I grew up in a family that struggled financially. I never felt like we were poor but I was well aware that we weren’t rich either. When my younger sister was old enough to go to school, my mother joined the work force and did better for the first time in my life. Four years later my parents were able to buy their first home. I didn’t know it at the time but I was learning some valuable lessons about living within your means.
To live within your means is to understand just what you can and cannot do financially. We are not all Rockefellers yet many of try to live as though we are.
When you are buying a home, the real estate agent will try to show you homes just beyond your budget limits. If you buy it, she gets a bigger commission. Banks will lend you the money because they get to charge you interest on a larger sum, as long as it looks good on paper. The reality is the four-bedroom/three-bathroom house will bankrupt you in time. Why not buy the three-bedroom/two-bath version which is what you really need and lower your monthly payments. What good is a house if you are so stressed about the payments that you can’t enjoy it?
This holds true of cars and other luxury items. Motorcycles, motor homes, boats, jet skis and snow mobiles are all wonderful items to have. If you need to take payments to buy them, then you probably can’t really afford them.