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So, why do so many people find it difficult to live within their means? Maybe it’s because of the restrictive nature of the concept. But, it’s possible to break free of these financial restraints while achieving all of your financial goals.
Here’s how.
What it Means to “Live Within Your Means”
Before we cut to the chase, it’s important to understand what it means to live within your means. The idea is that you spend less than what you earn every month. Spending less than you earn helps you avoid debt and living paycheck to paycheck. It can also help you build up an emergency fund to pay for expenses that unexpectedly arise.
But, often, trying to live below your means can leave you feeling restricted, which can result in some consequences.
If you have ever been on a diet and had to attend a celebration with all of your favorite delicacies, you know it’s hard to stick to your diet plan. Surrounding yourself with endless indulgences while on a diet will only set you up for failure. Trying to live within your means may feel the same way – very limited and restrictive.
While you can always walk an extra mile or sign up for an extra cardio class at the gym to offset your additional food intake, there isn’t a similar quick fix with overspending.
Feeling restrictive can actually lead to poor money decisions. It can yield a scarcity mindset giving you the belief that you don’t have enough. This belief can hinder your ability to make thoughtful and smart financial decisions.
Fortunately, they are several strategies you can use to break free from the stigma.
Take a Closer Look at Your Recurring Expenses
Start by trying to cut your costs without making major adjustments to your current lifestyle. Taking a closer look at your monthly, quarterly, and annual expenses is a great place to start. As you review the list of your expenses, find expenses that you can either negotiate or replace for a more affordable option.
For example, if you have a gym membership that costs $100 a month, you may consider replacing it for an online cardio subscription you can do right at home. If you don’t want to lose your gym membership, try negotiating the cost to receive a better monthly rate.
You may also want to take a look at expenses you can lower, like auto and home insurance. Contact your insurance agent and see if they will reassess your insurance costs.
Repair Money Leaks
A money leak is any amount of money you’re unable to identify how it was spent. For example, if you took out $20 from the ATM and used $15 at dinner last night but cannot account for the rest, that is a money leak.
To repair your money leaks, use an app to sync up all of your accounts to complete a full record of what you spend and earn. Then you can scroll through and identify any areas where you are wasting money.
Did you discover that you have been paying for a streaming service you never use? Or, perhaps did you find out that you have been spending way too much money on food delivery fees?
It’s time to plug the leak. Stop wasting your money on things that don’t bring you joy.
Become a Savvy Shopper
Comparison shopping can save you hundreds of dollars on plenty of expenses such as medical bills or home appliances. Whatever you’re shopping for, compare your options, use coupons, and always ask for a discount.
While negotiating or asking for a discount might seem uncomfortable at first, it’s better than living beyond your means. And, just like riding a bike, after you get the hang of it, it will feel like second nature.
Plan for Large Purchases
Spontaneity is great to spice up your personal life, but don’t let that bleed into your financial decisions. “Wants” like a brand-new television or upgraded furniture are tempting purchases to put on a credit card. Putting all the pressure on the future you to pay them off may feel like a solution, but it’s better to avoid the situation altogether. Relying on credit cards can be a dangerous game anyway since you have to possibly contend with interest and any decisions your credit card company makes.
That doesn’t mean you’re not allowed to treat yourself though! If you want something, plan ahead for it. Save up money each month until you’re able to buy the item outright. If you can’t afford to do that, it’s best to put that dream on the backburner for a while.
Get Your Budget in Check
Part of finding the right budget is knowing your income. Get familiar with your financial situation’s ins and outs, but don’t stop at calculating your hourly rate. You should look at your net income and how frequently you’re getting paid so that you can pay bills or other costs around that schedule. It’s easier to account for payments when you know your situation going in.
Budgets aren’t just to ensure you’re making ends meet on a monthly schedule either. They’re supposed to help you achieve long-term goals, such as retirement or significant future events like weddings. The earlier you begin budgeting, the better off you are so that you can approach some of life’s most worthwhile events with as little stress as possible.
Practice Gratitude
It’s altogether too easy to find yourself numb to your life and miss out on cherishing it. When you can acknowledge and give thanks for the expenses that make your world run, their value can shine through.
Try to identify and be mindful of what you have, whether it be shelter or opportunities, daily. Making a habit out of appreciation can not only give you a healthier mindset but help fight that feeling of being financially confined.
Identify Ways to Earn More Money
If you’ve made plan after plan, exhausted every coupon cutting bone in your body, and still are spending more money than you make, it may be time to consider alternative income avenues. Consider searching for a replacement job that pays a higher salary. You can also try to take on a second job.
It’s not easy to just tackle a new workload or shift gears like that, but if you’re looking for more flexibility in your spending, it might be the answer. If you’re not entirely comfortable with a professional overhaul, reasonably so, you can also try to ask for a raise at your current employment. Regardless, keep up the positive mindset! You are more than your work and shouldn’t feel confined in your potential to earn more.
Set Goals
Sure, you’re making a plan, but you need a reason behind it, something to strive for that propels you forward. It sounds a little lofty, but you don’t have to get too creative. Setting goals for yourself will be the insurance you need to maintain your budget. For some, it might be a down payment for your first home or maybe a necessary vehicle replacement.
If you know what you’re working towards and have that ideal in your mind, it’ll be easier to find alternative, cheaper ways to accommodate your desires. Making dinner at home instead of going out doesn’t seem like such a bad deal when you’ve got a better prize waiting on the horizon.
The Takeaway
Trying to live within your means doesn’t have to leave you feeling restricted. If overspending has become a habit, budget planning and cutting back can all seem overwhelming. If at any point you feel in over your head or like you need help grasping your goals, consider speaking with a financial professional. They can help you develop a strategy to live within your means that’s right for you and your future. Don’t lose any more time worrying over bills and begin your climb towards financial freedom today.
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