How To Start Living Below Your Means | Clever Girl Finance

so do you earn a good income but find yourself living paycheck to paycheck or do you find yourself overspending or taking on unnecessary debts even though you have a good income what are your biggest concerns about your spending well if you have any of these questions in your mind this video is for you I'm going to be talking about how to start living below your means to achieve your financial goals keep watching hi everyone my name is Bola shumi I'm the founder and CEO of clever girl Finance I'm also the author of The clever girl Finance book series and my most recent book choosing to prosper welcome to clevergirl finance TV so today's video we're going to talk about how to create a financial plan for yourself to help you start living below your means especially if you find yourself in that place where you're earning a good income but your money still finds ways to slip through your fingers so we're going to start by looking at how you currently spend your money there are some key indicators that will let you know that you are living well above your means and the sooner you're able to identify these key indicators in your life the quicker you're able to create your plan to help you start living below your means so some signs that you are living above your means despite earning a good income include number one you don't have an emergency savings fund number two you have credit card debt number three you're not saving at least 10% of your income number four you're purchasing Big Ticket items despite your finances number five you're paying for expensive vacations you didn't plan for if you can relate to any of these indicators I'm going to be sharing some key tips to help you get past them and start living below your means and also saving more money so step one you want to assess your financial situation you essentially want to determine where do you stand right now when it comes to your finances where is your money going and you want to look at your bank statements your credit card statements over the last 3 to six months to get a good idea of where your money is going where are you spending this money even those small expenses you want to pay attention into them so one the first thing you want to do is get clear on your current situation by determining where your money is going highlighting those key expenses and then determining your income and comparing your income to those expenses a lot of people think they know what they earn but they actually don't know because they haven't paid attention to that full number they're basing it on their annual salary before taxes come out right so how much do you really earn after taxes on an annual basis how much do you really earn after taxes when you get paid each month or every two weeks or if you have an inconsistent income what is the average um income that you earn after you've put aside your expenses you want to be aware of this you want to compare your income to your expenses and determine how much of your expenses are going over your income right how much are you spending beyond your income once you've done this assessment to see where your money is going and how much you are overspending by then you're ready for step number two step number two is to create a budget this is essential to being able to live below your means and when you create your budget you want to break your budget into categories for example you can have a category in your budget for your future self where you're saving for retirement you have your debt payoff goals in there as well you need a category for your Essentials these are the things that are essential for you to live your life uh you may have a category for your life goals so these are the things that you want to achieve outside of saving for your future self and then you can also have a category for everything else where you pay attention to what you're spending whether it's eating out traveling shopping Etc so that you're not spending beyond your means and this category will help you stay in check so it's important that you lay out a budget now based on your income and based on your expenses and as you lay out your budget you may find Opportunities to cut things out because you realize that wait a minute I did my spending assessment and I realized I actually don't need to spend money on these things anymore or I can temporary cut temporarily cut back from spending money on these things so it's really important that once you do that assessment that you then sit down and create a budget and there are many different budgeting methods it's all about finding a budget method that works for you so some budgeting methods include the cash envelope system zerob based budgeting um percentage based budgeting or using an app or spreadsheet and you can stop by clevergirl finance.com we have tons of articles on all these different budgeting methods we also have several free budgeting worksheets in our worksheet library that you can find on our website and then if you feel more comfortable budgeting with an app go to your smartphone's app store at download a bunch of budgeting apps and then go through them take some time to go through them to see which of them uh you prefer to use and will work best for your lifestyle the key to successful budgeting after you've built your budget is checking in and finding a budgeting method that you enjoy using so that you can check in often and then step number three is to create a financial plan so you know where your money is going you know how you're spending your money you've created a budget to help you keep your uh spending below your income but now you want to create a financial plan a plan of your long-term and your short-term goals that you want to achieve in your life this is really important to have this is also tied to your purpose and your fulfillment and so your financial plan will include things like your goals your debt payoff plan your emergency savings plan your investment plans and even an estate plan this is essentially your overall plan to Achieve Financial Wellness for yourself starting with those short-term midterm and then your long-term goals you can use financial planning app or templates or worksheets like I mentioned we have over 40 plus free worksheets on clgl finance.com it doesn't matter what tool you use to set up your financial plan it can be a simple uh spreadsheet or work Word document but it is essential that you lay it out so you know what goals you're going to pursuing and you know why you want to stay motivated and inspired to work your plan U and live below your means by the way if you're enjoying this video I would love for you to hit the like button below and subscribe to this Channel and then tell all your best girlfriends friends about clevergirl Finance then stop by our website at clevergirl finance.com we have over 30 plus completely free courses over 40 plus completely free worksheets like I 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