The world we live in has a current obsession with “stuff” and status.  We’re constantly tempted to compare ourselves to our Facebook friends and people in the media.  It’s a never ending battle to make our lifestyle appear to be the best it can be.  We have to stop trying to keep up with the Joneses, because in all honestly, the Joneses are broke. This type of consumption lifestyle and buying everything you want will only lead to stress, debt, and bankruptcy if you can’t pay the debt! Yikes.

Learning to live below your means will set you free. Living below your means allows you to have extra money for paying off debt, saving for retirement, or whatever your current financial goals may be. It’s crucial for good money management and reaching your financial goals. The amount of money you make isn’t going to matter if you don’t have your spending under control. You could have a great salary, spend it recklessly, and end up living paycheck to paycheck despite your level of income. Living beyond your means, and breaking even, will not get you to financial freedom. Living below your means will set you free.

 Related: How to Stop Living Paycheck to Paycheck

Living Beyond Your Means

If you’re spending more money than you’re making each month, then you’re living beyond your means.  If you have car payments or a mortgage that exceeds the recommended percentages, then you’re living beyond your means.  This lifestyle comes from making big purchases with debt that you truly can’t afford, and also from the daily choices you make that cause you to overspend.  This kind of lifestyle will lead to debt accumulation of epic proportions.  People living this way are often addicted to instant gratification and lack self-control or discipline.

You know income is the most powerful wealth building tool.  But, when you’re constantly living beyond your means and spending more income than you actually bring home, you’re never going to have any income left to invest into building wealth for your future. You have to stop only living for today and stealing from your future.

Don’t Just Break Even

If you’re really going to make a change and build wealth for your future, your lifestyle has to go below just the break even point.  Breaking even means the amount of income coming in each month is equal to the amount of money going out each month.  This means you could get by without any debt, but you’re never going to have savings for emergencies, save for retirement, build wealth, or be able to give outrageously. And if an emergency did come up, you might be forced back into debt to pay for it.  You’ve got to be committed to a lifestyle that does more than just break even.   You may feel like you’re doing well and living stress-free in your finances, but you’re only maintaining when you need to be building.

Living Below Your Means

Living below your means is the sweet spot.  You need to spend less income than you bring in each month so you have money leftover to save and invest.  This can be a weird concept when you’re used to the world telling you to spend, spend, spend but it’s the only way you’re ever going to prepare for your future.  This means having the discipline and self control it takes to say “no” to yourself and delay instant gratification.  It means making the hard decisions when you’re tempted to spend.  Spending is fun, but you need to wait until you can afford it.  One day you will be able to spend more freely, but you have to take care of your future first.  You don’t want to get to the end of the month, or the end of your life, only to find out you don’t have enough money to make it all the way.  The tortoise always wins the race...slow and steady.

Tips for Living Below Your Means

The changes in your mindset, habits, and self control it takes to live below your means won’t happen overnight and it will be more challenging for some than others.  Let’s dive in to some strategies for living below your means. 

1.CREATE A MONTHLY BUDGET

Having a plan for your money will allow you to limit your spending and get it under control. You can make sure you’re prioritizing certain areas. You will be able to designate money to go towards your financial goals and make things happen! Budgeting and tracking your expenses throughout the month will also help you see where your spending weaknesses are and adjust accordingly. Through the process of creating a budget, you will find out exactly what your income is. After all, you can’t begin to live below your means if you don’t know what that number really is.

Related: How to Create a Budget in 7 Easy Steps

Related: Why You Need a Budget

2. DON’T TAKE ON MORE DEBT

Having debt means living beyond your means. You’re spending money you don’t have yet. Even if you can afford the payments, putting purchases on credit cards, personal loans, or any type of debt is living on more than you make. This means you will need to plan and save for large purchases so you don’t have to go into debt. Financial freedom will only come once all your debt is gone. Don’t take on new debt because that will only lengthen the process. You need to get out of debt as quickly as possible and the only way to have extra money to pay off debt is to live below your means. It all works together.

Related: Why You Need to Break Up With Debt

If you’re ready to start paying off debt or you want further guidance in your pay off journey, get my completely FREE downloadable Debt Free Guide. This is a full guide of reading and prompts that gives you the steps to paying off debt in a bite sized format so that you can stop feeling overwhelmed and start feeling motivated!

3. REDUCE YOUR SPENDING

Take a look at your spending each month and evaluate areas where you might be overspending. Reduce impulse purchases, cancel subscriptions you’re no longer using, consider things like less eating out. Reduce your spending as much as possible so you have more money to put towards financial goals like saving, investing, paying off debt, etc. Just know that you do need to allow yourself to spend on things you truly enjoy because being miserable lead you to burn out.

Related: 20 Ways to Reduce Impulse Purchases

4. INCREASE YOUR INCOME

If you’ve reduced your spending and still can’t find enough room to live below your means, you need to increase your income. This could mean a side hustle, a part-time job, overtime, etc. Be careful to not increase your lifestyle as you increase your income. Your spending should stay the same, or less, to make sure you’re using that extra income towards financial goals.

5. STOP THE COMPARISONS

It can be so tempting to try and keep up with the lifestyles of your friends, family, and the people you see on social media. It’s important to remember that you don’t likely know their actual financial situation. Everything may seem all fancy and shiny from the outside, but they could be putting it all on credit cards or still living paycheck to paycheck. The point is, you don’t know, so you shouldn’t compare. The only thing you should be comparing is where you were to where you are now.

6. KNOW YOUR FINANCIAL GOALS & PRIORITIES

It can be tough to make an progress is you don’t know where you’re going. It’s important to know what financial goals you’re currently working towards and what your priorities are. If you’re paying off debt, you know your priorities need to be making extra payments to reduce the debt as fast as possible. Keeping these things in mind will help you to keep the spending under control and stay motivated and focused.

It’s time to put these strategies into place and start living with a lifestyle that fits below your means. You’re going to have to make tough choices and challenging changes if you’ve been living beyond your means or breaking even. Just stick with it, stay focused, and remember why you’re doing this. Don’t sacrifice the things you want most for the things you want now. You can learn to delay gratification and live below your means. You’ll have money to pay off debt, save, invest, and you’ll be on your way to financial freedom.