18 Tips To Successfully Live Below Your Means (And Still Be Content)

Woman with shopping bags demonstrating how to not live below your means

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Live below your means so you can save more

Our culture makes it easy for us to spend more than we have with so many credit options. Credit cards, payday loans, and even our home’s equity are opportunities to meet our demand for immediate gratification.

However, when you ignore the reality of your current situation and continue to buy more than you can afford, you cheat yourself of ever having financial peace. That’s why learning to live below your means is critical to your fiscal health.

When you commit to a lifestyle that doesn’t surpass your income, you make a real difference in achieving a debt-free life, saving more money, and reaching financial freedom.

Later, I’ll share several practical tips to help you learn how to live below your means, so you can be financially secure in retirement.

First, let’s talk about what this phrase actually means.

What does it mean to “live below your means”?

When you live below your means, you live on less than you earn.

You are intentional about making financial decisions that won’t consume all of your current income, so you have some left over for emergencies, retirement, and savings goals.

Living below your means will help you create financial security so you can be prepared for life’s curve balls and enjoy a comfortable retirement. Choosing this type of lifestyle will allow you to take control of your money – reducing financial stress and giving you more options in life.

Any smart financial planner will tell you to make this a priority in your money management. No matter how much you make, spending less than you earn is the best way to build wealth and achieve financial freedom.

Many people get caught up in lifestyle inflation so they can keep up with the Joneses. This can create a habit of living beyond your means, and getting stuck in a paycheck to paycheck cycle.

However, those who keep trying to widen the gap between expenses and income will be the ones who come out ahead! Don’t fall into the trap of overspending on temporary, material purchases. Stay committed to supporting your future self, and learn to live below your means.

The good news is, you don’t have to make huge adjustments in your life in order to start living below your means. If you can stick to a budget, create some good money habits, and set a few meaningful goals, you’ll be saving more money in no time.

18 practical tips to live below your means

The key to widening the gap between income and expenses is to spend less and/or earn more. Adding either one to your money management habits will help you increase your savings. Doing both will skyrocket your progress!

Here are 18 practical tips to help you live below your means.

Practical Tip #1: Follow a budget

If you don’t know where your money is going, you’re not in control of your finances.

Create a realistic spending plan that includes your total monthly net income and all current monthly expenses. Then, when you subtract the outgoing from the incoming, you should get a positive number. (Or, you could end up with $0, if you use the zero sum budget method.)

If your balance is negative, then your *means* aren’t enough to support your current lifestyle. That means you’ll need to cut back on meaningless spending.

Most financial experts will advise their clients to follow a budget, because it keeps you focused on the day-to-day movement of your money. If you’re diligent with following one, you’ll be able to stay within the boundaries you’ve set for yourself.

Practical Tip #2: Track your spending

Pay close attention to what you spend your money on, so you don’t bust your budget and get discouraged. Check in and update your day-to-day spending often. You can do this with a spreadsheet or mobile app (check out Mint or Calendar Budget). This will keep you focused and tuned in to where your money is going.

Tracking closely every single transaction will help you see where your budget leaks are – those small and meaningless expenses that make a big difference over time to diminish your savings. These are great opportunities to cut back.

I find that if I go longer than a few days without recording transactions and updating my budget, my daily spending can get a little out of control. Be diligent and consistent. You’d be surprised how spending these small amounts can quickly add up over time.

Practical Tip #3: Be frugal

Being frugal with your money means you make financial decisions to minimize waste and expense. It doesn’t mean you’re cheap or you won’t spend money without a coupon. Instead, you lower basic expenses in some areas so you have more money for things that hold more value to you.

For example, you might buy your clothes at a thrift store so you can afford a nice family vacation. Or, you make a conscious choice to live in a smaller space so you have more money to travel. 

Practicing frugal habits is just one way to live below your means. This kind of intentional lifestyle will help you distinguish between needs and wants, and free up more income for savings.

