Easy Ways to Learn How to Live Below Your Means

We're often told that the secret to financial ease and peace is living below our means.  Simply put, this means spending less than you earn.  It sounds straightforward, but it can be hard to do.

In large part, that's because our culture pushes us to spend everything we have and then some.  Carrying debt is considered normal – in fact, it's a requirement if you ever want to qualify for a home loan.  (Yes, you have to have debt so you can prove that you're good at making payments.)

Additionally, most of us increase our expenditures when our income goes up.  It's called "lifestyle inflation," and it too is normal in our society.  What used to be an occasional treat grows into a daily necessity, and it becomes impossible to imagine a return to a simpler lifestyle.  That seems too much like "failure."

And so we get caught in the trap of always wanting more.

Let's avoid the trap, and try one or more of these practical tips to spend less, feel in control of where our money goes, and achieve more financial security – all without feeling deprived.

6 steps to spend less than you earn

1.  Automate savings.

One of the easiest ways to live below your means is to have money automatically taken out of your paycheck and deposited into a savings account.  If you get paid via direct deposit, set up a transfer on payday.  This works with a 401(k), an IRA, or any other pension plan.  It also works with an account at your local credit union.  Keep it separate from your checking account so you're not tempted to dip into it casually.

The amount doesn't have to be large.  Eat one less restaurant meal, skip one weekend at the golf course, or drop one streaming service, and start saving that money each month instead.  It's a little reduction that doesn't have to make your life meager.  But that little bit lets you establish the habit of saving, and over time your account will grow without extra effort.

2.  Create a cushion.

Set your budget as if you earn less than you actually do.  For example, if your monthly take-home pay is $5,000, make a budget for $4,750, or even $4,500.  This lets you save 5% to 10% of your salary – not necessarily for emergencies or a vacation, but to let you practice living on less.

If an emergency or an opportunity does arise and you have to use some of this money, that's okay.  The goal is to ensure that you're not spending more than you make.  A financial cushion lets you remain stable and out of debt.

3.  Stop being a follower.

Many of us spend money to impress others, avoid negative judgements, or feel like a success.

If you find yourself making an unnecessary purchase, pause and ask yourself, "Why do I really want this?"  If the answer has anything to do with what someone else has done, said, or posted, that's a sign to stop and think about what you're doing.

True confidence comes from making your own decisions, following your own goals, and exercising self-control – not from material possessions.  When you stop seeking external validation, you become a leader.

4.  Delay big purchases.

Before making a significant purchase like a new TV, computer, sofa, or car, wait for a set period – ideally from one to six months.  Often, you'll find that the urge to buy fades, or that you're able to come up with an alternative solution.  Impulse purchases can drain your savings or put you in debt.

Taking this time helps you distinguish between true needs and temporary wants, which prevents buyer's remorse.  It also gives you time to save for the purchase if it's something truly necessary.  Being able to pay cash (or in the case of a car, perhaps a substantial down payment) makes you feel wealthy and confident as you easily afford what you need.

5.  Try a Buy Nothing month.

Plan ahead and choose a month in which you'll only spend on basic essentials.  You can cancel or pause subscriptions, services, and other non-necessary expenses.  Find free ways to entertain yourself, and use up what you already own.  This isn't about deprivation – it's an experiment that helps you see what you can do without.

Make your "rules" and discover how much you already possess.  Practice resisting impulses, dealing with boredom and temptation, being mindful and selective, and using your creativity and resourcefulness.  After 30 days, you'll likely have some new habits that help you cut spending in the long run.

6.  Practice gratitude.

I know I say this a lot, but gratitude is the key to satisfaction.  Instead of focusing on what you don't have, appreciate what you do.

Maybe you're content with your possessions until you see someone with something "better."  Suddenly you feel needy!  But if you were happy before you saw that new thing, then what you already have is enough.  Your discontent is caused by greed.

Gratitude helps you resist the urge to constantly upgrade.  It helps you resist costly comparisons and unnecessary purchases without feeling deprived.

Related article:  How to Beautify Your Life with Gratitude

You can live below your means.

Even with a small income, you can find $5 to save, just to give yourself practice at not spending every penny you make.  Let these strategies help you shift your mindset and achieve financial stability without feeling restricted.  Making the intentional choice to save and avoid debt is an investment in your secure future.

This weekend is your last chance to get the special "introductory" price of my new book, The Wealthy Minimalist.  A companion to the bestselling Simple Money, I know you'll benefit from having both.