Living within your pocket is more than just balancing a budget. This means being acutely aware of the difference between need and want, something Mark Twain calls, “the comparison between the two is the death of joy.” Furthermore, you must learn to spend money that suits your needs--not your neighbors or best friends. Living within your means means being careful about spending your money; which, when properly done, will not make you feel deprived or unhappy.
Step
Part 1 of 3: Keeping balance
Step 1. Make a list of basic needs
This includes foodstuffs, household goods and clothing. Basic necessities are items that you must have in order to survive. Suppose food, you can not live without food. However, you can be 'survived' without having to spend hundreds of thousands on clothes every month (even if you don't feel like it).
Step 2. Estimate your income
Preferably on a monthly basis. This is quite easy, if you have a salary. But if you are part-time, unemployed or dependent, this can be even more difficult. The best way to do this is to record your monthly income, or average the last three months' budget. This can help you estimate the required budget according to your ability.
When estimating your income, remember to set aside some of it to pay taxes. No matter how much you earn, your money will appear to be more before you pay taxes to the state
Step 3. Record all expenses
Keep track of whatever you buy, how much you spend and where you buy it. No need to be too detailed, just "Rp 800,000, shopping at Carrefour", for example. Again, this is probably better to count on a monthly basis. See how much you're spending on basic and extra needs.
If expenses are hard to track because you pay a lot in cash, or you're just having trouble keeping track of last month's bills, you can start recording them for the current month or next month
Step 4. Compare your income with your expenses
See how it goes. If your income is greater than your expenses, you're fine! If your income and expenses are the same, it means you're not saving at all, and you're in trouble if your expenses are higher than your income. Of course, if you are a student then you have no money, but you still have to think about how you can save more in the future.
Step 5. Evaluate your expenses
See where you're spending the most. Sort your expenses, create a “basic needs” category and other expense categories according to your needs, for example the “snacks” category. After that, record all expenses by category and add up the total for each category.
Step 6. Cut excess spending
In all likelihood, you will notice that there is at least one category other than “Basic Necessities” that takes up a large part of your income. Let's see what you can cut out of it. For example, if you see nine or ten visits to Starbucks under the “snacks” category, simply by reducing it, you could save 300 thousand rupiah. Try to reduce the things that are not important until your income is higher than your expenses.
See section three for more information on how to save more effectively
Step 7. Increase your income if necessary
You may notice that your expenses are far greater than your income, so you need to do more than just cut expenses. Maybe you have to work overtime, ask for a raise, look for a higher paying job, or look for additional work. If there are other family members in the family who are also making a living, try to see if he or she can do the same. If you have teens or adults, ask if they can help by doing a part-time job.
Step 8. Set a saving goal
Set goals that are achievable within a reasonable timeframe. The goal can be different, it could be that you want to have a goal to only spend Rp. 150,000 per month or it could be that your goal is to save one million rupiah per month for year-end vacation expenses. The more specific and attainable your goal is, the more likely it is to achieve it. Goals like “reducing spending” are too vague and it will be difficult for you to take the initiative or get closer to achieving your goals.
Step 9. Save for emergency expenses
If you really want to live within your means, don't let the unexpected, like an accident or loss of a job destroy your finances. You have to find a way to save in an emergency, even if it's only a few hundred thousand each month. This money will gradually add up, and you will feel more secure and confident than if you were spending money every month with no backup fees.
Even setting aside change in an 'emergency piggy bank' every day can prepare you mentally to save money for the unexpected
Part 2 of 3: Changing Perspectives on Spending Money
Step 1. Distinguish between what you want and need
Sure, you might think that you need a big high definition TV, but do small TVs or old TVs really torture you? Is it true that you need famous brand shoes or glasses or are you just as happy with cheaper ones? Does dinner with a partner have to cost a few hundred thousand at a time if you can go somewhere cheap or whip up a romantic dinner at home? Realizing that you don't really need the things you think you need can help you live within your means.
Spending money on things you don't need is okay to do every now and then, as long as it doesn't become a habit. And when you do, you have to realize that life would be just as good without them
Step 2. Don't try to live like your neighbors
Maybe your neighbors just built a swimming pool or renovated their house, but maybe they earn twice as much as you. If you always try to be like the people around you, not only will you be unhappy, but it will be difficult to live within your means, because you will be too busy maintaining an image that is difficult to maintain.
Sure, your friend's designer jeans look really good on her. However, be happy for your health without being jealous and wishing you could have the same thing. Envy is guaranteed to make you unhappy-and you will never be satisfied with what you have
Step 3. Change your definition of what “rich” means
Getting rich doesn't mean owning a BMW or taking vacations abroad every year; this could mean having enough money to keep the family and children happy, and having spare money for the occasional vacation or vacation. Try to come up with a definition of what "rich" means, and you'll be more relaxed and stop thinking about how other people see your wealth.
