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Ever looked at your bank account and realized you were just living on hope and vibes? You’re not alone. Living below your means is like a financial diet. This time, the junk food isn’t pizza, but impulse buys and food apps at midnight.
I know, it must sound horrible. You might be thinking it’s time to give up everything that makes you happy—from delicious brunches to your favorite hobbies!
That is definitely not the case! Following the right frugal living tips doesn’t have to feel like you have to sulk in financial silence. Think of it as learning to order the small value meal over the large. You’ll still get what you want without depriving yourself of joy!
Personally, I learned that happiness isn’t about how much money you spend, but how smart you spend it. Read on to learn how to live below your means while still having fun!
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1. What Does It Mean to Live Below Your Means?
The answer is simple. It means to spend less than you earn! But again, it isn’t about making huge sacrifices and living off instant noodles or an air mattress!
It’s about creating space between income and expenses so there’s plenty for savings, investments, and emergencies. I’m not teaching you to be Scrooge, but to be intentional with your money.
For example, if you earn $4,000 a month and spend $3,000 by using the 50/30/20 budget rule, then you’re living below your means. But if you earn $8,000 and spend $9,000, then you’re going beyond, even if you’re making good money!
With this spending, you’ll be setting yourself up for a lot of debt and incurred interest. You don’t want to end up living paycheck to paycheck, with financial anxiety creeping in!
2. Why Living Below Your Means Isn’t Just for “Broke” People
Many think living below your means is just for the broke or in debt, but I recommend it for all income levels—even millionaires.
Anyone can get caught in lifestyle inflation, blowing cash as fast as it comes in. Because of that, even the highest earners end up in huge debt trying to appear wealthy.
One example of that is someone buying a new pickup truck immediately after getting a raise, even if their car still functions well. That money could have been used for saving or investing in bigger things!
It doesn’t matter if you earn $30k or $300k; you need to apply these money saving tips so you have more control over your finances. That way, you have the power to retire earlier, achieve goals, or weather life’s curveballs without panicking.
3. Signs You’re Living Beyond Your Means
Telltale signs you’re overspending and living beyond your means include having no emergency savings and relying on credit cards to get through the month.
Another red flag is only paying the minimum on credit cards, causing your balance to keep growing. Another sign is treating yourself too often with random online orders or frequent dinners out. Those “I deserve it” moments add up!
If you’re nodding along to any of these signs, it’s time to take a good look in the mirror. You need to learn how to save money!
4. Benefits of Living Below Your Means
“But Ling, I love to live life on the edge when it comes to my savings!”
Go do you! However, when you live below your means, you aren’t just saving money. You’re also saving yourself the hassle and stress of not being able to afford your bills.
Besides that, you’ll also be investing in peace of mind. As you continue to save money and live better, you create a safety net that allows you to live the hakuna matata mindset. You won’t have to worry about unexpected expenses, like your car breaking down or a surprise medical bill.
It also opens doors to bigger opportunities—traveling debt-free, saying yes to a career change, or retiring early.
In fact, one reader saved $20,000 in two years by simplifying their lifestyle. That money could go toward travel or even a new car.
5. Practical Ways to Live Below Your Means (Without Feeling Miserable)
- Delivering pizza for dinner sounds awesome, but what’s even better is putting on the apron and cooking at home! I meal prep twice a week, so I save up to $300 a month on food. Pro-tip: Save money on groceries by purchasing ingredients in bulk!
- You can still look stylish and save money by buying secondhand clothing. My friends score brand-name pieces at thrift stores and save up to 80% compared to retail prices.
- If you’re starting to cut unnecessary expenses, let those unused subscriptions come first! I canceled my Netflix subscription, which saved me about $25/month. I have other streaming platforms for my entertainment!
- Unless your car is barely moving, it’s one of the things to stop buying to save money. You do NOT need an upgrade if your 10-year-old Honda works fine. In fact, they cost less to maintain than a new SUV with monthly payments!
- My favorite money-saving habit is doing my own facials and manicures at home using products I already have.
- Take advantage of the best cashback apps like Rakuten or Checkout51 for groceries! You’ll be able to earn the money back after each purchase, which you can use for other things.
6. How to Handle Temptation and Lifestyle Pressure
Instagram is filled with luxury influencers and reels that it feels pressuring to live lavishly. However, you need to remember that many of these influencers promoting a lavish lifestyle only show their highlights! Refresh your feed and de-influence yourself, following content creators who promote frugal living and budgeting.
To stop overspending, watch out for lifestyle creep. Before upgrading, ask if they really improve your life or if you’re just buying because you can.
What if your family or friends want you to spend on outings or material things? For the sake of your wallet, you need to learn how to say no!
If you’re itching to spend on unnecessary things, remind yourself why you started living below your means. Always think about your financial goals, whether you want to save for a new home, go debt-free, or retire early.
7. When Living Below Your Means Leads to Real Wealth
You might think that living below your means is about being an extreme cheapskate. On the contrary, something magical happens. You get to build wealth slowly, and everything else follows!
With simple money-saving tips, you start by having a little extra in your bank account each month. You can use this money to invest, build an emergency fund, or start a side hustle. The more you save and invest, those small amounts grow into something bigger.
Also, following this mindset doesn’t only lead to financial wealth. It also means being able to have choices and not live in financial fear. When my car broke down, I was able to pay for the repairs in cash without panicking or incurring debt from my credit card! That’s when I realized – I achieved financial freedom. And you can too, by starting to save or invest, even just a little bit!
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