The phrase living below your means can sound quite scary. In fact, it can make you feel downright miserable.
That’s the wrong perception of living below your means.
Living below your means simply means that you spend less than what you earn each month.
Nothing wrong with that is there?
If the truth be told most people that are financially free have learned to live well below their means.
The mistake that many of us make today is that once we get a windfall or a raise at work we equate that to mean we can now live a better life. A more expensive life.
That 32-inch tv screen becomes no longer good enough, now you NEED to upgrade to a 42 inch.
As laughable as that might seem right now we have all been guilty of it at some point.
We get a little extra money so now we must find a way to spend it.
Doing this is a surefire way to make sure that you are never going to have any financial security in the future.
If you are serious about securing your finances for yourself and your family then living below your means is the way to go.
This doesn’t mean that you have to live miserably or that you can no longer have any fun. Far from it, it just means that you are going to live more consciously with your money.
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What are the benefits of living below your means?
We all know that money can be the cause of a lot of stress and tension in homes across the globe.
This usually happens because either a person has not been able to pay their bills because of bad money management or because they are overspending in ways that they don’t want to admit to themselves.
Leaving your finances in disarray is extremely stressful. Whereas if you organize your finances by budgeting properly you will make it easy to live below your means and therefore reduce stress in the home.
You will no longer have to be constantly worried about getting to the end of the month and living paycheck to paycheck.
You shouldn’t have to live a monthly lifestyle, you should be able to live it fully and freely.
It’s amazing how having a little bit of extra money in the bank can give you a whole new outlook on life.
If you live below your means it also means that you give your family a fighting chance for the future as you will be able to clear off debts and start saving for things that really mean something to your family.
We now live in a society where debt is the norm and no one bats an eyelid over it. We are no longer shocked by a persons $20,000 debt. Our senses have become dull to this.
There is most definitely something wrong with having such a large debt.
Let’s look at some of the things we can do to live below our means:
1. Stop adding more debt to your credit cards
Stop whatever you are doing right now and either cut up your credit cards or put them somewhere far away out of your mind so you don’t spend any more on them.
Having a credit card might seem like a handy thing to have but if you don’t know how to use it properly it can quickly help you spiral into more debt than you need to.
Besides if you are using a credit card it means that you don’t have enough money to pay for the thing you are purchasing which means that perhaps you shouldn’t be purchasing it in the first place.
I had a credit card a few years ago and I used to use it for everything!
I mean everything, buying bread, dinner, anything. I used it just like a regular debit card. Only the money wasn’t mine and I didn’t fully understand that.
When I had to pay back that $4000 it was not fun. I really didn’t need to make all those tiny little purchases on the card and in fact, it actually cost me more in the long run because I ended up paying interest on each thing that I purchased on the credit card.
If you have a credit card you need to understand the reason behind why you have it and be able to use it very smartly.
If you’re not sure about it, put it away and pay it off as soon as you can.
2. Don’t look at other peoples lifestyles and compare
I used to do this often but soon realized that it is pointless. You can never keep up with the lifestyle of others. You will only lose playing this game.
The grass always seems greener on the other side as they say. Never has there ever been a truer statement.
You don’t know your next-door neighbour’s financial situation. They may appear to be doing lots of fun things as a family but you don’t know the state of their bank balance.
They could be 1 day away from having a debt collection agency arrive at their door or they could be secret millionaires, you just don’t know.
You need to be focused on your own journey.
I’m sure you would much rather make some small sacrifices now and be able to help your children head off to college or university debt-free rather than finding yourself in a pile of debt.
No one wants that.
If you choose to live below your means now it will most definitely pay off later in the future.
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3. Make purchases with only the money you already have
As mentioned before if you have to borrow the money then you shouldn’t be buying it.
Try to get into a habit of only making purchases with money that is actually yours. Overspending is a bad habit that we all have to fight.
I know its hard at first but it does get easier. Managing money is all about creating habits.
The sooner you get into the habit of only spending money that is in your bank account and money that you have budgeted for the easier things will get for you.
4. Separate your needs from your wants
This is a biggie simply because it relies on you to know and understand the difference between needing something and wanting something.
You might need a new pair of shoes because the only pair that you have have a hole and it is simply not wearable anymore.
You might want a bigger car so the whole family can sit more comfortably when you go on trips.
They are 2 very different things.
One you can do without for a period of time and will cause you no lasting harm whereas the other can potentially cause you to have an injury.
My general rule of thumb when it comes to differentiating between a need and a want is simply to see if it will have a negative impact on my lifestyle.
I might need to eat food before I go to bed but it doesn’t have to be Burger King. The food is the need and the want is Burger King. Although I need to eat I can choose to make a cost-effective choice here by eating what is already at home.
5. Stick to your budget
There’s no point in having a budget if you are not going to stick to it. It will be impossible to live below your means if you don’t know what you have coming in and going out each month.
If you don’t already have a budget in place then I highly recommend you get one sorted asap.
6. Use coupons/cashback rewards where you can
Coupons are not a bad thing. They may have some negativity surrounding them but as far as I’m concerned that is only there because people have too much unnecessary pride.
A coupon is essentially a discount. Who doesn’t love a discount?!!
Rakuten is a really great place to get cashback rewards.
Rakuten will give you cashback when you shop in particular stores. It’s really simple to use.
Start on the Rakuten website, choose the store you want to shop in, shop as you usually would and wait for the cashback to roll in!
Signing up to Rakuten is free and can save you money so there really is no reason not to join. Take a look here.
Paribus is another great place to get money back. Paribus will actually give you money back on purchases that you have already made once the price drops.
Again it’s another easy way to get money back on items that you need. You can check out Paribus here and sign up for free.
7. Get into the habit of saving
Believe it or not, the best way to save money is to make it a habit.
I find that if you make your savings automated you have a much higher chance of keeping it going.
What do I mean by automated? Put away money each month by direct debit from one account to another.
When you first begin to save money it feels really difficult to do because it feels as though you are losing out somehow. I can assure you that you are not losing out and will only be gaining in the long run.
If you can keep up the momentum of saving for 21 days you can make it into a habit.
Acorns is a really great way to save money a little bit at a time.
Each time you buy an item Acorns will round up the cost and save and invest that money for you. For example, if you buy a coffee for $2.60, it will round it up to $3 and invest the $0.40 for you.
It’s a really great way to save money for the future.
Sounds awesome right?
Go ahead and take a look at it here.
8. Consider living on one income
Living on one income does not mean that one of you has to leave your job.
The idea behind living on one income is that you save one person’s income whilst only spending the other.
Doing this might seem hard at first but there really is so much benefit in doing it.
Choosing to live on one income is a great way to live below your means.
9. Increase your income
Sometimes getting a second temporary job is going to be necessary.
If you have exhausted all other avenues of trying to save up and you still find yourself going into debt each month then you may need some temporary intervention.
Finding other ways to boost your income can help you reduce some of your costs.
Here are 3 things you can do for a little extra income:
The great thing about these ways of making extra money is that you can do them at your own convenience, at a pace that works for you. You will not be trapped in a second job.
Final thoughts on living below your means
Choosing to live on one income is one of the best things you can do to secure your financial future.
Once you can master the discipline in doing this you will start to see your financial situation turn around in a drastic way. Not only will this be good for your whole family you will also be setting a great example to your children as well.
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