What Does Living Below Your Means ACTUALLY Mean? | 10+ Ways to Help You Live Below Your Means 

 

We hear it all the time.

To save money, it is best to ‘Live below your means’. Or Save money by ‘Living within your means’.

You may be asking yourself:

Okay…. What does that mean?, Why should I even bother living below my means, and how do I even go about doing it? 

 

In the following we will explore what ‘living below your means’ actually means, the benefits and how YOU TOO can live below your means.

 

What Does “Living Below Your Means”, Actually Mean? 

In short, it means to spend less money than you make.

Living below your means, is when you have money leftover, after all your bills and essential expenses are covered.

If you are spending more money than you bring home, you are living ABOVE your means, leaving no room for saving, investing, and are probably acquiring more debt than you want.

Now as amazing as Living below your means sounds, it is not always easy to achieve. Hang in there, we will review some ways to get you on track in a bit.

 

Why Should You Live Below Your Means?

 

Now that you know what it means to live below you means. You may be wondering, why it is important to have money leftover (living below your means).

 

What’s the point? Why should you even bother living below your means? 

When you choose to live below your means, you will have money to pay the bills, save for financial goals, or even put money aside for a rainy day. As you get better at living below your means, you will reduce your time spent worrying about money, avoid fights about money and navigate life without a ton of debt.

 

Let’s take a closer look at the many benefits of living below your means.

Benefits 

When you put a stop to overspending (spending more money than you have coming in), you can allocate your money to different areas of your budget. You can put money towards your financial goals, pay your bills, and save up for something fun. 

The following are my favourite benefits of living below my means.

 

Tackle Debt

 

Instead of accumulating more debt, tackle it by putting any leftover money towards paying it down.

Stayed under budget at the grocery store (Kinda hard now-a-days)? Dinner plans got cancelled? Got a bonus?

Try to refrain from splurging and throw that money towards paying down a loan or a credit card.

 

Grow Your Emergency Fund

 

Help yourself out in the long run, by building up an Emergency Fund with some of the money you saved.

By having an extra account for emergencies, it helps you from putting those emergency costs on your credit cards, or taking money from your long term savings, such as a retirement account.

 

Reduce Stress

Stressing over money is NOT fun. It can creep into your everyday life, cause anxiety over missed payments, trouble falling asleep and constant worrying about your future.

With the wiggle room of living below your means, it can help you get on top of some of your money stressors.

I am not saying money stress will disapprear once you start living below your means (that would be magical!), but it will definetly help.

Lessen Fights Over Money

Ever felt the need to hide a purchase?

Have you ever had to explain why there was no money left to pay the rent?

When you share financial responsibilities with another person it can cause tension, especially if you are short on funds.

By cutting some costs, dividing up financial responsibilities, or even by making more money, you will not only be living within you means, but hopefully happier too.

 

Greater Appreciation

 

By consciously choosing to put off a purchase or a trip, until you can afford it, just makes it that much more special when you do buy it. This is a form of delayed gratification. Which is the opposite of what many of us consumers seek today. We are so used to impulse buys that grant us that instant gratification in the moment, that can later turn into regret.   

Regret can take many forms. Perhaps you realized you have a similar item at home, or if you would of waited or shopped around you could have found it a a better price. You could of used that money for something more practical or put it towards a savings goal.  

 

 

 

 

How Do I Live Below My Means

Now that you know what “Living below your means”, actually means, as well as the many benefits.

How do you go about getting there? What can help you to live below your means? 

With the use of the following frugal habits, you will spend less and save more towards your financial goals. 

 

Get Into The Right Mindset

 

The first thing you need to do to start spending less and living below your means, is to get into the right mindset. 

Focus on what financial goals you have and why you want to put money towards them. 

Some common goals are:

• Tackle debt
• Wedding
• Housing
• Children’s education 
• Travel
• Investing
• Retirement
• Financial Freedom

 

Remind yourself of these goals regularly, to keep them fresh in your mind keep them displayed in plain sight. This could be as simple as a note in your wallet, or at the top of your budget, or a fancy vision board, whatever works best for you.

 

Track Your Spending

Once you are in the right mindset, and goal oriented, the next step is to find out how much money you are making, how much you are spending and the difference between those two figures.

Keep track of your money.

All of it.

 

It all adds up. From rent to that chocolate bar you just had to have.

Write down every penny you spend. 

Then subtract the total amount spent from your income amount.

 

Make sure to check credit card and bank statements, to make sure you don’t forget anything.

 

Organize by categories, such as home, bills, groceries, eating out and so on. By sorting your spending into categories, you can see where most of your money goes. You may be shocked once you see it all added up, or your frequent purchases.

 

Besides bills my highest cost is always food, and I don’t think that will ever change. (I like food, what can I say). 

Feel free to track your spending in a spreadsheet, in an app or even on a piece of paper.  

 

Budget

Now that you know how much money you spend every month, you’ll be able to create a budget to help get you on track to living below your means.

