How to Live Below Your Means and Still Enjoy Your Money

living below your means

Just like everyone else, I love my daily cup of coffee.  But spending $5 – $10 a day on my caffeine fix wasn’t agreeing with my budget. So, as an advocate of “living below your means,” I did what any respectable penny pincher would do and bought a decent home espresso machine.

That was one of the soundest investments I have ever made as I saved tons of money brewing the perfect cup of joe at home. And even better, I found that my home-brew tasted as good or even better than any barista-brewed coffee out there. Who said I couldn’t save and enjoy life’s simple pleasures at the same time?

Spending less than you earn is the surest path to financial wellbeing. You’ll have extra to save and invest towards achieving your financial goals. However, you don’t have to be miserable living frugally.

10 Frugal Living Hacks You Can Employ to Enjoy Your Money While Living Below Your Means:

living below your means

Track Your Spending

To get started, you must have a firm knowledge of where your money goes. Without this information, it will be near impossible to plan your finances. Tracking your expenses reveals to you the things you spend money on which may not be necessary. This will help you to know which ones to curtail or cut-out outrightly. Secondly, you will always be able to know how much you save each month. And seeing your nest egg grow can further motivate you to even save more.

Tracking your expenses can be done without paying a dime. You can do it with an excel sheet or a free online tool or app such as Personal Capital, YNAB or Mint.

Create a Budget

Now you have a clear picture of where your paycheck goes each month (hopefully not on strippers), you can now be in a better position to intentionally plan how to spend it.  A budget is simply a plan for spending your hard-earned cash. If you’re like most people, you spend no less than 40 hours a week at work. Therefore, it will be wise for you to ensure that your money serves your best interests. A budget requires you to judiciously assign your paycheck among utilities, groceries, retirement savings, rent, loan repayments, etc.

Planning your spending with a budget and sticking to it ensures you have enough money for essentials. You will find it easier to live below your means.

Cut Unnecessary Expenses

When you consistently track your spending, you will see a lot of expensive items you can do without. While you can indulge in a cup of coffee at your favorite barista every now and then, spending $5 daily on coffee will take up a significant part of your paycheck. So it is also with eating out daily. You can learn how to cook the same delicious and even healthier meals at home for a fraction of the cost.

Another area you may want to look at are the services you subscribe to. You will find there are some that you can do without or that don’t fit into your budget. Cancel them. Then examine the ones you still want to keep. Can you use a free alternative?

While smaller monthly fees are attractive, pay your subscriptions upfront to take advantage of the discounts service providers offer. This will save you a lot of money in the long run.

Most of your monthly magazine subscriptions are left unread in your email. You can keep up with the trend on your interests online for free. Or even visit your local library which doesn’t cost a dime.

You should cancel your gym membership if you show up infrequently. You can still exercise with your bodyweight and run to keep fit.

Another common expense which you can absolutely do without is cable TV. You usually pay for stuff you don’t watch unlike streaming services like Netflix and Hulu where you can get your favorite shows for cheap.

Increase Your Income

This one is a no-brainer. When you increase your income, your budget becomes less constrictive and you have more leverage to save more or pay off your debts.

You can increase your income by working towards a raise and asking for it, working overtime or finding a side hustle.

With the internet, it has never been easier to make extra cash in your spare time. There are several side hustles which can significantly boost your income and are not hard to start. These include:

  • Driving for ride-hailing services
  • Freelancing
  • Take Paid surveys
  • Selling stuff online
  • Blogging
  • Affiliate Marketing

And the list goes on. Just pick a side business that aligns with your interest and skills so that your motivation remains high.

Avoid Lifestyle Inflation

There is a tendency for most people to ante up their spending whenever there is an increase in their income. This is referred to as lifestyle inflation and it’s obviously toxic for your finances. As you strive to increase your income do whatever it takes to avoid spending more.

An increasingly extravagant lifestyle will only negate the efforts you have made to improve your finances by increasing your income. Rather than trading in your reliable Camry for a new Mercedes why don’t you channel the surplus from you newly increased income towards your savings?

