Making Ends Meet - and Beyond

Making ends meet is a key for your financial survival. Getting beyond it and living clearly below your means is what becoming a millionaire will require. You don't need to be making much - what really matters is the way you think of your earned money and use it. If you get this part right, you are already ahead of most others! So, let's see how to make the best use of what you are earning.

Live Below Your Means

It's actually amazingly simple: the first real step on your million dollar journey is really to make sure you are always using less than you are earning. To be more exact, your expenses should stay at least 10% below your net income. So, if you are making $3,000 a month, you should be spending less than $2,700 a month. Or if you are making $10,000 a month, you should be spending below $9,000 a month. The difference - at least $300 a month in the first case or $1,000 a month in the second one - is what you will use as seeds for your million dollar: this is what you will invest. As simple as that - this is how you get beyond making ends meet.

"Wait a sec", you say, "surely I'd be saving tons if I was making $10,000 a month, but I'm hardly making $3,000 and there's no way I can spend below $2,700 - it simply can't be done"! Well, if you find it hard to believe you could really get by with 90% of salary, I have a couple of questions for you.

My first question is this: how do you think those people manage who make only 90% of what you make, or even less? No point in claiming that they are living in poverty - they make only 10% less than you do. Probably they live pretty much the same way as you do, but they are making ends meet by simply skipping some of the expenses you have and finding lower-cost alternatives for others. There is always someone who is making 10% less than you are, and no doubt there are many people who make even less. The funny thing is, no matter what income people have, most of them feel they can hardly manage with what they make. They believe that if they earned just a bit more - say 10% extra - life would be so much easier. If they are making $20,000 a month, chances are that they also geared up their expenses accordingly - and getting by with $18,000 feels hard. Poor them!

Managing With Less

In case you are not convinced and doubt the need for going beyond making ends meet, then here's my second question. Assume something happens and your monthly income drops by 10% - what are you then going to do? I'm not saying this would be fun, but I have no doubt you would find a way to manage - just like the other guy who has always been making 10% less than you do today and is still managing to survive, somehow. So, it's really all about the mindset. You will just need to be living as if you made 10% less than you actually do. If you can increase the 10% to 15% or 20%, even better! Just learn to live this much below your means, and you have your first element - one of the most important ones - in place for building your million dollar fortune. If you can do this, you are already ahead of most people!

All right, so you are financially smart, understand how to use debt, and figure there's no point in making ends meet this way. Why bother to scrape along with only 90% of what you earn, when you can always borrow money instead and pay it back later? "Makes sense", you say, "I can always go into debt and band pay it back later when I'm making much more. That's exactly what debt is for, isn't it!" Well, it's not, and let me tell you why not.

Chasing Dollar

Making ends meet and living below their means are among the most pervasive common characteristics for millionaires. Most millionaires got into these habits already early on - just like you are hopefully doing right  now - much before they became millionaires. In fact, it's really one of the key reasons why they ever became millionaires. Most people spend just about every cent they make, no matter how much it is, and their expenses grow exactly at the same pace - or even faster - than their income. No matter how much they make, they will never accumulate much, as it all flows out as quickly as it flows in.

If you just keeping borrowing money and getting into debt and never learn to manage with less than what you are earning, your chances of ever growing wealthy are very, very slim. In fact, in such a case the chances are rather that you will stay feeling financially squeezed for the rest of your life. Here is what makes it so bad: you will eventually have to pay back what you borrowed, and as you don't have the tendency to manage with less than what you are making, it will be hard ever to find the money to pay down your debt. This will get you to the same vicious circle where so many others are. You borrow because it's so hard to manage with what you earn, and you will need to keep borrowing: paying back your debts would mean having to manage with less than you are making - and that's really not for you.

Bite the Bullet

Time to face the facts then: as you clearly want to get your million dollars - why else would you still be reading this - bite the bullet and make the right choice right here. Just go ahead and do it! Start controlling your expenses carefully and make sure they will never exceed 90% of your income. Go even further beyond making ends meet and target a lower rate of expenses if you can - 85% should be doable, and even less may be possible. No point in going overboard in this though - after all, you do need to live your life also today. Having said this, it is true that the more you can do now, the quicker you will get to your goals and reach your financial freedom.

Virtually all millionaires are good at making ends meet and always putting a little money aside. It really makes the difference, and it's important to make it a habit and keep doing it even when it feels hard. Jim Cramer is doing it. Many others are doing it. So you too get started now - unless you already did so - and put in place this key building block of your million dollar plan!

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