Practical Tip #4: Reduce or eliminate expenses

Once you get on a budget, it’s easy to see where your day-to-day spending habits are depleting your savings capacity. Some of these discretionary expenses will be meaningless, and you can get rid of them altogether. Others are not optional, but can be reduced.

Here are a few unnecessary expenses that can be cut out of your budget:

  • Monthly subscriptions
  • Dining out
  • Entertainment & sports events
  • Car loans
  • Alcohol, cigarettes, and other vices
  • Expensive hobbies
  • Beauty treatments
  • Impulse purchases

Of course, removing these things from your budget doesn’t mean you have to completely go without. If you quit the gym, you can work out in your garage. If you stop going to the movies, you can stream on the TV. There is almost always a way to replace these expenses at a lesser or even zero cost.

Now let’s look at those areas where you can lower your living costs and save money:

  • Auto insurance
  • Mortgage payment
  • Utilities
  • Groceries
  • Credit cards

All of these categories are typically essential living expenses that must be paid. However, you can take steps to lower insurance premiums and interest rates, or minimize your grocery and household costs to save money.

Be intentional with aligning your spending with your values. Decide what’s important, and what can be eliminated.

Wherever you decide to cut expenses, every difference in cost will help you widen the gap between what you earn and what you spend. 

Practical Tip #5: Live a healthy life

What does your health have to do with saving more money?

According to some financial estimates, you may need upwards of $300,000 for medical expenses in retirement.

Eating a balanced diet and getting enough exercise will keep your medical expenses low, especially as you get older. This will help you minimize medical bills and debt, which can eat up your savings very quickly.

Practical Tip #6: Use cash instead of credit

One way to ensure you’re not living beyond your means is to always pay with cash.

This is not usually the most convenient method of payment, but this strategy will help keep you from spending more than you make.

Don’t fall for the promise of credit card points and benefits. If you can’t pay off the balance in full every month, it’s not worth it.

It’s so easy to trick ourselves into counting on future income to pay for stuff today. This mindset almost always works against you. Besides, you don’t know what future expenses will arise.

Make a commitment to avoid using credit cards at all costs. When you shop online, use your debit card so the funds come out of your bank account.

Try to use cash when you’re shopping in a physical location. The act of handing over paper money will actually cause you to be more thoughtful about buying something.

Build the habit of saving before spending. If there’s a large purchase you want to make, put some money aside every week until you have enough to pay in cash.

And, let your mantra be: if I can’t pay with cash, I can’t afford it.

Practical Tip #7: Build an emergency fund

If you don’t have the funds set aside to pay for an unexpected expense, you are essentially living beyond your means.

This is because of the nature of emergencies – you don’t know when they’ll happen, but you know they will.

So, when (not if) something arises that you didn’t plan for – like a flat tire or a broken dishwasher – you would undoubtedly have to pay with money you don’t have to cover it.

Building a dedicated emergency fund can protect you from going into more debt when unplanned expenses pop up, and help you to live below your means.

An ideal goal is saving 3 to 6 months of living expenses, but this may take you several months to achieve.

Dave Ramsey’s recommendation is to quickly save $1,000 within a month or two. This will cover minor emergencies and give you some breathing room.

Then, find space in your budget to put money in savings every month. Use an automated method so it’s not a choice, and you’ll never miss it.

Practical Tip #8: Pay yourself first

One of the best ways to build savings is to pay yourself before anybody else. This means adding money to your savings accounts before you pay any other bills. 

This smart financial habit will make sure you put your savings first and eliminate the temptation to spend beyond your means.

Create a savings category in your budget, and pay yourself like you would any other bill.

Practical Tip #9: Automate your finances

It’s never been easier to manage your money, with the help of online banking.

You can greatly reduce the time you spend on paying bills and balancing your checkbook by using the tools your financial institution provides through its website and mobile app.

Set up recurring payments through the online bill pay feature, and you’ll never miss a due date again. No more late fees or bounced checks! 

