Can You Afford Your Lifestyle?

Maybe you are suffering from the economic crisis, but maybe you are just suffering from a case of not being able to live within your means.  Enjoying a lifestyle beyond what you can afford is dangerous.  Debts can pile up, and the next thing you know you may be filing for bankruptcy.

List down your expenses

What you may be spending on may seem normal to you, and so you many not easily recognize what’s wrong with your spending habits.  All you know is that things are getting very tight and you want to discover the reasons behind this.  What you must do is record every little expense for a month.  Do not cheat; put down even your last bit of cigarette.

Recognizing your vices

After making the list, check which ones are impulse buys.  Also check items that seem to recur several times in your list, so you may just find the culprits.  Another thing you should look out for is the sensibility of the brands that you have chosen; perhaps your vice is going for the high-priced items.

Compare expenses with income

Calculate all fixed income for a month.  This includes your salary and investment returns.  Compare this with your total expenses.  If your income is less than your total expenses, or just a little over, you are spending more than you can afford.

Balance your finances

After confirming that you do spend more than you earn, you have to start putting your finances in order.  Stop using your credit card for awhile. It is difficult to keep up with your spending if you are using the plastic.

Save and invest

Once you have settled to a healthier spending habit, you can start setting aside more money.  You may also decide to invest to make the money grow.