I hit on the main ways of diagnosing your financial health in this past post.  I’m going to use Wednesdays to go further in depth on each point since I truly believe that financial health leads to less stress and happier lives.

The first point was to spend less than you earn.  This means that the money you have going out needs to be less (hopefully a lot less) than the money you have coming in.  Constant, overwhelming debt is not healthy for you or your future.

List Your Income and Expenses
In order to spend less than you earn, you need to know how much you earn and how much you spend.  I’d suggest writing down your known monthly income and expenses first.  Then spend a whole month adding anything you missed to that list.  Not only will this be a definitive picture of your spending and salary, but it will give you a great start on beginning a budget as well.

Ways to Widen the Gap
If you are not where you want to be once you’ve seen this list, you do have options:

1)  Decrease your spending.
2)  Get a better paying job.
3)  Find other income sources.

Decrease Spending
To decrease your spending, I’d suggest first cancelling or discontinuing any expenses that you really don’t want or need.  Don’t go crazy or be regretful…simply cut the fat.  I was surprised at some expenses I forgot about when we started tracking our spending.  It was easy to cut out an $8 monthly online game membership fee and a $25 a month gym membership since we had stopped using both of those.

If that doesn’t solve your problems, then look to cut expenses that you might want, but don’t really need.  Luxury expenses can wait until your income increases.  I’d consider internet and a cell phone as almost-necessities, but cable isn’t.  I’m sorry since I love cable, but if you aren’t making more than you spend, it has got to go.

Income Ideas
If you still aren’t there yet after getting back to the basics, then you need to look at increasing your income.

Obviously, only you know you well enough to get a better-paying job.  Other income sources are also a personal matter.  I worked for a book store for $7 an hour for 3 months in order to make a little part-time cash.  I’ve also babysat and taken care of pets.  I’ve most recently started a blog, although I wouldn’t consider this a great way to make fast money (I’ve made about $10 in 2 months).  My husband is a contract sports official for middle school and high school football and basketball.  He can also tutor.  What sounds good to you?

In short, you need to spend less than you earn to stay fiscally sane.  I prefer to spend much less than we earn since we have an early retirement goal.  Look at your situation and access your options to make this happen.  Good luck.

Are you spending less than you earn?  If so, are you happy with your position?  If not, did this article help?  Does anybody else have any suggestions on this point?