By creating a budget, you can make sure your bills are paid on time, and set some money aside for those goals you just chose.

Whether you use pen and paper, an app or a spreadsheet, find what works best for you.

Remember to review your budget and that they can always be adjusted if need be. There is no point setting a budget if you are not going to look back at the end of the month and see if you came in under budget or over budget.

If you came in over budget, see in what area, and how you can further reduce that cost,  or if you will have to reduce in othr areas to compensate next month. 

An example of this would be going over budget in the grocery category, as food prices continue to increase.  You can perhaps cut down on entertainment costs the next month, by spending your date nights at home. 

Cut Back

Once you’ve tracked your spending and set up a realistic budget, you will be able to notice areas where you can trim back your spending.

No one likes making cuts, but they are necessary if you are currently living above your means… That is spending more money than you make. 

 

Common categories to cut back on: 

• Brand names
• Cable
• Clothing
• Eating out or ordering take-out (Cook at home it is cheaper)
• Energy efficient appliances, turning off the lights or unplugging items not in use
• Entertainment costs 
• Groceries (Can you cut back by $10, $20, $50?)
• Housing costs (is it time to move or get a tenant?)
• Subscriptions you can do without

 

Get Frugal 

 

You can continue making cut backs, by adopting some frugal habits. By implementing a few at a time you can reduce your spending and increase your savings before you know it.

 

Some of my favourite frugal habits include: 

• Buying used when you can (clothing, furniture, electronics)
• Buy in bulk
• Cook at home 
• Reduce your utilities
• Shop sale items  (especially groceries)
• Reduce food waste

 

Intentional Spending

 

Intentional spending is spending your money with a purpose.

Thinking through a purchase before you go ahead and pull out your credit card. By taking the time to be intentional you can limit purchases helping  you start living below your means.

 

Ways to be More Intentional:

• Ask yourself do I really need this?
• Is this of quality? Good value?
• Do I have something similar at home? Repurpose what I have?
• Could I borrow or rent it from someone?
• Can I find it at a better price (Facebook market place, amazon)
• Say no 
• Shop with cash (makes it easier to say no).
• Is this purchase based on my emotions? (retail therapy)
• Wait 24 hours or a few days
• Limit temptations (Avoid your favourite stores, or resturants)

Increase  Income

I threw this one in here, because sometimes no matter how many frugal habits you implement or cuts you make to your spending it just doesn’t always add up to the amount you need.

If your expenses are still more than your income, and there is no where else to negotiate or go without, it’s time to find a way to earn some extra cash. 

You can increase your income in a few ways:

• Asking for a promotion
• Taking on a part-time job/ seasonal job
• Working over-time
• Selling unwanted items you have laying around the house
• Starting a side hustle

 

 

Get on the Same Page

Whether you’re a couple, small family or roommates, it is easier to live below your means when everyone is working together.

Sit down and work out the numbers together, discuss large purchases, and options to reduce your spending. 

If you are living alone, try having an accountability partner. They don’t have to know your numbers to check in on you and your financial gaols. You are more likely to stick to your budget, as to not disappoint your accountability partner. 

 

Pay Down Debt

Being in debt sucks. It is no fun owing money or paying interest.

To pay down debt, first try not to accumulate anymore, avoid it whenever possible.

To Avoid Debt:

• If you can’t buy it in cash, don’t buy it
• Have an emergency fund to avoid putting unexpected costs on a credit card
• Pay off  bills in full when you can
• Avoid  using credit cards (Leave them at home if you have to)
• Set up automatic bill payments

Any extra money you have out it towards your high interest debts. Such as credit cards, payday loans or student loans. Don’t give those big corporations all your hard earned money.

 

 

Automation Can Help

 

As mentioned above, automating your finances can help you stay on top of debt and help you live below your means.

Now a days we are lucky to have the convenience of automation, meaning you will never miss a payment again. 

 

What to Automate: 

 

• Monthly pre-authorized bill payments
• Transfer money to savings accounts
• Contributions to your retirement account
• Build up your emergency account 
• Start investing with regular contributions

 

 

Get That Emergency Fund In Order 

Unexpected expenses can pop up at any time. It is better to be prepared.

An emergency fund is an easily accessible account where you can quickly transfer or withdraw money in times of need. That way you avoid using a credit card (we are trying to avoid debt afterall).

It is recommended that you have at least a balance of $1000.

Now a-days $1000, might not get you too far, so it is best to work your way up to a balance of 3-6months with of your expenses. 

In Summary

Living below your means, is easier said than done. It is so much easier, to just charge everything on a credit card and worry about it later.

By adapting your daily habits, by making cuts to your spending, or bringing home more money, you too can start living below your means.

 

You got this!

 

 

 

How are you trying, to live below your means? 

What helps you save money? 

 

Let me know in the comments below! 

I’d love to hear from you.

– Connie 💕