How to Live Below Your Means: 9 Great Strategies

Living below your means is one of the most underrated ways to better your financial life. Too many people think that saving won’t make a big dent in their lives. Therefore, they spend whatever they can plus take on debt to buy more things. That’s not how you live the good life.

I get it. It doesn’t feel good to live below your means. After all, you worked so hard to earn a paycheck, what’s the point of working so hard if you’re not going to enjoy it? While I understand the sentiment, that’s not the right mindset to think about through life.

The more you spend money you don’t have, the deeper a hole you are digging for yourself. I consistently bring home six figures worth of income a year. My income was six figures+ for the past 3 years. However, I still don’t spend as much money as I know I can. Why is that? I want to protect and save for my future.

Living below my means is the surefire way to get there. I can’t imagine going through life and working this hard without having anything to show for it at the end of it all. My net worth isn’t $400,000+ in my mid 20’s because I spent all of it away. It’s because I saved and invested for my future.

Too many people live above their means and hope that one day they’re going to make it out just fine. That’s not right. You don’t want hope as your strategy you want to rely on yourself and yourself only. Depend on nobody else but yourself because other people are not going to hand anything to you.

What is Living Below Your Means?

Living below your means is that you spend less money than the after-tax take home pay of your paycheck. There’s no need for you to take on debt because you already have enough of an income to satisfy your wants and needs. Taking on and using debt to finance your businesses are completely fine.

After all, you’re generating more money by taking on debt than by not taking on debt. Therefore, that is completely good debt and there’s nothing wrong with that. However, taking on debt to buy the new shiny toy is not a good idea. It’s what the consumerist ideology society is built upon.

The United States is notorious for this. They highlight some billionaire with a $2M+ house and think that they’re doing well in life. Well, a billionaire buying a $2MM house is literally less than 1% of their net worth. The math doesn’t check out for an average person like you and I.

The person who owns that BMW may be riddled with debt and are trying their hardest to pay off the interest balance alone. That’s a very stressful way to live. That’s what happens when you don’t live below your means. When you live below your means, you have a much better peace of mind.

There’s no one else that you need to service. All you have to care about is having enough money for yourself and your family. Not for the lenders so that you don’t declare bankruptcy. Not for the company so that you need the paycheck to survive if they fire you. But for yourself and your family.

Here are the reasons why you should be living below your means.

Why You Should be Living Below Your Means

The first reason is for you to SMASH that social share button and post to your favorite social media! Your friends just may be living above their means and is one month away from having to declare bankruptcy. We don’t want that, it’s best to help the people you care about.

So with that said, let’s get into more reasons why you should live below your means!

1) No More Paycheck to Paycheck

Have you ever lived the paycheck to paycheck lifestyle? I have. And it feels so wrong and demoralizing all at the same time. When I graduated college, my salary was $52,500. After 401k contributions and HSA contributions, my salary was closer to $30k. That doesn’t even include the taxes and insurance I had to pay.

When you live below your means, you get to avoid the paycheck to paycheck lifestyle. It felt horrible to go through that. Every paycheck, it actually physically hurt. Like someone took away my power. Like I worked this hard just for someone else to take it away from me.

On top of that, I even saved more of my after-tax money. Imagine how much more pain I experienced every day. After living below my means for 5+ years, I know can say that it was all worth it. That if I was given the choice, I would do it all over again. I am so thankful for my past self for getting me here.

2) No Need to Fill a Hole In Your Life

The people who have a need to spend as much money as they can do so because they need to fill a hole in their life. It’s missing something so they need to fill it by adding stuff that they haven’t had before to their home and houses. It could be through decorations or it could be just to buy overall stuff.

When you live below your means and are choosing to do so, you are not trying to cope with the emptiness through something else. There’s no need to get external validation because you already have everything you need. You are being content with your life.

You get to add more dollars to your wallet at the end of every month AND you get to tackle any psychological or emotional issues that are going through with your life. That’s a win-win situation that many people ignore. Avoid the consumerist lifestyle at all costs, it is not the answer to your problems.

3) Less Dependency on Others

There are people who have a lot of stuff who are dependent on their employer. They have to get a paycheck for them. Otherwise, they are out on the streets in less than a month. However, living below your means mean that you are less dependent on your employer.

