How to Live Beneath Your Means
Sometimes, 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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