Living beneath your means is more than just saving money, it’s about learning how to take control of your finances and establish a base for financial freedom. Learning how to live beneath your means might be challenging at first, but it’s a quality that pays off tremendously.
When you learn this quality, you are able to handle unexpected issues better and not stress over them. Your car broke down? No worries, you’re prepared for this because you have your emergency fund. You’ve built it by living beneath your means.
Personal finance is exactly what its name implies: PERSONAL. So I know that one size never fits all when it comes to finance. Thus, I’ve constructed a list that is easy to implement for the general public, and I’ve avoided making things on this list too specific. Here are the best tips for how to live beneath your means without starving yourself from simple pleasures.
WRITE a budget
I bet you saw this one coming. I know it seems obvious to many, but there are many reasons why building a budget is the best thing you can do to start on the right foot with your finances. When you make a budget, you put together a blueprint to follow. Even if you make irregular income, there are still ways to budget for it.
Aside from just budget-planning, when you write (or type) things down you’re 42% more likely to follow through on your plans, goals, or budget. This is because as humans, we process visuals 60,000 times faster than when we imagine things, based on a recent study by the 3M Company.
Writing down your budget means that you can visually see it. This is important because when we see something, it affects how we act. You’re more likely to follow through if you can see what you have to do instead of just memorizing it or thinking about it.
Writing a budget facilitates the process of keeping track of your money and knowing where it goes. Once you start tracking it, I guarantee that you’ll be shocked to see where your money went before you started your budget. This is why it’s important to write a budget.
If you don’t know where to start, I made a FREE Budget Template and provided instructions on how to use it correctly. It’s flexible so that you can take away or add the unorthodox sections that may not be available on a hardwired app.
Pay yourself first
Paying yourself first has a strong meaning that many don’t understand, and it’s a very literal meaning too. Whether it’s an upcoming vacation, a new house, retirement, or a car, paying yourself first is the fastest way to achieve any and all of those goals.
Paying yourself first means that every time that you get that paycheck, the first thing that money does is go straight into your savings or investments. If you don’t want to think about doing this every time that you get paid, then you can set up recurring automatic deposits into these accounts.
In order to do this, it’s advisable that you set up your budget first so that you don’t excessively or insufficiently pay yourself. Without your budget, it will be hard to estimate how much you can afford to pay yourself without giving up basic necessities.
A strategy I used when I first started paying myself first. For the first two months, every payday, I paid myself manually so that I could make sure that I could afford to pay myself under my current budget. I set up reminders on my phone just in case I forgot that it was payday.
Once I established how much I could afford to pay myself without giving up basic necessities, I set everything up to be automatic. Now I make sure not to add unnecessary expenses even as my income increases. This way, I am able to pay myself more automatically, and I don’t become a victim of lifestyle inflation as my income goes up.
Go out less
I know it might sound tough, but notice that I said “go out LESS,” not “stop going out.” I know that once in a while it’s fun to go out and do stuff with your friends or even by yourself. But doing this every single weekend or even more than that is simply a little bit too much.
There comes a point where doing this so often begins to burn your wallet out, so much that you won’t be able to pay yourself. Also, when you go out, following a budget isn’t typically roaming around in your head. So doing it too consistently will end up hurting you and putting you outside where you need to be with your budget.
I know sometimes plans are spontaneous and your friends might call you up to go out this weekend, but if you’re already tight on the budget this month, learn to say no. Know that you’re doing this for your own good and that if you ended up going out despite the tightness of the budget, the amount of time it takes for your wallet to recover would outweigh the amount of time you spent out on a single night.
Don’t buy things just because they’re “on-sale”
Don’t fool yourself into thinking you are saving money when you buy things on sale. If you didn’t plan for it, chances are you didn’t need it. Unless it was from an emergency, in which case your emergency fund should be able to take care of it.
Other than that though, buying things you don’t need just because they’re on sale doesn’t save you money. Since you didn’t plan for it, spending money on it will take you out of where you want to be with your budget.
Be smart and be logical. Don’t make emotional purchasing decisions. Those are the ones that tend to cost the most. You made a plan, and by making exceptions it’ll turn into a domino effect that will do nothing more but make you less disciplined with your budget overall.
Don’t spend so much on eating out
I’m not just referring to nice restaurants with this point, believe it or not, those quick trips to McDonald’s really add up in just one month. If you make usual trips to McDonald’s or other fast-food restaurants and then take a look at your budget, you’ll see just how much money that eats up from your wallet.
This is money that could’ve been put into groceries that would last you weeks. Or maybe you’re building your emergency fund and this money could’ve gone in that. Or maybe you could’ve invested it and let compound interest do its magic.
My point here is that it could have been money put into something bigger, better, and for a long-term purpose, rather than for a quick meal that will be gone from your system in less than 24 hours. I understand that food is a necessity, but buying groceries is a much less expensive option.
I’m not saying to stop eating out, it’s totally fine to eat out! But anything excessive is never good. I personally make a section in my budget for eating out, but I don’t let it be a major part of my budget, nor do I let myself go over the limit in that section.
Learning how to live beneath your means is one of the most important parts of achieving financial freedom. Although at first it might be hard, after some time you won’t only get used to it, you’ll also be happy with what you see in your bank account.
More than being frugal, I like to call those who live below their means: fiscally responsible people. By learning to live this way, you take a major barrier out of the way between you and your wealth. And building wealth is the objective for the readers on this website.
If you’re not sure whether you’re living beneath your means, check out this article to find the top 7 issues that indicate you’re living beyond your means.
Please let me know your thought and experiences in the comment section below! I’m always happy to read about what you guys have to say and I’m always replying!