How to Stop Spending more than you Earn

Even if you are on a low income it is important to stay within a budget you can afford. If you start relying on credit cards and loans to cover everyday living expenses you will soon find yourself in financial difficulties and may end up paying even more in finance and interest charges.  

One important tool to keep from spending more than you earn is a budget. Each month write down how much money you will earn that month, then subtract expenses you will have to pay such as rent or mortgage payment, food costs, child care costs, utilities and others. Once you have subtracted these amounts you will see how much you may have left over. This extra can either be spent on things that you want to purchase that were not a need or put some extra in savings. 

If you have difficulties spending less than you earn, one tool is the envelope system. Each payday, get the amount you budget for certain areas such as groceries, dining out, clothes and others in cash. Put the cash amount for each category in an envelope labeled for that category. Each time you spend money from each category, the money comes from the correct envelope. Once the money is gone in an envelope, you are done spending in that category until the next payday. Some people take money from other envelopes, but that will decrease the amount available for those expenses. 

If you carry credit card balances and pay only the minimum amounts due, then you will pay considerably more for the items than the original cost and it may take several years to pay off your balance. 

If you find yourself continually spending more than you earn, you need to reevaluate your spending. Track your spending for a week or preferable a month. Write down everything you spend money on and at the end of the week or month you can take  a look at your spending to see which can either be cut down on or cut out completely. 

You may find expenses such as dining out, coffee, magazines, etc that can add up quickly and you may be spending mainly as a habit. Once you are conscious of this spending, then you can save money be cutting down on some of these expenses without effecting your life. 

There are some simple steps to take to learn to spend less than you earn.