Living within your means is the first, and most critical step to getting your finances on track.
After all, the more financial margin you can create in your life, the more opportunity you’ll have to save, invest, and reach your long-term financial goals.
But what, exactly, does it mean to live within your means?
In short, it means spending less money than you make. For example, if you bring home $5,000 per month, but your total monthly expenses only add up to $4,000 per month, then you would be living within your means.
While that may sound like common sense, it’s actually harder than it looks. In our society, there is a lot of pressure to keep up with the Joneses and spend money we don’t have.
Fortunately, there are quite a few strategies you can employ to curb your spending habits and start living within your means.
In fact, here are 15 super-practical tips to help you get started:
1. Set A Budget And Stick To It
Creating a budget is one of the best ways to live within your means. When you have a set limit on how much money you can spend each month, it becomes easier to cut back on unnecessary expenses.
Beyond that, it can help you see every purchase within the context of your financial future.
In other words, when you’re living on a budget, every purchase you make plays into your overall plan. So, when you consider spending $100 on a pair of shoes you didn’t plan for in your budget, you’ll be able to see the impact it has on other areas of your financial life.
That extra layer of accountability can be massively helpful when you’re trying to curb your spending habits.
I mean, if buying that pair of shoes means you’ll have to cut $100 from your grocery budget, then you’ll be much more likely to think twice about it.
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2. Put All Of Your Purchases On A Debit Card
If you find that you tend to spend more when you use a credit card, try using a debit card instead.
When you use a debit card, you can only spend what you have in your checking account—which can help prevent impulsive spending and debt.
Additionally, if you only spend money on your debit card, you’ll only ever have to log in to one account in order to track your spending–which makes budgeting a much simpler process.
Seriously, one of the sneakiest problems people have with budgeting is that they’re constantly trying to manage and track their spending across multiple credit card accounts.
To put it simply, the more accounts you have to keep track of, the more difficult and chaotic it is to track your finances. And if you want to live within your means, simplicity is the name of the game.
3. Automate Your Bills
Another great way to live within your means is to automate your bills.
This means setting up automatic payments for things like your rent/mortgage, internet/cable, utilities, insurance payments, and even debt payments.
Not only will this take a little bit of pressure off of your mental finance plate, but this is also a great opportunity to add up all your automated payments in order to better understand your financial situation.
Just don’t forget to log your bills into your budget every month so that you keep track of how much you’re spending. Just because your payments are on auto-pilot, doesn’t mean you should stop paying attention to your spending habits.
4. Reduce Or Eliminate Fixed Expenses
If you want to increase your financial margin, and thus, live within your means, one of the best things you can do is reduce or eliminate some of your fixed expenses.
For example, if you have a $100/month gym membership that you never use, you could save $1,200 a year by canceling it.
Or, if you’re paying $50/month for a subscription service that you no longer use, that’s another $600/year that could be going towards savings or debt payoff.
Every little bit helps when you’re trying to live within your means. And every time you eliminate a fixed expense, you are instantly increasing your monthly margin.
5. Find Ways To Earn Extra Income
One of the best ways to live within your means is to find ways to earn extra income.
This can be something as simple as taking on a part-time job, starting a side hustle, or finding opportunities to make extra money online.
The more money you can bring in each month, the easier it will be to live within your budget.
Plus, if you can find ways to consistently bring in extra income, that means you’ll eventually be able to save more and pay down debt faster.
So, start brainstorming creative ways that you can bring in some extra cash. You never know, what starts as a simple side hustle might turn into a full-time income down the road.
6. Find Cheaper Alternatives To Your Variable Expenses
You might not realize it, but there are probably a lot of things you spend money on regularly that you could replace with cheaper alternatives.
For example, instead of dining out, you can cook at home. Or, instead of buying clothes at the mall, you could shop at thrift stores or online marketplaces.
You can even sell that car you financed, and opt for a less-expensive, used car that you can purchase outright.
