What does it mean to live to your means?

Mummy blogger Paula Battle talks about prioritising school dinners and hockey practice over expensive designer clothes and holidays abroad. Also not to be missed are the frank but very useful family budgeting tips!

We’re living in frugal times, the global recession has left us all feeling battered and everyone is feeling the stress and strain. The credit bubble has well and truly burst, many of us are left considering what it means to live to our means and whether it’s even possible!

As a family of five we have a number of fixed outgoings. These include, in no particular order, the killer mortgage, monumental utility bills, hefty insurance premiums and mountains of food. Judging by the number of direct debit payments that leave our bank account on a daily basis I’m forgetting an awful lot there, but you get the general gist.

Then we have the other essential outgoings; clothes and shoes for the children, swimming lessons (considered a necessity in this household) and fuel and running costs on the family car. After that we move into the ‘luxury’ section, which includes school dinners, hockey practise and after-school clubs.

Notice the distinct lack of reference in the luxury section to savings, holiday funds, designer clothes or new cars. Living to your means has a different definition for each of us. For some it means maintaining a healthy bank balance whilst still being able to do all the things you’d like to do. But for lots of others it’s about scraping by, trying to balance the books on a monthly basis and congratulating yourselves if you only go a couple of hundred pounds into the overdraft – all the while keeping your fingers crossed that the exhaust doesn’t fall off the car this month.

In pondering the question of what it means to live to your means, it leads to the more obvious dilemma of how to manage this great feat. I don’t have the answers but there are a few things I’ve learned along the way.

Start by using a budget planner and being scrupulously honest about your income and expenditure. It’s amazing how quickly the little purchases mount up! If you complete the planner but your expenditure on paper bears no resemblance to what the bank balance says, then it’s time to get brutal. Spend a month noting down every single item you spend money on. You can do this by dropping every receipt into a box and putting it all into a spread-sheet or simply logging it in a notebook – whatever works basically! Over the course of a month you’ll soon start to gather a clear picture.

Once you’ve got that you can start to look at where you might want to make cuts or do a bit of redistribution. The act of plotting your expenditure and seeing it in black and white can be enough to help you move towards your budget goals. We’ve got some posts coming up on money saving tips but do share yours – how do you manage your budget and what are your tips for staying in the black?
 

Thursday, 17th February 2011

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