I’ve never written about managing your income before. Most people’s idea of a financial plan is to spend everything they earn and “hope everything will turn out OK.” It’s hard to have the discipline to save money and pay down debt. It’s a bit like controlling your eating habits and exercising regularly. We all know it’s good for us, but it’s very difficult to do.

Initiate a plan to live off less than 100% of your income. Decide how much you can cut back and manage on e.g. 85%, 90% or 95%% of what you earn. Have the money you won’t be spending transferred directly from your bank account. We always find ways to spend the money in our bank account, so remove it.

Most people will usually say they can’t live off less income. If this is how you feel, start by living off 95% of your income. Once you’ve made your decision, restrict your spending to your available cash flow. When you receive a bonus or an increase in your income, don’t automatically increase your spending habits. Try the alternative route of increasing your saving habits and increase the percentage of your income you’re saving!

Try it. It will feel awful at first, but it works!