Learning To Live On 70% Of Your Income

By Debra Dragon

One of the most important financial lessons a person can learn is to live within their means. The problem many people with excessive debt have is spending as much (or more) than they make – and then having to lean on credit cards and other sources of credit to make ends meet. Once you’ve gone beyond your “means”, it’s a vicious cycle that is extremely hard to break, because you’re basically start out in the red (or negative).

One of the most effective methods of saving money is learning how to live on less than you make. It’s a classic financial lesson that many people miss, and therefore end up deep in debt. It’s far too easy to charge a large purchase or numerous small purchases on a credit card, because you know the minimum payment will be affordable. The problem escalates as you increase the number of “minimum payments” you are required to make each month to the point that you can’t pay anything more than the minimum – and suddenly the interest and finance charges are eating your payments.

When you learn how to live on less than your income, you automatically make it possible to save money. You can use the difference in income and living expenses to create an emergency fund, save for your future, and pay for unexpected expenses with cash rather than credit.

Here are four basic tips for learning to live on 70% of your income, which means you can put 20% of your income in the savings vehicle of your choice:

1. Figure out what you’re currently spending money on by tracking every incoming and outgoing dollar for a full month. If you’re not already keeping a close eye on your spending, this will be an enlightening experience. If you find your income just isn’t enough, do something about it! If you’re spending too much on unnecessary items, do something about it!

2. Look at what you are spending your money on, for example – if you tend to spend a lot of money on coffee on the way to work, start making coffee at home. You’ll read this tip on every money saving blog and website you come across but the fact is, buying coffee out is something many people do without a second thought and the money absolutely adds up.

3. Learn how to make your favorite meals at home and avoid eating in restaurants or getting take-out. Doesn’t mean you can never have a treat, but for families who eat out frequently, you can use far less of your food budget by making food at home rather than going out.

4. Buy items in bulk whenever the prices are discounted for doing so and the items will not expire or be wasted. Good candidates for buying in bulk include paper towels, toilet paper, canned goods and juice.

In order to increase the amount of money you have available to save, you need to decrease the amount of income you’re using. Working toward the goal of living on 70% of your income (or less!) will help you grow a healthy savings account.

About the Author: Debra Dragon is a freelance writer providing content for


on the topics of savings accounts, checking accounts,

money market

accounts, certificates of deposit and IRAs.



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