Living below your means can make an enormous difference in your life — and you can do it automatically. How? By committing to doing two things:
- Always saving and investing a percentage of your income, and
- never spending money that you don’t already have.
And I do mean always and never.
But it’s hard…
Yes, it can be hard to go from living above your means (or just barely within your means) to living below your means. But that’s often got more to do with it being a shock to your system as you work to break a habit than it literally being hard to do.
Living below your means takes a combination of commitment and perseverance through the inevitable little tests that seem to happen not long after you announce your intention to turn over a new leaf.
But it’s not really that difficult to live below your means in most cases.
In fact, you may not realize it, but no matter how much you’re spending right now there already IS a limit to the amount you can spend. In some cases, that’s called your credit card limit. Occasionally, it’s called the point at which you can no longer get credit. But it is a limit.
It’s up to you to lower that limit.
Start small, but start somewhere
If you’ve already got an emergency fund saved up, paying off debt is one very effective place to start.
If you’re not interested in doing that though, you can at least start by refusing to borrow additional money. Just making that one simple change will begin to free up more and more of your money, because over time you’ll be sending less and less of it away to lenders.
If you don’t already have an emergency fund saved up, considering making that your priority. Begin by making a list of what you’re willing to consider an emergency. Keep in mind that in many cases, the longer your list, the larger your fund will need to be — because you’ll be accessing it more often. Then start funding it by having a certain percentage of your paycheck automatically deposited to your emergency fund. You won’t miss it as much if you never see it.
As far as where you’ll get the money for your emergency fund goes, unless you meet the poverty guidelines, I can almost guarantee there is something you could cut back on or change to get a little bit of money to send to savings. (Seriously, if you’re not sure what that could be, email me and I’ll let you know what possibilities I see.) Send the difference that you create to your emergency fund.
(Of course, you can also do what you can to make more money to increase the amount of money you’ve got available.)
Living below your means is satisfying
While it may seem like a struggle at first, that’s mostly because — if you’re like me — you find it hard to say no to the things you or your loved ones want. Or just the the things you’ve been used to doing out of habit. But the thing is, the more you say no to those things now, the more you can say yes later. And saying yes later can be a whole lot of fun, because those yeses will be guilt-free.
Living below your means doesn’t mean a lifetime of self-denial. It means making an adjustment, and then reaping the benefits as you go along. Living below your means is actually very satisfying — because you have money to do the things you want to do; and you’ve built up some financial security.Posted in Money Management on 12.07.11 with 25 comments.