Financial success means living within your means

Many people live their lives striving for a big house with nice cars and all the toys and gadgets they could imagine. Some work really hard to see these things come to fruition, while many never reach this level.

My fiancé and I are currently searching for an apartment to live in after our wedding. The plan is for a six month lease, but we have to choose between a nice place that is more expensive or one that is sufficient and cheap. This is a decision we need to make based on our current financial situation. The same decision needs to be made for our cars and other bigger ticket items, which could make a big difference in our finances down the road.

But first: Housing

My fiancé and I have the decision between keeping her apartment for another six months at $610 a month and moving into a newer place to spend our first half-year as newlyweds. Do we want to live in a nicer complex or town home? Definitely. Can we afford to?

This is something we have yet to answer. This is the first housing decision we will make in our adult lives. While it doesn’t have a huge impact on us, it will be a good indicator for how we will make larger decisions (like buying a house) in the future.

Where you live is a decision that shouldn’t be taken lightly. What are the implications of buying over renting? The housing market crash left many people in foreclosure. If you can foresee having trouble paying for a home in the future, you ought to avoid the payments now. Being responsible in a big decision will help you achieve financial freedom.

Our cars

Do you buy new or used? I grew up in a family where new cars were out of the question. My family spent money on things that we valued higher than our mode of transportation. I can’t see myself spending a lot on a car because of my past experiences.

Getting cool features and an impressive appearance is great, but does it fit in your financial plans? I spent less than $3000 on my last car and it has been very reliable. What more do you need?

This is similar to buying a house on a smaller scale. How do you value cars? How have you made this decision in the past?

Other expenses

Wherever you place your values is where you will typically spend money. This could be children, athletics, entertainment, etc. Financial decisions need to be made with an end point in mind. If you need to extend your wallet to make a purchase, the purchase probably isn’t worth the debt.

My family spent a lot of time and money on my growth in athletics. This is something we felt brought us joy and thus we placed a high value on it. Other families may value entertainment systems and/or raising a large family. What is important to you?

What have I learned?

In the past year, I have been in complete control of my finances. The journey has taught me many things I never thought it would. Being in a job that could last 20 years or 20 days, I have thought extensively about what I will do post-baseball. How much money do I want? How much do I need?

The most important thing I have learned is that as long as I am with the ones I love, I will be completely content. There are some things I want to accomplish in life and money is an inevitable part of these, but I will continue to live and make purchases in a way that will keep me as financially free as possible.

Source: Businessday