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We have all heard about living within your means – spending no more money than you earn – but have you ever considered living below your means?

The key to financial freedom isn’t totally based on the amount of money you bring into the household each month.

It’s about learning how to manage your money and prioritize your spending. This is also known as living beneath your means.

Let me share my favourite quote from a book written in 1828, The American Frugal Housewife. I think you’re going to like this.

No false pride of foolish ambition to appear as well as others should ever induce a person to live one cent beyond the income of which he is certain. If you have one dollar a day, do not spend but seventy-five cents. If you have but half a dollar, do not spend more than forty cents.

Let me share with you some great ideas for living beneath your means in order to build savings. You won’t have to move into a shoebox or completely forgo entertainment and shopping – but these tips will help you learn how to make better spending choices.

Have a slice of humble pie

If you’re constantly in a competition with your neighbors, coworkers or friends, you’re never going to stop spending.

In the back of your mind, you’ll always try to “beat” them by having the newest car, biggest house, most expensive clothing, and more.

Once you eject the competitiveness from your mind, you’ll be able to effectively trim the fat from your budget.

If you’re a smoker, now is the time to quit.

If not for your health, do it for your financial future.  I’m not sure how much a pack of cigarettes is these days, but I’m pretty sure they’re at least $10 around here.  If you’re a pack-per-day smoker, you can save $300 or more per month by ditching this harmful habit.

What other habits do you have which are harming you physically and financially?

Work with what you have, as much as possible.

There’s no need to upgrade your car if the one you’re driving now gets you from point A to point B without monthly repair bills. If your current home isn’t to your liking, but it’s still a suitable, livable home, make some updates or redecorate – moving is expensive and upgrading to a larger, more expensive home will mean increased bills.

Of course, this isn’t a blanket statement and “if” is a big word. Carefully assess your family’s situation. However, the war time motto – Use it up, wear it out, make it do or do without – remains a useful guideline.

Trim your grocery budget

Coupons aren’t the only way to save on groceries (though they can certainly help if you’re in the United States and can make use of them).

You just need to be conscious of your purchases.

It’s possible to feed a family of four for under $10 – with a high quality meal to boot!

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Never go grocery shopping hungry or tired.

Three nights per week, cook up something very inexpensive for dinner, such as beans and rice or homemade soup. It’ll be a nice change of pace, without feeling deprived. And of course, the biggest bonus is that you’ll save money! I like planning a “clean out the refrigerator” day on Sunday because it’s such a busy day, a soup night and a beans night. Here in the Maritimes, Friday night Baked Beans are a long-standing tradition that is frugal and filling.

There are so many ways to save money on groceries, but my simplest, fool-proof tip is this – build up a deep pantry of food that has been purchased at the best possible discount. If you don’t have even a basic pantry, you need to read this post to see why keeping a pantry is a vital first step.

Make savings a priority

Savings isn’t optional. It’s necessary for financial emergencies – and they always come up in some form or another. Treat it as any other bill each month. Place this, as every other bill, in your budget workbook. You do have a budget workbook, don’t you?

If you’d like, break it up into pay periods. In order to save $800 per month in a 2-income household, each partner would have to set aside $100 per week. A $400 goal would be just $50 per week. When a savings goal is broken into manageable pieces, it’s a far less daunting figure.  Of course, your household savings goals will depend on a lot of things like income and children.

When you’re unable to meet your savings goals, either find a way to make more money or spend less money each month.

Yes, it sounds simplistic, but it’s the basic truth.

If you’re able to trim the fat from your monthly expenses, there will always be a way to meet your savings goals.

Budget your “fun money” as well.

When you budget a set amount for unnecessary shopping trips and entertainment, you can’t shop until you drop. When the money runs out, you’re done. It requires a bit of self-control, and the best way to stay in control is to understand exactly why you are budgeting and saving money.

Your entire life doesn’t need to change in order to live below your means.

Okay, you could go and live in the deep woods, in an off-grid cabin for three years to keep your expenses well below your income. Hey – we’re living proof that it works. In those three years, we repaired our credit, learned to live below our means, and moved into a beautiful old fixer upper in town. Rags to riches.

But, honestly, that’s just not going to be reality for most people, and that’s fine. Living beneath your means is certainly possible, no matter where you live.

It’s all about minimizing your expenses where possible and refusing the urge to live larger – even if you have the means to do so. By implementing these simple tips, you can slash hundreds of dollars – if not more – off your monthly bills and stash it into your savings account!

Just Plain Living

Living BELOW - not within - your means is the key to financial security. If you spend everything you have, you'll never get ahead.

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