‘There is no dignity quite so important and no independence quite as impressive as living within your means’ – Calvin Coolidge

Everyone knows that in order to be financially secure, you must spend less than you earn. This truth has been recognised and appreciated right from olden times. Why is it so difficult to actually put this simple, effective idea into practice in the real world?

Do you notice that your parents and grandparents were perhaps more financially secure even though they earned much less than you do?

The answer to this question involves the understanding of several issues pertaining to costs of living, wages, consumerism as well as mental attitude to money.

Rising Costs of Living

Official statistics indicate that inflation in the UK was the highest compared to other countries in the EU. Inflation means that the same goods/products/services now cost more than they used to. In particular, energy and fuel prices have sharply risen thus leading to increased domestic expenses.

The squeeze on family finances is due to the fact that wages have not risen in alignment with costs of living. You are earning more or less the same salary but have to meet higher expenses.

Stagnation of Wages and Outsourcing of Jobs

UK experienced the golden age after World War II when jobs were plentiful and living costs were reasonable. In the twenty-first century, outsourcing trends have hit the local UK job market. Outsourcing means paying people from other countries (usually from the developing world) to do jobs.

Outsourcing has particularly hit blue collar, middle class jobs and has resulted in stagnating middle class salaries.

Excessive Consumerism

A very important reason that makes it difficult to live within our means is full-blown consumerism. We all want bigger cars, more exotic holidays, expensive furniture, clothes and cosmetic products among hundreds of other things.

The problem is that we buy a lot of things based on what companies think we should we own rather than what we really need.

The lure of credit cards

Credit cards tempt hapless consumers to buy things that they simply cannot afford. Credit cards attract exorbitantly high interest rates that can make a serious dent in the family budget. Credit cards tend to encourage irresponsible spending thus making it difficult to live within your means.

Cutting down on wasteful expenditure goes a long way in helping you live within your means. While there are always excuses available to justify over-spending, the reality is that excuses are all they are. To make a difference in your life you need to change the way you think about money and start spending less than you earn. It really is that simple.

Why do you think so many people find it difficult to live within their means? Is it the escalating cost of living, or is consumerism largely to blame? Leave your thoughts in the comments below.