Living below your means can help you secure your financial future. Discover the secret to financial health that you’ve been missing!
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Secrets That Will Help You Live Below Your Means
To achieve financial freedom, there are many things you need to do:
- Improve your financial literacy
- Set ambitious yet realistic financial goals
- Have a solid financial plan
- Cut back on spending and monthly expenses
- Learn how to save money and put it in a savings account
- Make extra money (online, with a new job or through a side hustle)
- Pay off debt (especially consumer debt, like student loans, auto loans, mortgages, payday loans, and credit card debts)
- Stay out of debt
But to succeed in all of these, you first need to start living below your means, spending less than you earn .
Living below your means is one of the secrets to gaining financial freedom. Whether you are ready to get rid of debt or stop living paycheck to paycheck, living below your means is the answer.
Getting control of your finances is one of the best things that you can do for yourself. Once you make the decision to stop letting the stress of money control you, you will automatically start living a more blissful life.
What Does it Mean to Live Below Your Means?
Simply put, when you live below your means (also sometimes known as living within your means), you spend less money than you earn.
This doesn’t mean that you have to deprive yourself of the things that you love and that make you happy. But it does include being aware of your spending, tracking your expenses, and making decisions based on the facts.
Living below your means sounds so simple and seems to be a no-brainer. Why doesn’t everyone do it?
Because we live in a consumerist world.
Many of us feel that we need to spend money on the best clothes, the newest car, and the most expensive toys and gadgets. But that initial feeling of happiness from purchasing material things quickly fades, and the money that was spent is gone.
Wouldn’t it be great to have that money instead? You could use it to pay off debt, save for retirement, or tuck it away in an emergency fund.
Learning to live below your means isn’t easy; it can take a lot of discipline and dedication. But once you start, it becomes a good habit.
It should be a long-term lifestyle change instead of a temporary solution to a problem.
3 Ways to Live Below Your Means
There are many different but synergistic ways you can do to live below your means. We’ll look at three of the most important ones here. These are the secrets to living below your means:
- Track your spending
- Identify your wants and your needs
- Eliminate unnecessary expenses
Track Your Spending: Every Dollar Should Have a Purpose.
In order to start living below your means, you need to know how much money is coming in and how much money is going out. Tracking your earnings is easy – especially if you’re a salaried employee, but tracking your expenses will take a little bit more work.
The easiest way that I have found to do this is by creating a spreadsheet. Be sure to include:
- Electric/Water bills
- Car payments
- Insurance: Homeowners, Car, Health, etc.
- Additional purchases: Groceries, Gas, Dining out, etc.
Try keeping track of all of your expenses for a month. When my husband and I first started doing this, we found it to be an eye-opening experience. It’s amazing how much money you spend and don’t even realize it.
Once you know where your money goes, you can then analyze your spending habits. If you’re spending less than you make, congratulations! You’re living beneath your means.
If you find that your essential living expenses are higher than the money you’re bringing home, then you’re likely to go into debt. If you use credit cards instead of paying cash (because you don’t have enough cash), you may already be in debt.
Once you have a good picture of your current financial situation, you can make the necessary adjustments to take control of your money, such as:
- Increasing your income
- Creating a budget
- Setting up an emergency fund for unexpected expenses
- Saving more money
- Setting up a retirement fund
Identify Wants vs Needs: Choose Your Priorities.
Before making a purchase, ask yourself, “Is this something that I need?” Putting the time in to study your purchases and identify them as either a want or a need will greatly influence your actual spending.
Impulse buying is one of the worst things you can do financially and often results in you incurring a debt to pay, living paycheck-to-paycheck, and having no peace of mind.
I mostly shop online and often put items into my cart and leave it there. I revisit it when I’m ready to make my purchase and weed out the things that I don’t actually need. This little bit of time spent before purchasing gives me a little reality check. It forces me to think before wasting my money.
When living below your means, you need to make a conscious and informed decision when making purchases. And there’s nothing wrong with occasionally splurging for yourself or others. You just need to take that into account in relation to the rest of your spending.
Eliminate Unnecessary Expenses: Be ruthless.
Once you have a good understanding of your actual expenses, you can start to eliminate those that are unnecessary. Again this goes back to the concept of identifying wants versus needs.
For example, if you subscribe to Netflix but barely ever watch it, then that’s probably something that you should consider cancelling.
Another more extreme example is considering downsizing. You could, for example, choose to eliminate your car payment. If you have a very large burdensome car payment, you could consider selling your car. If you were to save up your money and purchase a car with cash, then you wouldn’t have to worry about a car payment (plus interest).
Removing these avoidable costs in your life will greatly help you to live below your means and put you in a better financial situation.
3 Benefits of Living Below Your Means
If you’re like many of us, the phrase “living below your means” may trigger some form of resistance – especially if it makes you think that you have to live a life of deprivation. But watching how much you spend so you’re not living above your means doesn’t mean you have to be a Scrooge.
There are so many benefits to living below your means. Check out the top three benefits below:
Save Money and Pay Off Debt Faster
Living below your means will help you stay within your budget, allowing you to have money set aside for important financial obligations – such as paying off your debt faster. It will also encourage you to monitor signs you’re living beyond your means so you can redirect and change your course before you start accumulating new debt.
Remember how we talked about tracking, studying, and eliminating expenses? These tasks alone will help you to cut costs and have more money to either save or pay down your current debts, which are both financial wins.
One of the best benefits of mastering these secrets to living below your means is experiencing less stress, specifically debt stress. Knowing that you don’t have to worry about making a house payment or buying your groceries because you have the money you need to pay for them is incredibly freeing. If you’re truly living below your means, then you know that these expenses fit within your budget.
Every dollar has a purpose, and every expense should be accounted for. If you’ve tracked your earnings and expenses correctly, then you won’t have to worry about making ends meet or making your monthly payment to the electricity provider. You’ve already planned ahead and know exactly where your money is and where it will go.
Reducing stress in our lives has both physical and mental benefits. It allows us to sleep better, have better relationships with others, and feel more at peace with ourselves.
Find Contentment in Your Life
Living below your means is a lifestyle change.
When you stop trying to keep up with the Joneses and stop being wasteful with your money, you experience a sense of relief. You, instead, start to look for happiness in things that matter to you. You find your values and realize that the feeling of contentment that you have is something that you want to hold onto.
Start Living Below Your Means Now!
Many of us have a lot of bad money habits that are hard to break. But changing the way that we think about and spend our money is so worth it. We must remember that happiness is not tied to material things.
From my own personal experience, making the choice to live below our means, eliminate debt, and have an emergency fund has allowed us to sleep peacefully at night. We don’t worry anymore about being able to afford car repairs, expensive house projects, or providing for our family’s basic needs. The stress of needing a paycheck at the end of the week just does not exist anymore.
This lifestyle change that reduces stress and creates contentment will also push you towards taking the steps to living your best life, which is something that everyone should strive for.
If you truly want to have less stress and be more financially secure, then take the first step now and start living below your means. I guarantee that it will make you feel more financially free and bring more peace and happiness to your life.
You have the capability to make positive changes in your life.
And there’s nothing more empowering than knowing that you can control your financial future.
Note: The information on this website is for general information only, and is not a substitute for medical, financial, or legal advice. You, or anyone you are concerned about, are encouraged to seek independent medical, legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. If you or the person you are concerned about appear at risk of self-harm or harm to others, please seek immediate professional assistance.