Make sure that your monthly costs and expenses are less than your income, which is the amount you earn after taxes have been taken out. If you can live within your means, then you'll be able to stay out of debt and save.
A good way to establish if you are living within your means, is to keep a daily record of where your money goes during a typical month.
Make a note of everything you spend each day, over a month. Include everything, from your daily commute to the snack for the journey home and regular payments like your rent or mortgage, and utility bills. If you carefully track your spending, you'll feel more in control and will get a clearer picture of where your money goes. You may find it helpful to track your spending using a digital tool or a mobile app from your financial institution. Check whether you can set up notifications to let you know when certain payments are made.
At the end of the month, add up all of your expenses and subtract this total from your take home pay. If your monthly expenses come to less than your take home pay, then you are living within your means.
Take time to reflect. If you aren’t living within your means, don’t worry. There are plenty of things you can do to take control of your spending. Start by using the record of your spending to identify which expenses, if any, could be reduced or avoided each month, or when you reach a particular balance.
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