Whatever your income may be, it’s important to spend less than you earn. When you impart frugality into your spending lifestyle, it can mean reaching your savings goals sooner or even putting an end to living paycheck to paycheck.
Making the choice to spend less can mean you’re better prepared for what life throws at your and can give you a boost of confidence. If you’re wondering how far below your means you should be living, experts recommend spending 15% less than you earn on a regular basis.
So, what changes can you make to reduce spending? Below is your guide to living below your means.
Create a Budget
All good money-saving plans start with a budget. When you decide to save money and reduce your spending, you need to begin by figuring out how much money you’re currently spending. Creating a budget will allow you to know how much money is coming in, how much is going out, and give you an idea of where you can cut corners. Since saving is so important, consider following a version of the 50/30/20 budget plan; meaning you spend 50% of your budget on needs, 30% on wants, and 20% on savings. Of course, you can adjust these numbers according to your unique financial situation, but it’s a starting point.
It goes without saying that in order to live below your means, you need to spend less. Consider ways you can reduce spending in the following areas:
- Grocery shopping
- Dining out
- Clothing purchases
- Monthly subscription services
- Cable and phone bills
Also, seriously consider how much of your spending falls into the “unplanned purchases” category. The more often you spend on impulse buys, the less money you’ll save in the long run.
Get Rid of the “Keeping Up with the Joneses” Attitude
A lot of spending is done by Americans to keep up with current trends or to feel equal in some way to your friends, family, or coworkers. When you depart from this way of thinking, you can save a lot of money. It’s not necessary to drive the best car, live in the best house, or have the latest in fashion. You’ll be the envy of the whole town when you save enough money to retire instead – trust us.
Consider Living Off One Income
This one can be tricky and may take a lot of workarounds to accomplish; however, if you’re in a two-income family and are able to rearrange finances and spending to where you can live off one income and save the other, the world is your oyster. If you can’t save the entirety of one income, trying to reduce spending enough to save a good percentage of it can be immensely helpful.
Take Advantage of Paying Things Off
When you’ve paid off your car, or smartphone, or living room set continue spending that money as if you are still paying the bill, just redirect it to your savings account instead of to the financers. You can potentially save a thousand or more per year by doing this.
Downgrade Your Car
Ignore the push to drive a nice car. This can often equal bigger monthly payments and really eat into your budget. If you opt instead to drive an older or used car that runs well, you can save a pretty penny.
Store Brand is Ok
Store brands are typically pretty decent and often even manufactured at the same factory your favorite name brand is. The next time you’re at the grocery store, try purchasing the store brand chips instead; this can save you big on your receipt.
Ask your employer to direct a portion of your payment each pay period to a savings account instead – it’s harder to spend what you don’t see!