Spending more than you’re making can lead to stress and financial insecurities. If you’ve ever bought something you couldn’t afford and then felt immediate guilt after, you might want to practice living below your means. Living below your means aids in growing your savings, prioritizes your emergency fund, and possibly helps in retiring early when you save more than you spend. Here's how to spend less and save more.
Pay Yourself Off
After you finish paying off a bill you might be inclined to go shopping with your new-found money. Halt yourself from this thinking process and begin to pay yourself in an interest-yielding savings account. You won’t feel like you’re paying a bill since you’re already used to allocating funds to a certain account.
This is an easy way to save your money and accumulate some interest for an emergency fund or a long-term goal. Saving money is easier when you don’t feel like you’re constricting yourself, to begin with. Take a different approach and consider yourself a priority equivalent to that fancy car bill or your important school loans.
Download an App
In today's world, you can coordinate your life metrically because there’s an app for everything. From tracking your water intake to tracking the number of steps you take per day, your financial health can be monitored just as closely. Download an app for tracking your spending.
Being conscious about your finances is easier when you have a budgeting app in your pocket. Most budgeting apps not only track your spending but also give you credit score updates and tips on how to save in the future. A tool like this could make you more aware of the impact of small purchases.
Increase Your Income
Typically earning more than what you spend each month is the basic standard for living below your means. One easy way to live below your means is to increase your income. Pick up a side job by mastering your freelancing skills or even start your own business, increasing your income can come in many forms you wouldn’t expect.
If you don’t have the time to pick up a side job attempt to negotiate your salary at work. Simply asking for a raise can be intimidating but maybe try negotiating with an offer letter from elsewhere. Seek better opportunities that may be around the corner when you need money. You may be interested in learning how one of our staff members earns $200 a day from side hustles.
Form a Plan
Being out and about means you’re spending money on either food, transportation, or everyday necessities. Spending time away from home is inevitable so try and plan before you walk out into a bad financial situation. Structure yourself on what you’re going to spend your money on and when you will allow yourself.
Unlike a strict budget, an everyday plan may keep you on track without the stressors of a tight budget. Simply having goals before going out can help maintain your track of living below your means. It’s easy to head outdoors and forget your bills or budgets, forming a simple plan on your financial objectives for the day could become a major saving habit.
Refrain from Credit Card Use
At times it might seem easier to put something on your credit card by justifying that you’re building your credit. Keeping your credit card out of arms reach is the best solution to not overusing it. Getting carried away and overspending is a common symptom of having a credit card. It’s hard to use under the recommended amount of 30% and it’s easy to completely forget how much you’ve put on each card. The less accustomed you are to using a credit card the better your savings will be.
Additionally, if you go over your spending limit this can show your bank that you are in financial distress. Practice the ability to pay for your purchases upfront and full. Committing to this might take some time if you’re used to always putting your purchases on your credit cards however, leaning off credit cards is a powerful step in living below your means.
Living comfortably in a two-bedroom apartment may not be the best option for a single individual. Reevaluate your living situation, you may be able to cut costs on your biggest bills by downsizing. Consider your rent to income ratio to make a more informed decision about your living habits. When your lease is up, consider looking for cheaper listings around your area. Hold back from buying the most expensive house you can get a mortgage loan for. If you live in an apartment look for a more modest space to drastically cut your living expenses. If you're a millennial, consider where you should rent or buy.
Some ways to save on living expenses includes renting a house with friends, living modestly in a one-bedroom apartment, or splitting a condo with coworkers. You could potentially live more modestly in an area with a lower cost of living. There are obvious topics you must consider before relocating such as taxes, employment, and moving expenses. If downsizing seems like the right thing to do for your situation this might be an alternative for living under your means.
Rethink your Transportation
Driving a new car can burn through your wallet faster than you might have thought. A new car isn’t a necessity and if you’re looking for ways to save, try other means of transportation before splurging. Buying a used car serves the same purpose at a cheaper price. If you’re able to pay in full for a car then avoid the financing hardships and take the easy way out. For most people, having a vehicle is the second biggest expense after paying for housing. Today more than ever, owning a car is extremely expensive, therefore if you can cut this cost out living under your means would become easier.
Eliminate Small Expenses
It doesn’t seem like it at first but all those coffee runs, monthly subscriptions, and spontaneous shopping trips add up. Pay attention to the little things and steer clear of unnecessary spending. Becoming conscious about where your dollars go every day isn’t easy when you’re not usually regulating your spending habits. Take a new approach and buy a coffee machine to save money in the long run or stick to only one subscription a month instead of splurging on a few. Find ways to lower your cell phone bill or other monthly expenses.
Challenge yourself by becoming creative and finding ways to make up for the little habits you usually splurge on. Reducing your meaningless spending will deduct your debt and it will progress living below your means. Living below your means this way could retain a hefty chunk of change in your pocket by the end of the year to spend on a long-term goal.
Completely Avoid Debt
Financing anything is not the easy way out. It might seem as if you’re saving money since you’re paying something off slowly but that is rarely the case. Don’t finance anything if you don’t have the money, to begin with. If you don’t have the funds for major purchases, avoid this kind of debt and restrain yourself from making big buys.
Refrain from creating debt for yourself that could only grow to become much worse. Some plans to finance might have high-interest rates that could add up. Leave these decisions behind and don’t fall for the temptation of paying something off over time. Another bill only hinders your plan for living a more bill-free life.
Conclusion on Living Below Your Means
Committing to more efficient financial habits makes for a more secure lifestyle. Your long-term goals become reality and your emergency funds give you peace of mind. Living below your means helps form a stronger retirement fund and keeps you out of debt. It might require plenty of discipline and at first, it might not be the easiest thing to do. However, you could gain financial stability and an overall better grasp on your spending habits.