Just like you don’t have to take a risk to make money, one of secrets of reaching financial freedom (where your income is more than you not only need, but more than you normally spend) does not depend on how much money you bring in every month. It is all about managing your money properly and controlling your spending. In the financial world, this is known as living beneath your means.
There are many ways, but here are three easy suggestions you can follow to make sure you live beneath your means, which makes available money to set aside for savings.
Stop doing wat the Joneses are doing. Start doing your own thing. This does not mean you have to move into a shoebox of a compartment or stop going out and have fun, but these tips will help you get used to making better choices and spend less.
Here are 3 ways to start living slightly beneath your financial means and still have fun with some money left in the bank:
- Bite into a slice of humble pie. Stop trying to outdo everyone – especially, friends, colleagues, family and neighbors – when it comes to spending. A friend of mine used to say if you can’t afford something, lower your standards. This is not the case – just spend less on certain things, and stop spending on anything unnecessary.
- Trim the fat from your budget and stop trying to impress others (they usually aren’t really that impressed – maybe jealous, but not impressed).
- Stop burning money – quit smoking. If not for your health or that of those around you, do it for the health of your financial future. In some countries the smoking habit can cost in excess of $10 a day. If you puff away that amount on a daily basis, you can save $300 per month by getting rid of what this really is – a bad habit. The best (not necessarily the easiest) way is to go cold turkey and get it over and done with.
- Stick with what has been good enough for the last year or so. Do you really need a new car? Do you have to live where you do? If you are forced to get another car, rather scale down. The same goes for the roof over your head.
- Put you grocery budget of a low-calorie diet. Focus on what you buy. Read the labels – many different brands offer the same nutritional value, but at a lower price. Check the unit price (per kilogram or milliliter rather than per unit). In certain countries it is quite possible to feed a family of four on less than (the equivalent of) $10 a day – offering a high quality meal to boot!
- When you go to the store, don’t do it on an empty stomach – don’t buy food when you’re hungry (or tired, for that matter – take the time and effort to compare prices). Look for special offers. The most expensive brand is not necessarily the best quality!)
- Alternate less expensive meals with regular meals. Prepare something very inexpensive for dinner every other night, such as beans and rice or pasta and homemade soup. Don’t be afraid of leftovers cooked up into something different either. It’s a nice change to go a bit more basic every now and then without being left famished. You will save money!
- Put something away – it’s not an option! You need savings for financial emergencies – and believe you me, they always come up in some form or another. But here’s the secret – make it part of your budget – like any other bill each month. You do have a budget workbook, don’t you?
- If you are paid weekly and you live in a two-income household, you and your partner can easily save say $800 a month by setting aside $100 per week. Your monthly goal is now $400. When any goal ‒ including a savings gal containing an end amount and a time-frame ‒ is broken into manageable smaller pieces, it’s a far less daunting figure.
- If something happens and you are unable to meet your savings goals, look for a way to make more money, or simply spend less. If you can trim off the fat from your monthly expenses, you will always have a way to meet your savings goals.
- Do the same with “fun money”. Budget for a fun outing so that you are not able to spend beyond your means. Plan what you want to do. If you are limited that way, you can’t shop until you drop. Once the money has run out, you’re done
You don’t need to make a complete U-turn and change your entire life to start living below what you actually can afford – just cut back on your spending and save the rest. It’s about minimizing expenses where possible and suppressing the urge to live larger, even if you can afford to. Simply not buying something you don’t really need, or going a different route (eat at home as opposed to dining out) anyone can slash huge amounts off their monthly bills and stash the balance into an interest-earning savings account!