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Before you dive into this post, I highly recommend checking out 11 Signs You Are Living Beyond Your Means (& How To Change That!) to first identify if you are currently living beyond your means. This post tackles how to live below your means.
In 2018, it was estimated that the average American has $38,000 in personal debt, excluding home mortgages. Debt can be easy to get into if you are struggling financially, and provides a valuable lifeline through difficult times – but it’s hard to get out of once you’re in deep.
You only have to look at all the sacrifices made by the numerous personal finance bloggers who made an effort to eradicate their debt in a short amount of time to realise the monumental task tackling your debt is. However, on the flip side, all those stories show you that it is possible.
Whether you’re currently in debt, or trying your best to stay out of it, living within your means is a practical approach to your lifestyle. Don’t spend what money you don’t have.
Below, I’ve covered some top ways to help you live below your means – without sacrificing your happiness or feeling overly deprived.
1. Focus on memories & EXPERIENCES rather than things
One of the simplest, most effective ways to move away from a focus on buying and acquiring things, and instead to think about the memories and experiences you want to have.
When you look back on some of your happiest times in life, what stands out: the items you splurged hundreds on? Or a trip away with friends, and party surrounded by loved ones, or even something incredible you achieved on your own?
2. Be intentional
Be intentional about what you want. What you want from your career, from your income, your budget, and your life as a whole.
Bringing this practise of mindfulness and intentional living into our daily habits can be essential for helping you to recognize where you may be living above your means (perhaps without even realizing it!).
3. Know your goals
What are your goals for the next couple of months? Six months? A year? Five years? Goal setting is one of the fastest ways to take real control over your life, giving you a clear vision of where you want to be and when.
4. LEARN HOW TO BE SAVVY ABOUT STRETCHING YOUR BUDGET
Learning how to be frugal with your cash (spending smarter, not necessarily always less) is key for living below your means.
From meal prep that saves a huge chunk of your weekly budget, to making small but effective changes to your lifestyle that save money (such as reusable items, walking/cycling where possible, looking for deals and discounts), can be a great way to build habits that help you live below your means without too much effort required.
5. Spend less
Sounds kind of obvious, right? The pure and simple fact is that to save money, you need to spend less. To live within your means, you need to get used to living the good life on a smaller budget.
Step 1: figure out how much you’re actually spending. Use an app like Trim to help you identify hidden subscriptions you’ve totally forgotten that you’re paying for, and nip them in the bud immediately. Identify your biggest money drains. Get a clear picture of your spending.
Step 2: identify the areas you could make some quick and easy savings instantly. These are probably the areas that you find yourself spending almost mindlessly or without any real thought.
Step 3: go back to your goals. Your goals are what guide you. Constantly assess and analyse what you are doing to reach your goals and strive for what you want in life. If spending less if a big part of your goals, you need to set some actionable plans to make that happen.
6. Identify your biggest money drains and how to change them
If you’ve tracked your spending if suggested above, you should be able to identify the areas in your life that are the biggest ‘drains’ on your income.
While some money drains may not be instant fixes (expensive rent, loan repayments etc), other things should be easy to address either immediately or within a couple of weeks. This could be things like:
- Subscriptions you don’t really use
- Over-paying for things like utility providers, internet etc (Trim can automatically identify the bills you are overpaying for free)
- Entertainment/leisure expenses like eating out, nights out etc
- Vices that you could consider cutting down on e.g. smoking, drinking, gambling…
Read “The Top Things Draining Your Wallet Right Now” for some more ideas on possible money drains.
7. Don’t Spend Money You Don’t Have
You know when you look at people the same age as you and wonder how the hell they can afford that brand new car, multiple holidays a year, and a seemingly brand-new wardrobe every time they step outside? Well, chances are – they actually can’t afford it.
Don’t fall into the trap of relying on credit (aka money that is not yours) to keep up with the lifestyle you think you ‘should’ have. Rather, use what you have to stay living within your means.
If there comes a time where going into debt is the only solution for an expense, think carefully about how worth it that purchase is. If you’re looking at a car or a holiday, for example, would there be much harm in putting it off for another few months so you can focus on building up your savings rather than whipping out your credit card?
8. Consider finding another means of income
If living below your means just isn’t happening…flip your perspective and think about raising the bar. Up your means.
Even if you have a 9 to 5 job, consistency and intensity are all it takes to build up a steady side hustle. For some ideas of what you could do:
– 60 Super Easy Ways to Make Money From Home Today
Just because an online mortgage calculator tells you that you could borrow a certain amount, doesn’t mean that’s your only option.
If you’re not under huge time pressure, could you consider looking at a cheaper, fixer-upper? Would you consider downsizing your existing home? Or, would you even consider an alternative living option to really cut down on costs?