All of us want to have a living space that is attractive, comfortable and functional. We love to have friends over and hear them “ooh” and “aah” when they see what we have created in our space.

For many people, this pursuit of a living space that provides us with a pleasant retreat and also earns the admiration and envy of our friends is a costly mission. Society has taught us that getting what we want today is not only a privilege, but an inherent right. After all, we work hard for our money, right? We should have all those little gadgets that make life easier, as well as plush inviting furnishings in every room.

Nice thought; but the problem with this picture is that it often leads to money problems that long term will prevent you from being financially secure. Our approach of having to have the newest, the biggest, and the best, coupled with the pressure to put it all on credit, makes that few moments of pleasure turn into years of financial purgatory.

Yet, there is a grain of truth in the basic proposition. Certainly, when we work hard, we should have the pleasure of coming home at the end of the day and enjoy what our efforts have allowed us to possess. The secret to balancing your desire for a lovely and comfortable home with the income stream you have lies in learning and applying a few simple guidelines to your spending habits.

Get Real with the Finances

First, you must assess your current financial situation. List the fixed monthly commitments, such as rent or mortgage. Next, list the variable expenses necessary to keep your home operational, such as utilities. If at all possible, review your variable expenses item by item and affix a budget amount equal to the highest monthly payment you made for each item in the last calendar year. Third, allow budgeted amounts for other essentials, such as food, clothing, and automobile maintenance and operation. Lastly, consider monthly items that are not necessary, such as meals out and other forms of entertainment.

Be brutally hones with yourself. Divide all your monthly expenses into two basic categories: basic living needs, and wants. If you have to rationalize an expense in order to make it a basic living need, then it does not belong in that category. List it as a want.

If you are like most people, this simple exercise will be a sobering experience. Very quickly, you will identify instances where your money is flowing out of your bank account like water through a coffee maker. Plug those leaks immediately, and you are on the road to creating a monthly source of funds that can be used to enhance your living space.