In addition, automate weekly or monthly transfers so you can save money before it even hits your checking account. You can have your employer set up paycheck deductions so money goes straight to a savings or retirement fund before it’s directly deposited into your regular account.

Automating your finances will minimize the number of financial decisions you have to make, and ensure you’re paying yourself first.

Practical Tip #10: Budget with one income

It’s easy to get caught up in the possibilities that two sources of revenue can provide. A bigger home in the suburbs, better private schools, newer cars, etc.

However, if you can downsize your expectations and your lifestyle, you might be able to just live off of one paycheck. This would free up thousands of dollars in yearly income for savings.

Talk about living below your means! That’s like living on *half* your means!

Instead of focusing on what you could buy today, think about the interest you would make on all of that extra money. And, the financial freedom you would have by the time you retire.

Practical Tip #11: Control impulse spending

Those small, spontaneous purchases you make – like a $5 coffee or a $20 pair of jeans – add up over time. If you want to live below your means, you’ll need to break the habit of impulse spending.

A smart way to do this is to always have a list when you go to the store. Write down only what you need, stick to the list, and pay in cash.

Other tips to help you curb your spending include keeping your credit cards at home, avoid online shopping, and unsubscribe from marketing emails.

Also, make a rule to always wait 24 hours before you spontaneously spend more than $25. You may decide you don’t want to give up the money after you’ve had time to think about it.

Practical Tip #12: Right-size or downsize your home

Don’t get caught up in that expensive house with the corner yard – even if you can afford it.

The bank will gladly approve the loan, even if it squeezes every dollar you need from your income. But, anybody who’s ever owned a home knows that the cost of homeownership goes beyond their monthly payment.

This can ultimately result in being “house poor”, where too much of your income is going towards the mortgage and maintenance payments.

Instead, find a house where the costs of homeownership won’t stretch the limits of your paycheck. You’ll have some breathing room, and you can save the extra money for the kids’ college education or your dream retirement.

If you’re already a homeowner, consider downsizing. You could save thousands every year by reducing your largest monthly expense.

Practical Tip #13: Plan big purchases

The last thing you want to do while you’re trying to build savings is go into debt for a big purchase. This doesn’t mean you can never get that big screen TV or newer-model car. It’s just means you should plan ahead.

If your vehicle’s miles are up in the triple digits, you might need to replace it within the next year or two. Don’t wait until it breaks down and end up with an auto loan! Create a car fund in your budget *now* and set aside a little money every month. Then, when the time is right, you can make that big purchase with cash.

Having cash in hand puts you in the driver’s seat. You can choose to buy a used car from a private party, or negotiate with a car dealer because you’re paying in full. 

Saving for big purchases also puts a limit on the cost. If you save $5,000 for a home improvement project, you’ll be more likely to make those choices that keep the expense within your budget.

Planning for big purchases at least 6 months ahead, and keeping the expense as low as you can, will help you avoid debt and live below your means.

Practical Tip #14: Drive a used vehicle

A brand-new car will have its biggest drop in value within the first 12 months of ownership. After 5 years, it will be worth about 60% less than its original cost.

Save up the cash and pay for a used car in full. Find one that’s gently used, over 5 years old, and with low miles. Do some research to find the makes and models with low maintenance issues.

You’ll pay less in insurance and registration fees, but still have a reliable vehicle without the monthly payment.

Practical Tip #15: Lower your interest rates

If you have any kind of debt, you’re likely paying interest. This is like paying someone else so you can keep the debt – as you’re paying it off! 

There’s not much you can do to eliminate the interest, but you can minimize this expense – and sometimes even reduce your rate to zero (at least, temporarily!).

Refinancing your mortgage to a lower annual interest rate can potentially give you the biggest savings. If you can reduce your payment by $200-$300 a month, you’ll save thousands over the life of the loan.

