Building your finance: Spending below your income.

in hive-167922 •  8 days ago 

An healthy pocket provides an amazing smile on your face every time you walk into your favourite shopping spot, you are confident in the fact that you can actually pick anything you want and your card and pocket (not credit card) can cover all the expenses. This is one level of financial freedom that majority of us want to attain all the time.

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One question you have to sincerely answer is this: Will your spending habit get you that financial level of freedom you desire?

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Some of our questionable spending habits is one reason why most of us have been setting financial goals for years and we keep on finding ourselves on a stagnant level. You cannot be spending more than you are earning and expecting to have some money in reserve.

With the excuse of enjoying life before they die, so people get themselves into so much debt and they have to work every day of their life to pay those loan back. The ideal thing to do in my opinion is to work and have enough money in reserve that if you want to go on that shopping luxury, your reserve can confidently afford it rather than just pilling up debt and more debt on the grounds of enjoying life to the fullest.

If you earn $800 on a monthly basis and your monthly expense adds up to $1500, this means that you have $700 on debt very month at the end of the year you will have had $8,400 in debt. It is wrong to live above what you are earning currently, and at the end of five years if you continue to live in that manner, you would have accumulated $42,000 in debt.

The most appropriate thing in building a proper financial life is by setting a budget that is below what you earn and saving some extra cash in the process. If you earn $800 on a monthly basis and you cut your expenses to $600 in a month, which might not be too convenient for you but you will have saved $2,400 at the end of the year while you are also living conveniently.

The main essence of this post is to remind you that, if you want to have a good financial life, then you must live below what you earn. Thanks for reading. I am @oluwatobiloba.

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