It takes a lot of dedication to get out of debt, and one of the key factors is spending less than you earn. If the family spends more than they earn, no money is going into savings, less is paying off debt, nothing can be invested in any way, and the debt continues to add up over the long run. One of the first things to do after establishing a budget is to become committed to spending less than you earn.

Step 1: Get serious about that budget. Once you’ve established a working budget for your family, commit yourself to it for a minimum of 60 days. Sometimes some tweaking is needed to establish a long-term budget, but give yourself at least two months to know what needs to be adjusted and how to do it. That way, you know how much money you are working with, how to prioritize where necessary, and where to make modifications. After that is figured out, stick with it unless a genuine emergency calls for a different plan of action (normally temporarily).

Step 2: Don’t make changes unless necessary. It’s tempting to modify the budget when you want some extra spending money or a great investment opportunity comes up, but don’t give in to it. Unless an emergency calls for a short-term or long-term change, stick with the budget that is already in place. If you make changes, you have to go back to step one to rededicate yourself to the budget so you can spend less than you earn.

Step 3: Avoid major purchases if possible. Sometimes we can’t avoid having to make a major purchase, such as when the air conditioning or heating units give out or a vehicle is wrecked. However, most of the time we spend money based on what we see that we want or think that we need, so get in the mindset that to avoid spending more than you earn, major purchases are taboo. Wait until there is room in the budget or your dispensable income for renovating the home, replacing furniture or appliances, or buying an updated vehicle. Obviously, emergencies happen, but this situation implies a want instead of a necessity.

Step 4: Know what you make and what you can spend. If you don’t really know how much you can spend, then you will definitely spend more than you earn. You should already have a good idea of this after you’ve established your budget, but make sure to adjust your numbers after an increase or decrease in hourly wages or salary. It’s always nice to discover more wiggle room than you initially thought possible, but be careful to avoid going overboard with any addition to the dispensable income—be smart with every cent.

Step 5: Teach your whole family to cut back. Mum and Dad do the majority of the cutting back when it comes to living cheaper, but this is a great time to teach kids about saving money (which we’ve discussed), living on less, and cutting corners. What does the family need and what can be done without to make sure that you are spending less than you earn? This dedication can mean eliminating pay TV for a while, reducing the mobile phone bill (or data plan), waiting for a vehicle update, or minimizing home renovations outside of emergencies. Get the kids involved; you might be shocked at what they are willing to cut back on in order to save up for big-ticket purchases later.

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