How to Live Below Your Means: 10 Practical Tips

Living below your means doesn’t mean sacrificing your quality of life. Explore the 10 practical tips for gaining financial success with HyperJar. Learn more today.
Colby Brin
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October 13, 2022
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4
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Living below your means isn’t always easy, but it’s essential for financial security. If you’re regularly dipping into your savings or overdraft, you are living above your means. The only way to combat this is to do the complete opposite and live below your means.

To make this work, you must spend less to have money left over each month. Living below your means requires dedication and discipline, and you’ll have to leave your habit of impulse buying at the door. 

This guide is for you if you have champagne taste but a cider budget. We’ll cover the following:

●  What Does Live Below Your Means Mean?

●  The Importance of Living Below Your Means

●  10 Practical Tips for Living Below Your Means

What Does Live Below Your Means Mean?

Living below your means is the only way to save. When you’re sensible with your money, you’ll have savings for a rainy day. It means that you’ll have money left over for emergencies, to pay any debt off more quickly, or simply to have the security of surplus money in your account.

If you were to lose your job today, how long could you continue to fund your life as it is? Many people don’t understand the importance of living below your means until it’s too late. Once you find yourself in financial trouble, it can escalate quickly. Be clever with your money now and create a successful financial plan that works for you.

Whatever your approach, living below your means is a great way to improve your financial situation and give you more financial freedom in the future. 

Why You Should Live Below Your Means

It can be tough to admit that you don’t have the budget to live a certain way. But accepting your situation and taking control of it is the first step to financial freedom.

You should live below your means because the alternative is much worse. You may feel pressure from friends and family to keep up with their lifestyle. True friends will understand and organise cheaper get-togethers that are just as fun.

You can still live below your means without sacrificing your way of life. Yes, there may be things you hate to stop doing, but with the right planning, there’s nothing you should have to give up completely. You can live below your means by following these tips and budgeting properly.

Here are some key reasons for the importance of living below your means:

Avoiding debt

Too much debt can cause serious financial problems and impact your chances of getting a mortgage later in life. To avoid debt, you need to know how much you earn to budget your money. The HyperJar savings jars are a great option as you can see everything clearly in the app, so you know where you stand.

Allows you to save money

When you have money left over, you can save it. These savings can be used for whatever you need or saved to help you reach your financial goals. Whether it be for retirement, saving for a holiday, or a house deposit. It’s a good idea to keep some extra for emergencies too.

If you have the knowledge and means, you could consider investing some of the money you save. There are apps that do it automatically for you, so you don’t have to be an expert, but you have to understand it. Be aware that investments can go down as well as up. 

Less financial stress

Living paycheck to paycheck can cause anxiety and worry, especially if you have debt. If you live below your means, you’ll worry about money less, as you know there is money in your account. You’ll have more financial freedom and safety as you’ll be able to manage unexpected emergencies without having to borrow money.

10 Practical Tips to Live Below Your Means

To understand how to live below your means, you need ideas on how to do it. We’re on it! Here are ten painless ways to live below your means: 

1. Track your spending 

You need to know exactly how much income you have to track your spending efficiently. Then add up all of your expenses so you know what’s coming in and going out. The best way to do this is with a budget planner. If your expenses exceed your income, you’re living above your means.

2. Make a budget

Use a budgeting planner to write down every transaction during a typical month, down to the last penny. This should include your after-tax income and other income sources such as side hustles or selling items on marketplaces.

Then make a list of your regular expenses, including:

·   Housing

·   Food

·   Transportation

·   Insurance

·   Debt payments,

·   Direct debits 

Once you have a detailed list, you can see where you need to cut back or what luxuries you could go without.

3. Pay yourself

Paying yourself means putting a little aside each payday and putting it into a savings or investment pot that will help you in the future. It’s recommended to live on around 15% less than you earn to create a health savings buffer and keep your money worries at bay.

4. Spend less on leisure

Spending less on leisure still means you can enjoy your life, but you need to be aware of how much you’re spending.

-   Find free or low-cost activities that you enjoy

-   Wait until a film is available to stream instead of going to the cinema

-   Cook at home instead of going out to eat or ordering food

-   Host social nights with friends/family instead of going to bars or clubs

-   Limit the amount you go out to once or twice a month

5. Pay less interest

Paying off high-interest debt quickly will mean you pay less interest. If you have a high-interest credit card, consider a 0% balance transfer card, so you don’t pay interest at all. You could also invest in a lower-interest-bearing account, such as a savings account.

HyperJar Jars allow you to split all your savings into jars and link your current cards, so you only spend from the jars you need to.

6. Get extra income

Getting extra income is a great way to top up your earnings. Here are ways you could get extra income:

-   Get a part-time job

-   Start a side hustle

-   Invest in assets that generate passive income

-   Participate in market research

-   Sell things you don’t need

-   Deliver fast food in your spare time 

7. Spend less on shopping

Overspending on things you don’t need is a bad idea. It’s normal to want the latest gadgets, new clothes, or mobile phones, but ask yourself if you really need them. You need to consider whether spending the money is worth it or just a material purchase. 

-   Save money and earn rewards with brands that work with us.

-   Cut back on unnecessary purchases

-   Cancel monthly subscriptions

-   Use vouchers or student discounts

-   Avoid impulse and expensive buys

-   Creates a saving jar and save towards the purchase each month

8. Downsize your home 

Downsizing your home can be difficult, but it can be a good way to save money and simplify your life. If your current home is too expensive to run or the rent is too high, downsizing will save you a lot of money. If you have a spare room, consider getting a roommate, renting it out, or listing it on Airbnb.

9. Improve your money mindset

It’s easy to get pulled into the rich lifestyles shown in the media, but that isn’t reality. Managing your money successfully is all about perspective. This is your money, and you need to know how to spend it properly. Don’t focus on the negatives and have a positive mindset about your money. Living below your means is a good thing. It’s the path to financial freedom and living life free from money worries.

10. Stay disciplined

Discipline is key to living below your means. The temptation will be around every corner, and although it will be difficult, it will be worth it. Create a strict budget and keep to it and avoid impulse purchases. In 5 years, you will be so glad you did.

Conclusion

Living below your means isn’t easy, especially in the beginning. You may feel like you have to change your life in ways you didn’t expect. Stay positive and focus on the good things that you’ll achieve by living below your means and saving money each month.

If you’re struggling, there are resources available to help you manage your debt. Money Saving Expert has some great tips for those who need more serious support.

Colby Brin

Head of Copy

Colby Brin is Head of Copy at HyperJar. With over 17 years of professional writing experience, Colby’s been a journalist, ghostwriter, language consultant, and writing trainer. Having previously served as Head of Copy at Wise, he’s worked in fintech for over six years. A native of New York City, Colby graduated from the University of Michigan, and has lived in London for two years.

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