Many of us may be familiar with stories or reality shows where people — mostly celebrities — try to live on a limited amount of money. Although this may be an interesting exercise for those who typically don’t worry about money, for many others it is an essential life skill that could help them go through life’s ups and downs.
The ability to scale back when needed and value money when it is available can help guide a healthy financial lifestyle. Not only do people learn to recognise luxuries and give them up willingly, they are also able to see when their money situation is changing and take action before a crisis hit. In a way, being able to live within your means with flexibility is essential to scaling down when needed.
If you don’t have this skill or if you’re trying to help a spouse or children develop it, there are many steps that you can take to ensure that cutting back to live within a limited income doesn’t impact the perception of life quality or happiness.
Exercise sound spending at all times
Regardless to your financial situation, encourage yourself and others to be prudent and considerate when it comes to money. Being aware of the value of money, the efforts that go into earning it and so on should not be something that comes up only when a crisis hits. Instead, that should be an ongoing conversation that emphasises the important of financial planning and sticking to a budget.
Parents, in particular, may be keen on having their children’s needs fulfilled, but that should not mean meeting every single want on a whim — even if they can afford it. Sticking to a budget and setting fair boundaries can help everyone be flexible when the situation changes.
Look at the bigger picture
If the reason that you have to scale back is losing a job, a spouse or a source of income, this situation can have grave consequences if you are not immediately adopting strategies to keep your expenses and debt under control. So while you may want to continue to live at a comparable lifestyle to what you had in the past, thinking about the problems that approach may lead to should be an incentive to scale back.
You also should learn to be comfortable confronting people with your new financial situation. For example, mention to friends that you won’t be dining out as often as you did in the past. Tell family that you won’t be hosting events or participating in expensive trips until your financial situation stabilises. This could be initially awkward as you have to deal with sympathy along with the other struggles that put you in this situation, but the more forthcoming you’re about your limitations, the more likely you will have less pressures to deal with.
In addition, know that your situation is probably temporary. The wiser you become in handling its complications, the more likely that you will get back on track quicker. The last thing you need is to accumulate debt that strains your budget even after your situation improves.
Think value rather than price
Help yourself and others see the purpose of things rather than taking pride in just acquiring them. A family dinner, for example, isn’t about the food as much as the company. A functioning car can be sufficient even if it is not the latest model. With a shift of focus, having less may not be perceived as much as of a compromise.
In addition, learn to make the best out of what you have. For example, if you will have to give up an annual vacation because you’re tight on money, look for alternatives that are less costly and still fun to do. By doing so, the change isn’t a sacrifice as much as an adjustment to the new normal.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Learn to cut back
* Exercise caution even when money isn’t tight
* Learn to live within your means always
* Shift focus to the role of possessions
* Think of the longer-term consequences
— R.O.