Maybe not in just a year, or even two. However, after 5 – 10 years of consistently doing so, then your dependency level goes to zero. That is great. You ultimately have self reliance. When you are dependent on others, trust me when I say they are not going to make your life easier.

They want to make their lives as easy as they possibly can while making you be as miserable as you possibly can be. They don’t care about you, all they care about is themselves. The person bosses are most afraid of is an employee who won’t spend their money freely. They know they’re slowly losing control, every single day.

How to Start Living Below Your Means

So now you are fully convinced living below your means is great. So how do you actually go about doing so?

1) Know Your Budget inside and Out

You can’t live below your means if you don’t know your budget inside and out. Therefore, you need to know your numbers, otherwise your dollars are freely going out and going in at the same time. You generally have a monthly budget that you need to stick to.

Personally, my budget is closer to $1,100 per month. I know that if I never go above that amount, then I will be more than fine going forward. To me, that’s still a lot of money to spend on. I usually average closer to $900/month than anything else. On a six figure salary, that is living way below my means.

And I like it that way and I intend to keep it that way. Every year, even with positive inflation, I seem to spend less money. The stuff that I bought from last year carries over to the next year. I know that when my expenses go down every year in positive inflationary times, I am doing something right.

2) Control Yourself

People spend money because they give in to their urges all the time. They don’t know how to delay their gratification. They want things and they want things now. That’s the problem. Businesses who understand this know how to use the information to their own benefit.

Amazon is the first company to understand this psychology very well. They are now doing everything they can in order to deliver products in a single day. I ordered a memory foam pillow just 3 days ago and it got here in three days. Even though I don’t have a Prime membership.

I was happy to wait that additional 1 – 2 days versus if I had Prime because it’s not worth that additional $100+ to pay for a Prime membership. When you learn to control yourself, no one else can control you. Don’t let companies take advantage of your psychological tendencies. They will use it for their own benefit.

3) Avoid Debt to Purchase Things

Living below your means means to never take on consumer debt. It’s OK to have debt like a mortgage or a car debt to finance. However, if you’re getting an unsecured personal loan just to buy more stuff, then there’s a problem. Not just a little problem, but a big problem.

There’s no need to get the store credit card just to get 10% off your purchase. There’s no need to take on debt to buy the latest iPhone. If you have a need to do so, then you are living above your means. You don’t just pay for the product itself using money you don’t have. You have to pay the interest on top of it as well.

That’s trying to get out of a hole by digging a deeper hole. It doesn’t logically make sense. You shouldn’t have to rely on anyone else’s money in order to buy things. You should be able to stand on your own two feet. Your salary should be more than enough to pay for your life.

If it’s not, it’s time to create additional sources of income or get another job.

4) Evaluate Your “Needs” and “Wants”

Too many people don’t separate out their wants and needs. They see something shiny and think that they “need” to have it. When they were perfectly fine not having it in the first place before they went to the store. When you separate these things out, that’s when you can live below your means.

We don’t need a lot of things in order to stay alive. Besides having a roof over our head, insurance, utilities, food, and water, anything else is a want. Now, internet connections have become a necessity in order to compete in the world. However, it’s not necessary for your survival.

There’s not a lot of things we need in order to stay alive. Anything else is a want. Some are really good wants and you should get it. Like a reliable internet connection, a good computer, and the like. However, a brand new car in which you pay for the depreciation is not one of those needs.

5) Buying Used is Key to Living Below Your Means

This is one of the most overlooked ways to live below your means. You don’t buy the newest car that you can afford. You buy the same car but used and let someone else pay for the depreciation. The depreciation costs can be as high as 20%. That is a lot of money that’s just gone to thin air just like that.

I bought my car when I graduated college for $10,000. It’s been six years and the car still runs great and gives me no problems. I plan on using the car until 150,000 miles. I am completely OK with that. It’s my trusty old reliable. To be honest, at my driving rate, it will take me something closer to another 15 years before I buy another car.

More than likely, I will buy another car but I’m still going to buy it used. My couch is a used hand-me-down furniture. There is no way that I’m going to buy new when used ones are perfectly fine. It’s just as good but 30%+ cheaper. There are many things that you can buy used.

6) Negotiate Contracts

If your contract was up for renewal then it’s time! It’s time to negotiate any bills you have if you’ve been a good customer. Things like your phone bill, internet bill, and the like are fair game to be negotiated. That’s how you live below your means. Getting the same thing but at a lower price.

