How To Start Living Below Your Means To Save Money

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Want to change your financial life? Spend less than you make—the easiest and most basic of financial advice.

Living below your means is all about having control over your hard-earned money. When you live below your means, your money doesn’t overpower you. Instead, you are the master of your money.

This is a guest post written by Robyn from A Dime Saved.  Robyn is a millennial mom with an MBA.  She shares some great tips on living below your means, and who doesn’t love saving money?

I will let Robyn take it away from here.

Living below your means, no matter how much money you make, is a habit that will help you throughout your life- especially when you start making more money. When you live below your means- you have extra money to put away for the future or extra money to invest in your children’s future.

You will have control over your money, and with that control comes freedom.

When you start controlling your money, you never have to worry about any unexpected expenses like medical emergencies or a car repair. You will begin being confident about your ability to face any kind of financial emergencies when you start managing your money by reducing your expenses.

How To Start Living Below Your Means To Save Money

Do you dream of financial freedom? On some level, everyone does. Breaking the cycle of paycheck-to-paycheck living is a basic financial goal that most people share. Everyone dreams of financial independence. Spending less than you earn is the mantra you need to live this dream.

Ideally, it would be best to spend 20% less of your income to secure your future. Of course, that number can be laughably high to some of us. Whatever you can save, even if it is only a few dollars, can help you on your journey to financial freedom.

Here are some tips to help you get started:

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Have A Budget and a Plan

Planning is the key to success for every dream. In order to have financial freedom, you need to have a money plan in place.

  • First of all, calculate your income and expenses ratio.
  • Pick a budgeting method that works for you! One good and effective budget follows the 50/30/20 Rule.
  • This rule recommends that you spend 50% of your income on your needs, 30% on wants, and the remaining 20% should be saved for your emergency funds or in your saving funds.
  • You can play around with the percentages a bit and allocate more into the savings funds to create more money for your future, or alternatively, you may find you need to spend more on your needs.

Save First Spend Later

We tend to give priority to our expenses over savings and think of saving the leftover money. Changing this habit can help you save a decent amount. Automating your savings to deposit into a savings account immediately after you get paid is the number one key to financial success.

The best thing to do is, save at least 20% of your income as soon as you receive it. And then plan to spend the remaining 80%.

This way, you will not forget to save money regularly and will never exceed your set budget.

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Avoid Spending Money on Things You Don’t Need

A major part of our income goes to things we don’t really need. Some may be things you don’t even really want, and those should be fairly easy to cut out of your budget. Unused gym membership, anyone?

Analyze all your subscriptions and just cut off the ones you don’t really use.

Then comes the hard part. Do your best to cut out things you spend money on that you think you can do without. You can always add them back in later! Nothing is permanent! Cut down subscriptions and see if you can live without them or find a cheaper alternative.

Buy Used Items for the “Big Stuff”

Most of us prefer to have brand-new things over the used ones. It is not really necessary to overspend on new items when you can get some preloved stuff in good condition at a lesser price.

There are several groups on Facebook where people buy and sell preloved stuff. Look for such deals, and you may find the best things at a lower price. This is great for the “big stuff” that is also very expensive- items like cars and furniture.

Implement An Everyday Saving Habit

Yes, it may sound like overdoing, but it really works. Having a piggy bank is always a great option to save little money each and every day.

Make it a habit to add a few coins to your piggy daily. This small amount can add up to your emergency funds easily.

Starting a money-saving challenge is a great way to get you into the habit of saving money and can be fun as well. Working towards a specific goal within a specific time frame is a great way to accomplish something big.

Work Out Your Emotions

If you overspend or feel good surrounded by “things,” then try to figure out what really makes you happy. What emotions do these actions and items elicit in you? Can you get those emotional needs met with a cheaper alternative?

You may feel so good when you go on a shopping spree. If it works like a mood booster for you, try to avoid it altogether.

When your emotions start to overpower you, they will force you to go for a shopping spree every time you feel low. It will kill your budget and money-saving goals quite frequently.

Look for some other inexpensive ways to boost your mood instead of becoming prey to emotional spending.

Embrace a minimalist lifestyle and work on your mindful spending. Not only will you save money but you will be happier.

Start With The End in Mind

All this money-saving and living below your means is hard work. It helps to have a goal and an end-game in mind. Why have you decided that you need to live below your means? What does having extra money in savings do for you? What are your plans for the future? You can read this post and be encouraged to start taking control of your financial future, but if you don’t have a reason and a purpose, then you won’t do it. Why do you want this?

Once you have a vision and a purpose, it is much easier to change your habits and lifestyle. Getting started will be so much easier, and you won’t be as tempted to sway off course.

Are you going to start Living Below Your Means? Try to implement some of these tips and see where it takes you. It’s the first step on your journey to financial security!

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12 thoughts on “How To Start Living Below Your Means To Save Money”

  1. This is a great overview to help someone start growing the gap between their income and spending. It’s a habit that needs effort and practice to become second-nature, but it’s definitely possible!

    Thanks for sharing your knowledge, Robyn!

    1. Chrissy, you’re right, the gap between income and spending is so important. It really doesn’t matter how much you make (beyond a certain amount), the gap is the more important number.

  2. Great post, Robyn and Maria! This is great advice. I agree that changing your financial situation starts with the basics. Frugality is a great place to start no matter how much you earn. I really like your point on paying yourself first. That has been one of the keys to saving money for me. Budgeting and turning my finances into simple habits have helped a lot. I am definitely trying to implement all these tips.

    1. Graham, paying yourself first is key. There are so many ways that you can run out of month before you run out of money if you don’t pay yourself first. Happy to hear that you’re trying to implement these tips.

  3. Great post! Another great way to save money is to have two kids, haha!! I don’t have time to shop for myself. The other day I bought $7 flip flops from Superstore (I have resorted to being one those people who buys their clothes at the grocery store I suppose), I saved money not buying $25 Havaiianas!

    1. GYM – You’re right, sometimes having kids can be more expensive, but in other ways, they totally save you money. Right now taking a toddler to a restaurant is the last thing that I want to do.

  4. Great tips here. Pay yourself first was the key first step on my journey. I realized I didn’t miss the money if it never showed up in my account so making sure RRSP contributions at work happened got me to realize that I would find a way to live on what I had and if it wasn’t in my account to spend…I wouldn’t spend it.

    Also spending on things I value was a key turning point for me. Stop worrying about spending money on shoes (which I love) as long as i don’t spend lots of money on things I don’t value (like a newer car, bigger TV or shiny new tech toys). Keep the big picture in mind and enjoy the things I choose to spend money on.

    1. Pam – paying yourself first is a game-changer. I have always kept our savings in a different bank so that we can’t see it in our chequing account. If we don’t “see” the money we are less likely to spend it.

      Aligning our spending with our values has also helped us decrease our money stress.

  5. 100% agree that saving should start with living well below your means. For us that involved going from a house, to a townhouse, to a condo….4000sqft to 1000sqft in two years.

    1. Wow Cananomics, those are some big house moves. With housing often being one’s largest expense the more you can decrease it the better off you will be.

  6. H Maria,

    Great tips on living well below your means. Since the pandemic never bought new clothes. On course for the 3rd year in a row. I still do like to do bargain hunt at any thrift shops and FB marketplace for things that are a huge discount that we deem necessary. Minimalism or frugalism is a way of life.

    1. Rommel – shopping second-hand is a great tip. I think of it as a game, and not only is it good for your wallet, it’s good for the environment too. We are not big clothes shoppers here. But when we do buy clothes for our little ones, second-hand is our go-to.

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