Top 4 Tips On How To Live Your Life While Practising Financial Prudence

Top 4 Tips On How To Live Your Life While Practising Financial Prudence

Financial prudence is important for both your general health and financial well-being. ‘Living within your means’ essentially means that the amount of money that you spend each is month is less or at the very least equal to what you are earning. 

However, most people find it hard to put this into practice. Top 4 tips on how to live your life while practising financial prudence.

1. Learn to Take Advantage of Free Stuff

Spending money is fun. Just like other people, I enjoy eating at good restaurants, travelling and visiting entertainment joints. 

However, life has taught me a secret that I will share with you. You do not need to spend a lot of cash to have fun. You can still have as much fun with cheap or free entertainment. 

Today, most of us spend a lot of time reading, hiking, cooking, playing in designated playgrounds, attending free concerts or attending museums when there is a discount. 

This is a perfect example that there are many free things that you can do without spending a lot of quid. Don’t get me wrong. Spending money on entertainment is once in a while is great. 

However, do not overlook free things. You can still have a lot of fun without putting yourself in a financial constraint.

This tip can be especially helpful to young people who are just getting started out in the world and even older people who need a reminder to live within their means. 

To cut a long story short, picture this… the cool and melodious sounds of the symphony have been wafting through your windows and you and your friends are planning to visit the park to enjoy the free show. 

Soon, the 1812 overture will be playing and later there will be a fireworks display… See? There is still fun albeit at no cost.

2. Ensure That You Track Your Income and Expenses

In my 20s, I waltzed through life without accounting for my income and expenditure. However, I lived a modest life and this meant that my income kept increasing. 

Still, I  think that I would be better off had I tracked my income and expenses. Below are some benefits of tracking your income and expenses.

For starters, you will know how much money you are earning. This will be your baseline. You should ensure that this baseline increases every year. If it stops increasing, there is a serious problem. You may need to get a new job or upscale your skills to get back on track. If you do not track your income, you will not know when there is a problem until much later in life.

By tracking your income, you will know how you spend your money. Most people end up spending their hard-earned cash on unnecessary things simply because they do not track their income.

You will also be able to know how much you are saving each month. I should mention that it is best that you save at least 15% of your total income. 

Dean Anderson, personal finance expert at Pronto Finance says, “if you do not track your income, you will never know how much you are saving. If you want to become financially independent as soon as possible, you should aim for a higher saving rate. For example, you can set a target of a 50% saving rate. By tracking your income, you will be able to see your income grow. Seeing your money multiplying is addictive and it will also motivate you to aim higher”.

Tracking your income will also help you develop good financial habits.

3. Stop Trying to Impress People

Most people find it very difficult to ignore the Jones’s. However, I find it very easy simply because I do not care what other people think.

I learnt this lesson in my early teens. When I was a teen in junior high, I really wanted to own a pair of Nike Air. Most of the cool kids I knew owned a pair and I was very envious. 

To make my dream of owning a pair possible, I saved up $80 over the summer and acquired a pair before school started. However, it turned out nobody really cared what I wore. The shoes did not increase my athletic abilities and truth be told; I was still terrible in PE. 

From that day, I learnt not to pay attention to shoes, jewellery, cars and any other outward sign of prosperity. 

Why should you spend your cash to impress other people? 

Successful entrepreneur Karina Wolfin says, “most people are so consumed in their own lives they really do not care what you wear or drive. Unless your job involves impressing clients, you really do not need fashionable shoes and a luxury automobile. If you really need a luxury item for a special occasion or to impress someone, try renting that item. We built a whole business model around the desire to rent before you buy. Renting appliances, bedding, cars or other expensive goods will give you time to experience the real impact of having those goods in your life. This will give you perspective and insight into whether you truly need this, or is it a waste of money”. 

4. Learn to Boost Your Income

As I stated earlier, when I want to save some cash, I tend to gravitate towards frugality. However, this is not the only way that you can boost your income. There are many other things that you can cut out of your life before you start feeling deprived. 

For most people, the bulk of their income usually comes from a full-time job and it is good to concentrate on that job. However, aim for a raise at the end of each year and also be on the lookout for better job opportunities. 

If you have stayed in one job for too long and there is no improvement in your income, then it is time to look for a new job.