My phone bill is a very low $40 per month bill that’s grandfathered in so there’s little chances that it will go any higher going forward. Insurance bills are open for negotiation as well. I negotiated hard for my insurance bill. When it comes time for renewals, my insurance company doesn’t increase my bill as a result.

They know if they increase my bill, I’m just going to go towards their competitor and everything is going to be dandy. How do they know that will happen? I did that to them before. I don’t lose a minute’s sleep over it. It’s time to negotiate your recurring bills because if you’ve been a good customer, you have the power to dos.

7) Side Hustles

If you’re living above your means consistently, it means you’re not bringing home enough income to support your lifestyle. How do you fix that? By getting side hustles and making more money! If you want to live below your means, getting additional sources of income isn’t a bad idea.

My side hustle opportunity is this blog. I also have a couple of other projects in the pipeline for 2022 as well. I want to diversify my income sources so that I am not dependent on my W-2 income at all. Live below your means by increasing your means, instead of just figuring out ways to decrease your spending.

These days, there’s an infinite number of ways that you can increase your income. The money is out there, all you have to do is find them. There’s a reason why the average millionaire has 7 sources of income. If your means aren’t big enough to support you, it’s not bad to have bigger means.

8) Refinance Debt

We are in the lowest debt rate we’ve ever seen! It’s not a bad idea to review the debt that you have and see if you can lower any of the rates by refinancing. I personally took on debt in 2021 at 4% interest rates. For nothing else but liquidity purposes. I was shocked that the banks are willing to lend at that rate.

It was shocking. I felt like they were literally throwing money at me. If the rates are that good, imagine just how much money you could save by refinancing. The rates are set to increase in 2022 so the benefit might diminish going forward. However, good rates are out there. You have to go and find it.

The United States had near zero interest rates for a very long time now. Having this low of interest rates may not stay forever. So take advantage of it while you can. The trick to live below your means is to get the same thing at a lower price. Refinancing to a cheaper rate is getting the same debt at a lower price and worth it!

9) Find Coupons for Things You Were Going to Buy Anyway

Millionaires are not above using coupons. I’m not against using coupons either. if I can get the exact same thing but for a lower price with the help of a coupon, why wouldn’t I? To live below your means, the trick of the game is to get the same thing but at a lower price.

You will be utterly surprised at what companies are willing to give out as coupons. Subway has been giving out a free footlong sandwich if you just buy a footlong subway sandwich. That is a ridiculously good deal for the customer! Or a good trick is to add numbers to a coupon code.

When a coupon is “SAVE10” try “SAVE20” first before checking out. Sometimes it works and sometimes it doesn’t. However, on the times that it does work, it feels great. You don’t lose anything either. It’s not like you’re doing it face to face so that it feels awkward. It’s done all online anyway.

Living Below Your Means Will Help Your Life

If you live below your means for a number of years (a good rule of thumb is 3 – 5 years), then you will have set the foundation for a great life thereafter. Making sacrifices for a couple of years to be set up for decades down the road is a great way to go. Too many people these days are living with debt.

Debt that they didn’t need to finance something they didn’t need. Don’t get sucked into the consumerist marketing and mindset that companies love to tout. There are plenty of free things to do to make yourself happy. Stuff will not bring you intrinsic happiness but rather will bring you more maintenance expenses.

In 2022, I’ve been spending more freely with my money. When I see a $50 purchase that I want, I don’t hesitate to buy it. I bought an Audible membership this year without hesitation because I wanted to listen to something after work. I’m at a point where I want to enjoy my life more going forward through spending.

After putting in your dues and the legwork is when you feel like you’ve made it. When you feel like you can actually enjoy the fruits of your labor. If living below your means gets too hard, then it’s not a bad idea to splurge once in a while. Treat yourself every now and then, even for an extended period of time.

If you need to spend money for 3 – 5 months before getting sick of it to get back to living below your means, then by all means. If you live below your means while everyone else lives above their means, you’re winning both ways. You will be surprised at how far you can go if you don’t follow the masses.

How to Start Living Below Your Means Shortlist:

• Know your budget inside and out
• Control yourself
• Avoid debt to purchase things
• Evaluate your “needs” and “wants”
• Buying used is key to living below your means
• Negotiate contracts
• Side hustles
• Refinance debt
• Find coupons for things you were going to buy anyway