The more expenses you can eliminate or replace with less expensive alternatives, the easier it will be to live within your means.
7. Increase Your Income
While reducing your expenses is a fantastic way to live within your means, it’s not the only solution.
You can also increase your income by finding ways to make more money.
For example, you could start a side hustle, ask for a raise at work, or sell some of your belongings online.
The more money you can bring in each month, the easier it will be to live within your current budget.
8. Give Yourself Some Wiggle Room
If you’re serious about living within your means, it’s important to give yourself some wiggle room in your budget.
This means creating a monthly buffer of $50-200 that you can use for miscellaneous expenses that might pop up throughout the month.
By giving yourself this buffer, you’ll be less likely to feel stressed about your finances—and you’ll be more likely to stick to your budget overall.
9. Set Inspiring Financial Goals
One of the best ways to live within your means is to set inspiring financial goals.
When you have inspiring goals in mind—like saving for a down payment on a house, investing 20% of your gross income, or paying off all of your consumer debt–it’s much easier to make better spending decisions.
And the more inspiring your goals are, the more likely you will be to live within your means.
10. Invest In Yourself
If you want to live within your means, it’s important to invest in yourself.
This means taking the time to learn about personal finance, investing, and money management. The more you know about money, the more likely you will be to make smart decisions with your own finances.
You can also invest in yourself by developing other skills that can lead to higher income potential. For example, you could learn a marketable trade or get certified in something that you’re passionate about.
Ultimately, the better your skillset, the more income potential you’ll have.
And the more income you have, the easier it will be to live within your means.
11. Put Your Savings On Auto-Pilot
One of the best things you can do for your finances is to put your savings on auto-pilot.
This means setting up a direct deposit from your paycheck into a separate savings account—and making sure that you don’t touch that money except in case of an emergency.
By putting your savings on auto-pilot, you’ll make it much easier to live within your means because you won’t be as tempted to spend that money on non-essential items.
12. Get Rid Of Consumer Debt
If you want to live within your means, one of the best things you can do is pay off all your consumer debt.
After all, the less money you owe each month, the more financial margin you’ll have.
There are a number of different ways to pay off your debt, and the best way to do it will vary from person to person.
But the bottom line is that you need to take action and pay off as much debt as possible.
13. Embrace Minimalism
One of the best ways to live within your means is to embrace minimalism.
Minimalism is all about living with less stuff—and that includes both physical possessions and financial obligations.
When you live a minimalist lifestyle, you’ll find that it’s much easier to save money and live within your means.
Beyond that, reducing the clutter in both your physical and financial life can help you reduce stress and find more joy in your current lifestyle.
14. Track Your Net Worth
If you want to live within your means, I highly recommend keeping track of your net worth.
Your net worth is just the total value of all your assets (property, savings, investments, etc.) minus any debts and liabilities you may have.
Tracking your net worth is a great way to stay motivated to live within your means because it allows you to keep tabs on your financial progress over time.
Whether you’re paying off debt or saving and investing more of your income, tracking your net worth can help you see your overall financial picture and make better financial decisions.
15. Make A Detailed Plan (And Execute It)
If you want to be successful at living within your means, it’s important to make a plan.
Start by setting some goals and working backward to figure out what steps you need to take in order to achieve them. Then, create a budget that outlines all of your income and expenses. After that, take some time to assess your spending habits and figure out what you need to do on a daily basis in order to achieve your goals.
I like to think about it like this: 5 years from now, you’re going to be somewhere. You can either wander aimlessly without ever making any meaningful progress, or set a goal, make a plan, and take small daily steps to go somewhere on purpose. The choice is yours.
You’d be amazed at how much you can accomplish over the course of 5 years.
Living within your means is essential if you want to improve your financial situation.
By following the tips above, you can make it easier to save money, pay off debt, and build wealth over time.
What are your best tips for living within your means? Share in the comments below