am going to begin this lesson by give everyone a quick recap of lesson so bear with me or skip the first paragraph if you have already read it. Lesson 1 was mainly about why someone should have a personal financial budget. Lesson 1 showed that without a personal finance budget there is no real way for people to track income and expenses. And of course with tracking this people cannot be sure that they are being financially responsible. Starting up and sticking to a budget is probably the biggest key to success in realizing personal financial freedom.

The idea with a budget is to determine your income level and spend accordingly. Once you make a personal budget you can then begin to live within your means. Living within your means is the topic for today's lesson and now that you have the basis for living within yours means (a personal finance budget) its time to move on to the concept of living within your means. Living within your means means that you can pay for the stuff that you need without having to take on debt to do it.

I already told you all in a previously that Americans on average now have a negative savings rate. This means that the average American spends more money than they make. NOw most people would agree that is astounding and certainly is not the way to achieve financial freedom. But at the same time most Americans live this way.

When a person spends more than they make the extra money has to come from another source and more often than not, for Americans, it comes in the way of credit card debt. The problem with this is that most Americans have confused the words want and need. Americans think that getting the next designer clothing or brand new luxury/sports car is a NEED.

When people start a personal financial budget they are able to consider all spending habits and actually realize how much money they are spending and this enables them to better live within their means.

The basic idea of living within your means is to spend less than what your income is. When you set up a budget and stick to it you can track your expenses better and it will allow you to live within your means.

When people are not living within their means they are really hurting themselves. Instead of putting money towards their dreams their money fills the pockets of credit card companies. It would be a lot better for these people if they lived more prudently and the money they paid in interest went into a savings account or an investment account. Paying for items by going into debt limits your choices because you are stuck paying for yesterday instead of moving toward tomorrow.

As I have said before, the best way for one to live within their means is to establish a budget and stick with it.