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A Guide to Living Within Your Means

Even if your neighbor's last name is Smith (not Jones), it doesn't make it any less tempting for you to try and keep up with them financially. It's only natural when you see that someone has something new and wonderful, you want it too… even if you can't afford it. But learning to live within your means is the single most important financial tip you can learn. But before you start taking action, you have to get into the right mindset.

Namely, it's critical to understand and accept that you can live without these things, without looking or feeling badly – and here are some of the ways:

1. Leave credit cards at home.

Impulse buying is much more likely when large lines of credit are available to you. Just remember, the interest and fees you can incur with a credit card can add up quickly. To see just how much it adds up, click here and get our worksheet that will show you why you should pay more than your minimum on your credit card each month. So if you can't afford to pay the card in full each month, the instant gratification you feel when you make the large purchase will disappear and turn to guilt when your monthly statement arrives.

2. Set a budget, and stick to it.

You hear this often, but remember that budgets are tools, and can be set as frequently as you wish, in order to account for schedule changes. For example, next week: if your kids have a birthday party and you'll need a gift, you have date night so you'll need a babysitter (and money for dinner!). You have a doctor's appointment you'll need a co-pay for. You have family haircuts. You're hosting a dinner party and need groceries. These are all items you can budget for on a weekly basis. Planning ahead with accurate budgeting, and sticking to that budget is the key. Check out our Budget Worksheet: Monitoring Your Monthly Spending that will help you get started!

3. Lose the guilt.

Competitive gifting is not productive – nor is it effective. People really do enjoy homemade items, baked goods – an invitation to dinner – or fresh picked flowers, all of which show you care, but don't break your budget.

So remember, trying to keep up with the Joneses or the Smiths – or anyone else for that matter - may only be hurting your long-term financial health. When you're able to get comfortable with your own income and what your budget allows, you'll enjoy the biggest perk of all – peace of mind.

For other valuable tools and ways to help improve your financial life, visit our Learn and Plan Center where you'll find articles, worksheets, and checklists to manage your financial health.