy luxuries

l Protect your Assets and your Loved One’s – Savings & Insurance

l Plan for your Future – Retirement Planning and Insurance

 Now is the best time to start living within your means!

Your financial wellness is up to you.

Follow these simple life rules and be comfortable and happy with your money.

If I was Thato*, I would start today!

*Modisa Maphanyane is a Sales Manager with Kalahari Training Institute (Pty) Ltd. © fondly known as KTI. Kalahari Training Institute is the Premier Provider of Vocational Training in Botswana, working with employers around Botswana to upskill all Batswana in the workplace for personal growth and productivity. Continuous Learning will be a regular feature in BusinessWeek aimed at helping readers with financial advice and personal growth content, provided by KTI.

*Names in this article have been changed




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