Learning to live below your means is a great way to reduce your financial stress and enhance the quality of your life within your household. By choosing to delay consumption for a later period, you are making the right call. One that will benefit you and your family in the future!
What does it mean to Live Below your Means?
Table of Contents
- 1 What does it mean to Live Below your Means?
- 1.1 Live Below your Means – Getting Started
- 1.2 Below your Means, Living Frugally with Benefits
- 1.3 Share this:
- 1.4 More related content, please!
What does “live below your means,” actually mean anyway? My friend, we’ve got you covered. At the core, learning to live below your means is about ensuring your cash outflows are less than your cash inflows. It is making sure you spend less than you are bringing in.
For some, this lifestyle is easier said than done! Let’s look into the concept a little more. Up next, we will talk about some ways you can get started, use the balance to your advantage, and otherwise change your life for the better!
Live Below your Means – Getting Started
Many of us will have to make a decision and muster an effort for this to happen. Some will be able to review the points and move through, scanning for a few new ways to enhance what they are already doing. Either way, this post has something for you! The choice to live beneath your means doesn’t mean endless suffering and no enjoyment in life.
Live Beneath your means: Budgets are Essential!
All of it must be accounted for which makes sense, right? How can you know if you’re living below your means or not without a sharp understanding of where your dollars are really going?
Budgets are where it is at, and even a basic one is better than nothing. Depending on your personal interests there are several types of “budget” that one can pick from, including envelope, excel, and electronically (e.g. Mint).
At a high level, and at the very least, you need to know what your inflows are from all income sources. In addition, you’ll need to identify what your outflows are. Take note of your investments, credit card payments, student loans, etc.
Live Under your Means by aligning Vision, Goals, and Discipline
With your budget assessment in hand, now you’re ready to pick a vision, build-out goals in support of it, and train discipline into your day to accomplish what you set out to do.
Treat your vision as a high-level statement that you can support with more detailed and specific goals (SMART format). For example, you could write a vision statement of “Our family seeks to live below our means so we can save for the future, be better equipped to handle surprises in life, and achieve a debt-free lifestyle.”
The Goals supporting that Vision should be more formal. I have enjoyed the SMART template for your consideration. There are many templates available, so feel free to modify them accordingly. Are your goals SMART?
- Specific: Is this detailed enough? Think about What and Why.
- Measurable: Can you quantify goal by task or unit? Needed for completion and progress.
- Attainable: How will you make this happen? Is it realistic?
- Relevant: Does it fit with and support your vision?
- Timeline: When will this goal be accomplished by? What time constraints are there?
Protect the Cashflow! – Save more and Spend Less
Everyone’s situation is different, and there is no such thing as “the only way” to live below your means. Here are some ideas on ways you can get started, get some “wins” upfront, and start the process on the right foot.
Use Your Budget!
Identify areas you are spending money, and make sure you know where your hard-earned dollars are going. Look for ways to remove spending that isn’t essential and get down to the basics only. From there, feel free to allocate some dollars in your budget to entertainment and “mad money” but only after you’ve taken a hard review and understand how and where you can breathe life into your finances.
While you’re at this process, why not take some time and invest it into increasing your financial education? There is a lot to learn from books and a library card can help you get along just fine without breaking the bank. Standard “conventional” degrees are important too, but much of the family finance basics are covered with some DIY and elbow grease.
Trim the “Junk Food” Spending
I label this category in such a way to remind myself that a little goes a long way. Take a look at your budget and note frivolous spending that is slowly bleeding your budget dry. Here are some easy ones to review and remove if necessary. Remember, the point is to live below your means.
- Leasing a Phone (or anything) is very expensive, especially over time.
- Subscription Services for movies and TV add up! Trust me, you don’t need them all.
- Any variety of subscription based services should immediately be questioned. This includes myriad movie and TV varieties – do you really need them all?
- Try shopping off-season to save money on clothes. Often times, I’ve found name-brand clothing substantially discounted by shopping out of season/ end of the season.
- Generic vs. Name Brand. This applies in a lot of different categories and is something to keep in mind as you look for ways to slash spending. I am a firm believer in buying quality when needed, but sometimes the more expensive quality item is overkill for the task at hand.
- Fee-based Memberships to gyms or other groups should also be reviewed to see if it makes sense to cut them out.
- Eating out adds up quick! Even cutting out a few restaurant meals each month could result in big savings each year.
- Coffee is a highlight to any morning, but they can be very expensive if you buy them from the local coffeehouse. For some instant savings, consider brewing at home.
Get a Raise
While this may not work every time, it is an effective way to help your financial situation. It is also an accelerant. If you slash spending to the bone, and you increase your income the effect is you now have that much more available to dedicate toward your goals and vision. Personally, I strongly dislike the interview process, and I completely empathize with those who may steer away from this option. However, if you have not had a good raise in the last year I would encourage you to update the resume and start looking internally and externally for the next opportunity. Your family is depending on you!
Beyond the interview, think about what side-gig options you have at your disposal. Perhaps, you can go into business for yourself! Either way, the point is to think about what you can do to increase your salary dollars.
Below your Means, Living Frugally with Benefits
With all that discussion about hard work and spending less out of the way, it is also good to keep in mind what you are pursuing. Spending less money doesn’t mean living a degraded life, nor does it mean you have to sacrifice quality.
Financially Empowered by Living below My Means
Being in control of your family finances means you have been empowered to make choices. Instead of falling further into debt, or being unable to answer your financial obligations, you now can.
This may not mean you have “buckets” of money left over, but perhaps this is instead the day that you no longer fall further into debt, pay a little more in your student loans, or put a few more bucks into your child’s college fund.
Whatever that looks like for your family, learning to live below your means will help bring those dreams into reality! Dream big, work hard, and you’ll be surprised what realities come to pass.
Spend below your Means today, Magnify the Results over time
Especially over time, the benefits of disciplined fiscal responsibility will saturate your family and others. As you live below your means, think about the difference you can make in your community. To me, looking for the opportunity to make a surprising difference in another person’s life is one of the motivators to live below my means.
Preparing for the Future
None of us know what the future holds, and we should prepare for what we can. Frugal living helps us prepare for the unknown by allowing us to dedicate dollars to emergency funds, retirement, sinking funds, and the like. Additionally, we can use this newfound flexibility to start saving for a dream vacation as well!
Regardless of your approach and family goals, I hope this post serves you well with ideas on how you can get started. Live below your means today and enhance the financial quality of life tomorrow!