For high-interest credit card debt, consider doing a credit card balance transfer with a 0% promotional rate. Taking advantage of a low or zero-interest introductory period can make a huge dent in your interest costs.

I’ve done this many times to reduce how much I pay in interest.. Just make sure the balance transfer fee (typically 3% of the transfer amount) is lower than the amount of interest you’d normally pay.

Practical Tip #16: Learn to negotiate

This might feel uncomfortable at first, but learning how to negotiate your bills could potentially save you thousands in the long run.

This is especially true of medical bills. I’ve been able to cut some medical balances in half by offering to pay cash in full.

If you are a responsible person with debt, and you’ve been a long-time customer, you can ask each credit card company to lower the interest rate. They know you’re reliable and capable of making your monthly payments on time, so they have the incentive to keep you as a customer.

Check your credit card statement for your current rate. Keep in mind that not all of your balance may have the same rate.

It doesn’t hurt to try, and you might just create a little extra margin in your monthly expenses.

Practical Tip #17: Save the windfalls

Decide ahead of time what you’ll do with any unplanned income. Time to time, you’ll probably be the recipient of monetary gifts, a large tax refund, an inheritance, etc. Or, you get a raise or promotion. Even a little bit of money can grow substantially over time with compound interest.

If you don’t need this extra money for any pressing expenses, consider adding the full amount to savings. Or, you could decide to save a certain percentage of all unplanned income increases.

When you have a plan for it, you won’t blow it spontaneously on stuff that doesn’t really matter.

Practical Tip #18: Increase your income

As I mentioned earlier, you can live below your means by spending less or earning more – or both. By creating additional sources of income, you can reach your savings goal faster.

Most people don’t like the idea of getting a second job in addition to their full-time work week. However, in this current age of the gig economy, making a little extra money on the side has never been easier.

Just picking up an extra few hundred dollars a month could easily allow you to live below your means comfortably. You could do this a number of ways:

  • Drive for Uber or Lyft on the weekends
  • Work a few evening hours at your favorite coffee shop
  • Offer freelance services on Fiverr
  • Ask for a raise or apply for a promotion at your current job
  • Start a side hustle in your neighborhood by walking dogs, house sitting, tutoring, etc.

Think about how you can monetize a skill or service that you already have experience with. This second form of monthly income can give you the freedom to determine the hours you want to work and how much you want to charge.

If what you offer is in demand, you may only need to work a few extra hours a week to make a huge difference in your finances.

How to adjust your mindset and successfully live below your means

Many people don’t understand the importance of a healthy money mindset when it comes to managing their finances.

However, if you’ve been stuck in a paycheck to paycheck cycle and can’t get out of debt, you’ll need to make adjustments to your perspective as well as your budget.

Focusing on your past mistakes will only keep you stuck. And, always striving to keep up with the Joneses will just increase your debt load.

Here are 8 powerful tips to change your mindset, so you can prioritize your finances and achieve financial freedom.

Mindset Tip #1: Know what you value

Knowing what you truly value will help guide your spending habits. Write down what’s most important to you, and start cutting everything else out.

I love to travel, and this value motivates me to put money in a vacation fund instead of using it for meaningless spending. I’ll create a travel budget so I know how much I need to save. Then, I’ll set aside an equal amount over several months. It is such a great feeling to go on a vacation and pay for it in cash! No more living beyond my means by charging hotel rooms and rental cars.

Mindset Tip #2: Create motivation

Do you often write down a few goals, only to forget about them a few weeks later?

Once you know your values (see tip #1), use them to guide your short-term and long-term financial goals.

Then, write your goals down and put them somewhere you’ll see every day.

Make sure you get the buy-in from your partner, so you can support and encourage each other along the way.

You can even make this a contract, where you both sign it. Commit to your financial values, goals, and budget in writing. Then, review your goals often, together, to keep your motivation going.

Setbacks will happen, so it’s important to stay focused and motivated. The only reason you won’t reach your goals is if you give up!

