Tag Archives: Budget

LBYM: LIVE BELOW YOUR MEANS

“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty-pound ought and six, result misery.”

-Charles Dickens

Living below your means or (LBYM) is not a sexy headline. It is safe to say it is pretty much the opposite of sexy. However, it is one of the most fundamental and most important concepts to grasp in personal finance. If you ran a business and consistently showed expenses that were greater then income month after month you would eventually run that business into the ground. No one that is rational would keep a business like this running because it would be costing them money every month. The same thought process should be applied to your personal finances, this is obviously easier said than done.

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PRACTICING PATIENCE WITH INVESTING

Patience is a concept that is easier said than done. In all parts of life there are times when it is key to practice patience. This is a skill that is learned from an early age and later extends throughout all stages in life. It is part of human nature to want certain things in life NOW. Why would anyone want to wait to take that dream vacation or purchase a new vehicle?

All things equal we would be better served consuming something today because tomorrow is never promised. However most of us will learn that if you consume all your resources today tomorrow never becomes easier and if you over consume your resources today (using debt) tomorrow becomes even more difficult than the day prior.  Therefore, a rational person who is looking to better their life is better served finding the healthy balance that works for them.

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PERSONAL MONEY PRIORITIES

Every day we wake up we all have choices. If it feels that your life has become routine, that is because you have chosen a life this way. Every day before today you had choices to make, some prove to be better than others. It is a combination of the choices we make that end up being our life story. This is so important to understand as we often forget we have choices and end up moving down roads we never thought we would be on.

This same phenomenon happens with all of our money if we are not intentional and decide not to prioritize what matters.  There are so many people focused on making money, but they often forget what they are earning that money for. This certainly does not mean we all need to have money be our primary focus, instead we need to understand what the money can do for us. This involves making a list of priorities and then figuring out how much money you need to live a certain lifestyle.

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KEEP YOUR HOUSING COSTS LOW TO GET AHEAD

One of life’s basic needs is shelter. Everyone needs a roof over their head and a secure place to store their possessions when they leave. Without this fundamental building block, life is a constant battle. So no matter what your current living situation is, be grateful you have a roof over your head as many do not. In this article, we will look into ways you can keep your living expenses down so you can focus on saving more money and having fun with your hard earned dollars.

“Experts” say you should spend no more than 30% of your income on housing costs. This is a good starting point, but there is so much more to the story. In a recent article in The Denver Post, they stated, “One in every four Colorado renters is spending more than 50 percent of their income on housing”. Ouch, that is the reality of what is happening in many major markets across the country. Rents are moving up fast, but wages are lagging.

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