How to Live Beneath Your Means

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How to Live Beneath Your Means

How to Live Beneath Your MeansSometimes, running out of money before you run out of month isn’t a sign that you don’t have enough money coming in—it’s a sign that you live above your means. How do you know if you’re the type to live above your means? If you have ever gotten a raise and noticed that you run out of money just as quickly as you did before, you probably live above your means. The good news is that you can learn how to live beneath your means.

Keep a Brutally Honest Budget

The first step to living below your means is completing a completely transparent, honest budget. Make a list of your fixed expenses, including rent, utilities, and other bills. No rounding up or down—you want to know exactly how much money is going out every month.

Then you need to make a list of flexible expenses, including food, gas, grooming, and entertainment money. Write down how much you want to spend in these areas, not how much you currently spend—we’ll deal with that in the next step. Include every category you spend money in, no matter how random it may seem.

Know Exactly How Much Money is Coming In

Now, it’s time to know how much money you have coming in to cover your various expenses. If you don’t have recent paystubs, you may be able to estimate your income. Figure out what your gross income is for each pay period. Subtract any insurance, 401k, or flex spending money that comes out before taxes. Multiply the remaining amount .75 to estimate how much money you bring in.

Ideally, you should use paystubs to figure out how much money you have coming in. This gives you an exact figure to work with, instead of a ballpark figure.

Don’t miss :The Ultimate Guide to Living Within Your Means


Track All of Your Expenses for One Month

Now here comes the tough part. Track every bit of money you spend for 30 days. Include money spent on debit, credit, and cash. At the end of each week, sort your transactions into the categories you have listed in your budget. When the end of the month comes, you can go through and see exactly how much money you have spent. You may be surprised to see how much you go over your budget in certain areas.

Fix Your Budget and Set Up Auto-Save

Still asking yourself, how to live within my means? It’s time to edit your budget. But first, figure out how much money you want to be saving. Whether it’s $200 or $2,000 per month, set up an auto-save payment that comes out of your bank every time you get paid. If the money isn’t there to spend, you’ll have a lot harder time going over budget!

If you need some more help, check out these great books:


Now, look at the money you have left. After paying for essential expenses like food, mortgage, and gas, where can you cut back? Construct a budget that fits your income and savings goals.

Increase Your Income

And if you are still having trouble you may want to look at some ways to increase your income.  We have a great article on little ways you can increase your income fairly easily from home. And if you just want to earn a little extra for little luxuries, like Starbucks, web surveys are a great way to do this.  Some of my favorites are Pinecone, I-psos , e-Poll and Valued Opinions.  You won’t get rich, but they are easy and make a way you can have the little things you enjoy.

So, does living beneath you means mean you can never afford “extras” or dream big?  No, it doesn’t!  You simply need to take the time to figure out HOW you might afford those dreams without going into debt.  You could take a side job, sell some items, start a small business.  Don’t think of living beneath your means as restrictive, just think of it as a safe boundary.  And when you are able to increase your income you can increase your boundary.

Living beneath your means is not always easy to do, it takes discipline.  I hope these tips get you on the right path and you start thinking of all the ways you can dream and live big in a way you can afford.

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  1. Elizabeth says

    It’s not always possible to know your exact income. My husband works for himself and doesn’t get pay stubs or even a consistent amount of income. So we really have to look back and do our best to estimate. But also because of this it is important that we try to live beneath our means. You never know when a dry spell may come along and you will need some backup money to get you through.

  2. says

    My husband’s pay varies, as does mine. When a client pays him he splits it into 3 business accounts: regular, taxes, and tithe. Then from the “regular” account he pays himself a monthly salary amount.
    We are not as careful about keeping track of random little expenses as we could be ( movies, school/kid supplies etc.) but we don’t do a lot of drive-through food or coffee etc.

    Our big budget wreckers are unexpected medical events, travel (live far from family so we usually fly at Christmas), and random home projects that either need to be done (fix something) or will pay for themselves eventually (like…getting chickens).
    Theoretically we are saving ahead for those things but then if we get two back to back things (appliance breaks right after we buy plane tickets) we are juggling money trying to not overdraft etc. “Borrowing” from the tax-savings-account etc. No bueno.

  3. Richard Buse says

    These are great tips. Thanks for sharing this.

    I work as a freelance writer, so my income varies from month to month. What works for my wife and Ii is having a number of online bank accounts, with each account designated for a particular budget item (home repairs, self-employment tax, health insurance premiums, etc.). Those accounts are with Ally Bank, but there are a number of other banks that offer similar services. It’s very easy to transfer funds from one account or bank to another, and to keep track of how much money has been set aside for each expense item.


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