10 Practical Ways to Start Living Within Your Means and Say Goodbye to Money Problems

Living below your means can be simple to understand but, for many, difficult to do. At its surface, the concept is simply to spend less money than you make. Easy, right?

Take your income, add up your expenses, subtract the two, and as long as you come up with a positive number, you’re okay.

The problem is that many people aren’t doing anything to keep track of their expenses and have no idea if they really are living below their means or not. If they aren’t, they have no clue how to get to the point where they are.

What Does “Living Below Your Means” Mean?

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Living below your means doesn’t have to mean that you are pinching every penny, clipping every coupon, and only buying things on sale. There is actually a lot more that goes into it.

The biggest change doesn’t involve spending or saving money at all. It’s really all about your mindset.

It means you take your finances seriously by keeping track of your spending, creating a budget, stopping trying to look wealthy, and actually start becoming wealthy. None of this is possible until you are truly spending less money than you’re making – simple as that.

Why You Should Live Below Your Means

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The reason you need to live below your means is also very simple. If you are always spending more than you make, you’ll never really live the life you want to live because you won’t have the money to do so.

Living below your means allows you to pay off your debts, and start saving and investing, and even reach a point of financial independence.

How to Start Living Within Your Means

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There are really only two ways to balance your finances: make more money or spend less. Preferably, you could do a little of both.

For most of us, instantly increasing our income can be very difficult. The best route is to cut back expenses, as you have far more control over what you spend, and the results will be immediate.

1. Understand How Much You Make

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The first step in living within your means should be understanding how much money you actually make. That’s more than just knowing your salary. Look at all forms of income and figure out what the number is after any taxes.

2. Create a Financial Plan and Budget

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An essential part of anyone’s finances is having a plan and a budget. Figure out what your financial goals are and make them quantifiable and specific. Don’t say that you simply want to save money. Put an exact figure on how much and then determine how you will achieve that goal.

Part of the plan should also be to create a budget. Take all your spending categories and limit yourself to a certain amount in each. Once you go over that amount, you can’t spend in that category anymore.

3. Track Your Spending

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A plan and budget are no good if you don’t stick to it. If you have no idea how much you’ve spent on any given category you’ve set yourself, you’ll never achieve anything.

You don’t have to reinvent the wheel, either. Plenty of free tools and apps exist that will help you keep track of everything, making it super easy.

4. Get Rid of Unnecessary Spending

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Now that you’re tracking your expenses, figure out which expenses are unnecessary, and which are essential living expenses.

For those of you who think, “I have to have my daily Starbucks,” you might need to rethink that.

If you really want to get your finances in order, you’ll have to make sacrifices you don’t want to make. Unnecessary expenses add up very quickly and cutting them out will make your road to financial independence much easier and shorter.

5. Consolidate and Pay Off Debt

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Once you’ve gotten rid of those unnecessary expenses, you can take part or all of that money and put it toward the biggest destroyer of your budget: debt.

The first step of your debt payoff plan should be to lower your interest rates. If you have several loans, you can consolidate them into one loan with a lower interest rate. That alone could save you thousands of dollars in interest over the course of the loan.

After that, it’s all about putting as much as you can toward paying off your loans. Paying off all your debt (except your mortgage) will lift a huge financial weight off your shoulders and give you a great foundation for living below your means.

6. Stop Using Credit Cards

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When spending money on your credit card, it’s easy to lose track of how much you’re spending. It has also been proven that it’s harder for us to make a purchase when we need to use cash. The physical action of handing someone our money is much harder than simply swiping a card.

Until you have your finances in order, stop using that card and feel the pain of giving someone else your money. Hopefully, it makes you think twice about any purchases. Your credit card company won’t be happy, but your finances will be.

7. Save for Big Purchases

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All of us will eventually need to make a big purchase. Some will come out of the blue (you have an emergency fund now, right?), but most you’ll see coming a mile away.

Get ahead of these big purchases by saving for them long in advance. Instead of going more into debt, you’ll be able to have the big-ticket item you want or need and still be financially stable.

8. Negotiate Costs

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Image Credit: PeopleImages.com via Depositphotos.com.Another great way to save money is to negotiate the costs of any services. Cell phones, cable, insurance, and many other services aren’t just going to hand you a discount, but you’d be surprised what they’d do if you just ask.

Don’t go in blindly; do some research on other services and be informed. Remember, service providers want to keep your business, even if it means offering a discounted price.

9. Get a Second Income or Increase Your Current One

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Ok, so you’ve done everything you can to cut back your expenses and make every penny count. Sometimes, that’s still not enough to really get you back on track.

The second prong of attack on your finances would be to increase your income. Ask for a raise, get a second job, start working a side hustle, or start looking for a better-paying job. It will be worth it to get yourself back on track.

10. Change Your Mindset

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Probably the most important aspect of living within your means is changing your mindset. Too many people have the “Keeping up with the Joneses” mindset, and that only leads to financial ruin.

Once you let go of the need to drive up in a brand-new car or live in the biggest house on the block, your life instantly becomes so much better. You can stop pretending to be something or someone you’re not and live the life you want to live.

The Benefits of Living Below Your Means

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Once you’ve put in the time and effort to get your finances in order and have money left over at the end of each month, you can start reaping the benefits of living below your means. You can start investing, and your stress levels will plummet.

Reaching financial independence will allow you to not only be happy with what you have but allow you to pursue other interests and passions without having to worry about the money aspect of life. This won’t happen overnight, but the long road certainly seems worth it.

Getting your finances in order will provide so many more benefits than any fancy car or house ever could.

More Ways to Save

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Saving money is not inherently difficult. The hardest part is finding new or creative ways to save money and then acting on them.

Yes, it’s easier to go with the flow and pay sticker price for everything. But what if learning how to save money on a few everyday things could significantly improve your financial situation? Would you be game?

So if you are ready to start growing your bank account, here are 52 money-saving tips to help you improve your savings game (that won’t leave you feeling deprived).

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