All too often we hear people say, “Well if only I made a bit more money, I would be in such a better financial situation”. In some cases, this might be true. However, far too often we see people spend more than they make. I know people that make less than $50k a year and are more financially stable than some people. It’s not how much you make. It’s what you do with your money that makes you wealthy. That is a very crucial point that we can’t stress enough.
In today’s society, we are always trying to keep up. If a person has a nice car, we have to buy a nice car. If a person moves into a larger home, then I have to move into a larger home. It could be the latest Apple gadget, clothes or….anything….deep inside we do feel pressure to compete. We have felt pressured go out on a bar night (many moons ago, prior to babies), even if we didn’t have the cash to buy drinks. Thanks OSAP! Before you know it, you are in debt because you have spent well above your means.
You may be reading this and thinking, “WTF does spending within my means, even mean?!” If we were to ask you right now, “how much disposable income do you have each month (without going into debt)?” Would you even know the answer? You might have a guess, however, if you don’t know you could be going into debt every month and not know why.
Don’t get me wrong, not everyone is perfect all the time. You will have times when you have to spend more than you make because certain things come up. It’s all about having more months being underspent than overspent. For example, Lindsey and I were overspent during the holidays for a number of reasons (car broke down, bought more gifts than expected, vacation to Mont Treblant, dishwasher broke, etc.) However, because we were aware of our spending habits and tracking our budgets, we knew how to correct for the next month. We pulled back on our spending the last few months and are happy with where we are again.
Wealth isn’t measured by how much you make, but by how you invest and save your money. If you live within your means and have some money left over, that is where you start to generate wealth. In the long run that is how you pay off your debts, buy a home and even save for your retirement.