As long as you need to buy goods and services to survive, you need money. As long as you have used other people’s money to buy goods and services, you need money to repay that debt. As long as you desire to buy more goods or services, or enjoy the finer things in life, you need money. As long as you plan for a good retirement, you need money.

Imagine though, if you could be in a position that you did not need money. Imagine that you had enough money to not only buy all the goods and services you needed to survive, but enough money to buy what you desire. Imagine that you did not have to worry about money. You knew that you had enough money or cash-flow coming in each month to buy the goods and services you need to survive, plus the additional goods and services you desire. And you knew that monthly cash-flow was coming in regardless of whether you went to work each week/month or not.

Is it possible? Yes it is. Many people have achieved financial independence in this world, and those people are no different to you. Good money management skills are a foundation skill you require to achieve financial independence

One money management rule you should follow is commonly called ‘live within your means’. For every $1 you earn, only spend 90c. One of the biggest traps to breaking this rule is readily accessible credit cards and personal loans. If you have personal loans, personal debts or credit cards that you do not pay off in full at the end of each month, then you are breaking this first rule. It may mean that for every $1 you earn, you are spending $1.10. You are acquiring ‘personal stuff’ using other people’s money. You are acquiring depreciating items using other people’s money that you have to pay interest on. Appreciating debt for depreciating items is not the path to financial freedom.

My parents definitely lived within their means. They emigrated to Australia with two small children and no jobs. My father got a job, and as soon as was possible, my parents bought their first home. In those days the house only cost $13,000; this was around 1972 or 1973. They purchased in the lower end of town (within their means), and furnished the home with second hand furniture (within their means). When my brother and I were a few years into primary school, my mother got a part-time job around school hours. All her wage went into paying off the mortgage; we lived off my father’s income. They also used my father’s income to save for furniture, cars and family holidays. There was no such thing as credit cards in those days, or at least not to my parents. You only purchased something when you had the cash for it. I can’t remember how long it took them to pay off the mortgage, but I can remember them celebrating when I was in early high school. They then sold the house, and upgraded to the upper side of town. It only took them 10 years to move to a new country with nothing, to being well established in a lovely home and living the lifestyle they were seeking for their family in Australia.

They practised the concept of living within your means. The only loan they had, was on the family home. All other items were purchased using cash, even if this meant buying second hand until they had saved enough to upgrade. They never had a personal loan or credit cards.

Today’s society appears to be quite different in terms of how we spend our money. Some first homebuyers want their first property to be the home of their dreams fitted out with stylish furniture, big screen televisions and modern kitchen appliances. Many also are battling to pay their car loans, university fees and credit card payments. At a young age, many get caught early in the credit trap.

Budget to ensure you have enough money to buy your necessities and luxury items as long as you don’t break rule 1: Only spend 90c out of every $1 you earn.

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