Step 4. Realize that reducing your spending will not reduce your quality of life
You can still eat well and entertain friends at home, instead of spending a lot of money going to restaurants. Does it worsen your quality of life? Certainly not. On the other hand, you can still do the things you love-you'll just do them a little differently. Don't think life will get worse when you cut back on expenses.
On the other hand, cutting back on spending can “improve” your quality of life, because it will reduce your thoughts of overspending, and can be more at peace with the decisions you make
Step 5. Be happy with what you have
Instead of always focusing on what you want to have – a new car, expensive clothes or a bigger house – focus on the things you have. You may hate your TV, but really love your computer. You may wish you had a new jacket, but take a look at your sweater collection. Make a list of these things, both material and otherwise-perhaps a great spouse, smart kids or a great place to live.
Being fully aware of what you have will reduce your desire to spend, to make up for the things that you think are lacking in life
Part 3 of 3: Saving
Step 1. Eat at home whenever you can
Eating at home is by no means more unpleasant than going out to eat. Eating at home can make you a better cook, more aware of the contents of the food, and can even create a more intimate atmosphere for a date or social gathering. What's more, it's very economical. If one of your biggest expenses is eating out, try reducing the intensity to only twice a week, and try reducing it again until you are satisfied with eating only once a week or once every two weeks.
Of course once in a while you have to eat out, for example for a colleague's farewell or a friend's birthday. If you eat out, you can still be mindful of what you're putting out. Don't come on an empty stomach as you will likely order too much food and spend too much money
Step 2. Wait for the discount season
You don't have to buy something at full price. Wait until there is a discount or promotion, or be patient with the knowledge that whatever it is the price will decrease. You don't need to have the latest iPod or video game when it's released, just wait a while for the price to drop or wait until you can save up to buy it.
There's nothing wrong with buying second hand. You can find a variety of interesting clothes at thrift stores
Step 3. Make entertainment at home instead of outside
Have a party at home instead of going out. Invite your friends to watch a movie instead of going to the cinema. Having fun at home can be more enjoyable than traveling outside because you don't have to deal with strangers and can control what you eat. So next time you want to meet friends, try inviting them over to your house, instead of meeting at a café or bar.
Step 4. Cancel unneeded membership
You could end up spending hundreds of thousands of dollars per month on a membership that you don't really need. Try to cut some of them to save your monthly expenses:
- Gym membership. If you only train once or twice a month, better cancel this membership and start running.
- Magazine subscriptions. If you only read one or two articles from a monthly magazine, it is better to save up and read news from the internet.
Step 5. Borrow whenever you can
Go to the library to borrow books instead of buying them. Borrow your friends' DVDs instead of renting them. Borrow your friend's dress instead of spending money on something you won't use anymore. Share your stuff with your friends so they can do the same. Borrowing is fun-and a merciful way to save.
Step 6. Have a garden
Farming is not only fun and entertaining – and proven to make you live longer – but besides that, it can save you money. Instead of spending money on vegetables and herbs each week, try investing in your garden and see how much money you can save each week.
Step 7. Never go shopping without pocketing a shopping list
If you're going to the supermarket or the mall, you're likely to be shopping more impulsively and not being careful if you're just walking around buying outright what you "think" you need. Therefore, prepare yourself with a detailed list before shopping and stick to it until you see something you really need but forgot to put on the list.
Even if you go to the mall to buy three items, writing them on your list will make you more aware of not buying other things you don't want to take home
Step 8. Wait 48 hours before making a major purchase
If you see a new jacket or a nice pair of shoes at the mall or online, don't buy it right away. Instead, wait 48 hours to really think about it. Maybe you'll change your mind and realize that you don't really need the item, or that there's a cheaper substitute. If you've rethought and decided that the item was really needed, you'll feel more satisfied with the decision.
Tips
- If you manage to cut your expenses big enough, save the excess for the unexpected.
- Don't overdo it when cutting expenses. You've worked hard, you deserve to treat yourself. If you don't pamper yourself every once in a while, it's going to be hard to keep your budget as well.
- Use a simple coding system to record your expenses, such as: M is for food; D for doctors and health, T for anything related to transportation, as well as E for the unexpected and so on. To make it easier, write the letter code on the left side of your accounting book and add a few examples to the category until the line is full, then add up and write down the total.… open a new line if necessary.
- Impulsive spending must also be contained. A good rule to follow is if you can't afford it, don't buy it.