Lifestyle inflation will make it tough for you to live within your means, achieve your financial goals, or save towards retirement. Don’t buy anything that begins to seem like a necessity as soon as your paycheck goes up. If it were that important, you would already have had it.

Ditch Your Debts

Consumer debt is endemic in America. As the name implies, they are debts used to buy consumables rather than investments that appreciate. These include credit card debts, payday loans, and personal loans.

Why do you need to get rid of your debts? Consumer debts do not add to your income and are often more expensive than secured loans like mortgages. The high interest you pay cut a hole in your paycheck and may keep you from achieving your financial goals and living your best life. On the other hand, intentionally avoiding consumer debts means you only buy what you can afford. You save up for an item before you purchase it. This is key to living below your means.

If you have consumer debts of any sort, it’s in your best interest to start immediately to pay it off and avoid incurring new ones. You can consider consolidating your credit card balances to a balance transfer credit card with a moratorium on interest for up to 12 months or more.

You can also refinance your high-interest credit card debts with a lower-interest personal loan from your bank or any other financial institution. This will reduce your debt burden and help you pay them off faster.

Buy Used (If You Must Own a Car)

With glossy exterior and an interior that smells like – well, “new car”, getting a brand-new ride is nice. But do you know that you can save lots of money by buying used? In fact, you spend on average $13,500 less when you buy a used car rather than a new one.

New cars depreciate rather fast. Once you buy one and drive off the lot, it loses a hefty 20% of its original value. And in three short years, it’s worth just about 54% of the original value. Depressing right?

That’s not all. A new car comes with higher sales tax, higher insurance and in some states, costs more to register. Although a used car will require more maintenance than a brand-new car in the long run.

Aligning with your efforts of living below your means, try to save up money and pay cash for your car. This is easier when you buy used since brand new cars cost far more.

Buy a Smaller Home

Buying a home is one of the most significant expenses you can make. Most people go for the most expensive homes they can possibly afford with a mortgage. But do you really need that 8,500 sqft 7-bedroom home? Aside from the hefty monthly mortgage loan repayments, a huge home cost more to maintain. You‘ll also pay higher taxes and insurance.

Instead, go for a smaller house your budget can comfortably accommodate. That way, you’ll be free of the financial stress that comes with keeping a large house. You’ll pay less each month and possibly have extra to squirrel away for other uses.

Have Fun for Free

That you live below your means shouldn’t turn you to a sour-faced scrooge. You can still be frugal and have fun. And there are thousands of recreational activities to enjoy which doesn’t require you to spend lots of money.

You can go hiking or camping with friends or a date. Look out for hiking trails and parks in your city and enjoy the sun and fresh air without spending a dime. If you’re not much of an outdoors person, you can organize a book club where you get together with friends to discuss a chosen book.  Local fairs and festivals are also great for getting free entertainment plus the occasional free concert.

Enjoying your free time doesn’t have to be expensive. And while it wouldn’t hurt to treat yourself to a fancy restaurant once in a while, Just don’t make a habit of it.

Don’t Compete with the Joneses

It’s natural to compare yourself to your neighbors and peers. But if you’re totally hooked on living your life benchmarking others, you’ll have a miserable time and may become broke as well. The truth is that people are too engrossed with their own lives to care about the type of home you own or the fact you drive a 10- year old Honda. You will only hurt your finances trying to impress the Joneses.

Consider only what you truly need so you won’t end up broke and in debt trying to appear wealthy.

Conclusion

The path to financial freedom is not an easy one. But it’s well worth it if you can discipline yourself to live on less than you earn. With time, it will become a habit and you will watch your wealth grow without feeling deprived in any way.

BA in Accountancy, he entered the entrepreneurial world by starting his first online marketing business in 2004. He is passionate about personal finance, self-development, the stock market, and a digital marketing addict. He strongly believes that financial knowledge combined with self-discipline is the key to achieving financial freedom.  He is also an avid golfer and a 15 handicapper.

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