Finance Friday Series: Live Within Your Means

You’ve probably heard the expression “Live within your means.”  Okay… well, what does mean exactly?  How do you know if you are living within your means?

If you are living within your means, you should have the ability to save a little each month or to plan for upcoming expenses or purchases.

The best way to live within your means is to track your spending to gain insight into your expenses, then create a budget and live by it.  There are a variety of online tools you can use to help you with this task.  Two options are: www.budgetworksheets.org or www.monthlyexpensecalculator.com

As a general guideline, aim to stay within these targets for expenses:

  • 28% Housing
  • 15% Food
  • 12% Debt (credit cards & loans)
  • 10% Utilities/Expenditures
  • 10% Savings
  • 10% Car Insurance/Personal Expenses
  • 5% Transportation
  • 5% Clothing
  • 5% Entertainment

Once you know where your money is going, it will be easier to say “no” to unnecessary expenses.