Live Below Your Means

Want to reach your financial goals more quickly? Learn to live below your means. When you live below your means, you have more money to save and invest or use to pay down debt. Unlike living within your means which can make saving money more challenging. The simple difference between the two lifestyle choices is that one prioritizes saving money over spending unnecessarily, and the other doesn’t. If you live below your means, you may be able to save $500 per month compared to $100 if you were to simply live within your means. To get on a better path towards living large in retirement, follow these tips.

1. Create and follow a spending plan.
2. Track your spending.
3. Reduce unnecessary expenses.
4. Use cash to set a limit to your spending.
5. Avoid impulse buying with online ordering and in-store pickups.

If you currently aren’t using a monthly spending plan and tracking your spending, begin doing so today. It’s much easier to reduce unnecessary spending when you know how much money is needed for everyday expenses like housing, food, transportation, utilities, childcare, insurance, etc. and how much you’re spending each month on things you don’t need. This method of building a nest egg isn’t about going without and making yourself miserable. The goal is to reduce unnecessary expenses enough to pay your bills, spend a little on entertainment, and achieve your savings goals more quickly.

Using cash instead of cards is a simple way to limit spending. When you go out with friends for dinner, set a limit before you leave the house and take cash. When you order, select the food and beverages that are within the dining limit you set. Living below your means does not mean giving up your social life. In fact, if you attempt to give up too much at once you will likely fail. 

Grocery shopping is expensive enough but throw in impulse buying and overspending on groceries is inevitable. To avoid buying things you don’t need and paying extra fees, order online and arrange for in-store pickup. Instacart and other grocery deliver services are a wonderful luxury but can be expensive. Delivery fees, taxes, and tip really do add up. 

The bottom line is, to live below your means you need to set a monthly savings goal and stick with it. Be mindful when spending money but don’t sacrifice so much that you fall off the savings wagon and pay for a trip to Italy on a credit card. It is possible to pay your bills, save, invest, and still have fun and do all the things you want. It just takes planning.