Mindset Tip #3: Set yourself up to be mindful

Don’t rely on your feelings to overcome the temptation to spend money. Instead, create an accountability system for yourself that you can refer to whenever you want to buy something impulsively.

You can do this a number of ways:

  • Set up a rule to always wait at least 24 hours before making an unplanned purchase.
  • Have a list of questions you review first: Do I really need this? Will I really use this? Is this the best price I can find? Do I have to buy this new? If you answer no, put it back on the shelf.
  • Always shop with a list, and commit to never buying anything not on it.
  • Decide to only pay with cash, and take just enough to pay for what you’re planning to buy.

These strategies will help you stay intentional with your money, and not overspend.

Mindset Tip #4: Practice delayed gratification

If you can master the habit of *pausing* before you buy, and develop the self-control to wait before you spend, you’re well on your way to mastering your personal finances.

Living beyond your means often comes down to emotional decisions, like impulsively charging something you’ve wanted for a while. It’s easy to talk yourself into believing that you can pay it off quickly. But, this usually turns into just one of many charges you’ll make over a period of time, until your credit card is maxed out.

Place a restriction on yourself to always wait a certain amount of time before buying a large purchase or making an impulsive spending decision. You’ll find that most times, you’ll change your mind (and keep your money in the bank!).

Mindset Tip #5: Develop a knowledgeable money mindset

An unhealthy money mindset can just come down to a lack of education in personal finance. Take the time to learn how money works, through investing, saving, budgeting, and debt.

There is an abundance of information you can find for free on the internet. From blogs to forums to videos to podcasts – you can become a master of your finances with just a little time and initiative.

Check out these 21 *free* online personal finance courses to give you some inspiration.

Mindset Tip #6: Get on the same page

If you have a spouse or partner, be sure you’re working together toward common goals. You may approach your financial situation differently (one is a saver, the other a spender), but you should still commit to a shared budget.

Partnering in finances will foster accountability and lead to greater success. When you face setbacks, you have each other to support and encourage.

Mindset Tip #7: Break the “broke” mentality

Many times I’ll tell my son that I’m going to make dinner at home rather than go out to eat. He thinks it’s because we’re “broke” and don’t have the money.

This is when I tell him I have plenty of money, and I’m just deciding what I want to spend it on.

If you feel like you can’t buy that new car or go on that nice vacation, remind yourself that you can. If you really wanted to, you could pay for either one. You might have to use up all your savings or take on a lot of debt, but you could.

It’s not a matter of being broke and unable to buy these things. It’s a matter of choosing to spend your money on what you really value. You’re choosing to save your money for the future instead of going deep in debt.

When you approach your finances with this mindset, you won’t feel like you never have enough money. Instead, you’ll feel like you’re completely in control and making wise financial decisions.

Mindset Tip #8: Define needs versus wants

Has your teenager ever said, “But Mom! I reeaaalllly need these new pants!”

As a parent, it’s easy for me to see that this isn’t true. I know he’s got 5 pairs of pants hanging in his closet. Would it be nice to have them? Yes. Is it necessary? No.

However, this can get a little tricksy when it comes to something *I* want. I can easily talk myself into believing that I really do need that new baking pan, because my old one is … well … old.

Don’t fall for it. Know what a need is versus a want. Then, filter all of your purchases through this definition.

The purpose isn’t to keep you from ever buying something you don’t really need. The purpose is to create a mindset that perceives every financial decision through the truth. Get honest with yourself!

Stop living beyond your means by rejecting the lie that you really need to spend money on something that’s actually unnecessary.

The benefits of living below your means

Once you build the discipline of spending less than you earn, you’ll start to experience some valuable results.

It’s helpful to know what these benefits in life are before you’ve mastered the habit, so you have some incentive to stay committed when things get tough.

The good news is, the benefits of living below your means are good for your bank account, your brain, and your body!

Let’s look at 7 of the biggest benefits of living below your means.

Benefit #1: You have less debt

Of course, when you learn to spend less than you earn, an inevitable result is no longer building debt. This allows you to have more money to pay down your balances.

Instead of paying interest to others, you’ll grow your wealth with all the savings you invest.

Benefit #2: You’ll experience lower stress

If you’re stretched to the limits of your budget, you could be one emergency away from a financial crisis. An unexpected car repair or trip to the ER could easily add thousands to your debt load.

Or, if you’ve failed to pay your bills on time, you may no longer have access to credit. This adds even more stress to a financial crisis.

Carrying excessive consumer debt has negative consequences such as anxiety and stress, which can lead to feelings of hopelessness and depression. These burdens on your mental health can also result in harm to your physical health such as high blood pressure, heart disease, and lack of sleep.

Living below your means gives you the margin you need to handle unplanned expenses. Then, you’ll have less stress in your life, more peace of mind, and you’ll get better sleep at night!

Benefit #3: You’ll have fewer family arguments

Financial stress can take its toll on a marriage or partnership. It’s been said that money arguments are the 2nd leading cause of divorce (after infidelity).

And, of course, this conflict between adults inevitably affects the kids as well. 

When you partner with your spouse in your finances, and both of you prioritize your financial health, your family relationships will be better.

Benefit #4: You’ll experience greater fulfillment

Maintaining a firm grasp of your finances not only makes life easier, it also creates more satisfaction. Having the self-control to delay gratification, live below your means, and save money, gives you a great sense of accomplishment and fulfillment.

In addition, you see the future with greater hope and anticipation. As your wealth increases, you have more opportunities available to you.

Benefit #5: You’ll achieve your goals

The big difference between living below your means and living beyond them can be summed up in your quality of life.

Are you working just to pay off debt? Do you have a second job so you can cover your car payment, and have no time for your family? Are you worried about how you’ll support yourself in retirement?

If your paycheck leaves little left to enjoy life and build financial security, you’ll never achieve your goals. Learning to live below your means gives you the space to have big dreams about your future, and take action to achieve them.

Benefit #6: You’ll have job flexibility

Stretching your financial limits will ultimately trap you in a career corner that’s tough to escape. You don’t have any room to reduce your work hours, take extended time off, or accept a more desirable position that pays less.

Building a healthy margin between your monthly income and expenses gives you the freedom to make career changes when opportunities arise. You can make these decisions on your terms and your timeline.

Maybe you want to work less because your kids need you around more. Or maybe you’re no longer satisfied in your current career and want to go back to school. Having the flexibility for life events like these is important for a happy life.

Living below your means gives you this flexibility to choose something different and be in control.

Benefit #7: You’ll be in control of your financial security

Many people are simply not in control of their money. Instead, they’re controlled by their employer, their credit card payments, and their impulsive spending habits.

When you can develop the self-discipline to spend less than you earn, and save for the future, you will be in the driver’s seat. You are the one who decides where you’ll work, when you’ll go on vacation, how you’ll pay for a financial emergency. You aren’t restrained by debt repayment or a credit limit.

Do you want to be in control? You can be! Take the tips in this post and learn to live below your means. You’ll experience all of these benefits that lead to a greater level of happiness and motivation and higher quality of life.

In the end, understanding the benefits and importance of living below your means can offer a powerful incentive to develop this critical financial practice.

How to know you’re not living below your means

A telltale sign of living beyond your means is simply running out of money before your next paycheck.

However, there are other key indicators you can identify to know you’re spending more than you earn.

Knowing what these are will help you increase financial awareness and make better decisions for your money.

Let’s take at 7 warning signs that indicate you’re not living below your means.

Warning Sign #1: You don’t have an emergency fund

If you don’t have any money set aside for emergencies, you are likely spending beyond your means. Not only that, but when an unexpected expense arises, you’ll probably have to rely on debt to pay for it. 

You should have at least $1,000 in a separate interest-bearing savings account for those small financial emergencies that inevitably pop up. Once you reach this goal, keep saving until you can cover 3 to 6 months of your necessary living expenses.

Warning Sign #2: You have excessive credit card debt

How much is excessive? Most financial experts will advise you to keep your credit utilization below 30% of your household income. However, if you can’t pay off your balances every month, you have too much.

Using credit cards is not necessarily a bad financial practice, unless you get in the habit of taking longer than one credit card cycle to pay them in full. This is when interest kicks in and you’re paying more just to keep the debt.

The best thing to do to avoid unnecessary debt is always pay in cash. This takes financial discipline, but ensures that you never have a credit card bill.

Warning Sign #3: You’re not saving for the future

How’s that retirement fund coming along?  It might be time to take a good look at your saving habits.

If you aren’t saving for your future today, you’re probably living beyond your means. And, don’t think you have another 20-30 years to catch up. You never know what curve balls life will throw at you. Maybe you suffer an injury and can’t keep your job. Or you go through a messy divorce and can barely make ends meet.

Develop the habit now to spend less than you earn, put the excess funds in a savings account, and give that money time to grow with compound interest.

If you struggle with spending, set up automatic savings transfers so you never see the money. You can do this through your employer, or create automatic transfers through your bank.

Warning Sign #4: You’re not on a budget

For many years I didn’t have a budget. I just spent money until it ran out, and then I would pull from savings or use my current credit card of choice. 

Don’t do this.

Get on a budget so you can see where your money is going and identify how you can cut expenses. Give yourself financial boundaries so you’re not spending more than you earn every month.

A budget will help you plan for big purchases, family vacations, and saving for the future. You don’t need to believe the lie that you’ll never get out of debt or be able to afford a newer car.

Take control of your money by learning budgeting basics, creating a spending plan that you can stick to, and you’ll start achieving your financial goals.

Warning Sign #5: You buy things you can’t afford

Can you pay cash for that designer purse? Or that fancy dinner? If you don’t have the money upfront, then you can’t afford it.

Stop telling yourself that you can and that you’ll pay it off with the next paycheck.

Determine your values, distinguish between needs and wants, and then set aside money in your budget to save for those things that are important to you.

We just got back from an awesome vacation in Hawaii. I can’t tell you how great it felt to pay for everything in cash, and know I won’t be paying it off for the next six months.

Warning Sign #6: Your housing expenses consume too much income

Typically, a bank’s responsibility is to only lend you what you can afford. In reality, a lender will let you borrow more than you can actually handle.

If your mortgage payment requires more than 25% of your monthly take-home pay, you might be stretching yourself too thin. Consider the other warning signs on this list to determine if this applies to you. Are you still able to save for emergencies and retirement? Are you building credit card debt? Are you unable to pay cash for all of your expenses?

You may be able to considerably reduce your mortgage payment by refinancing at a lower interest rate. Shop around and use an online mortgage calculator to see if the cost of refinancing is worth the savings.

Warning Sign #7: You have a low credit score

If your debt-to-income ratio is too high, or you’ve been late in paying off debts, your credit score will suffer. This is a sure sign that you’re living beyond your means.

A score that falls below the average (around 700) will make it difficult for you to obtain additional credit when it’s the only option.

Take the time to check your credit report to figure out why your score has been lowered. You can get a free credit report at AnnualCreditReport.com.

How to live below your means and still be content

If you’ve been struggling with overspending for a while, then you’re probably used to a certain lifestyle that you can’t really afford.

Giving yourself spending boundaries and practicing delayed gratification might seem like you’ve signed up to deprive yourself of all the fun in life.

But, it doesn’t have to be that way!

Once you understand how to live within your means – and still be content – you’ll have mastered the key to financial freedom.

And, if you can get to a place where you consistently live below your means – you’ll discover the secret to creating wealth.

Learning how to be content with what you have is like a muscle you can strengthen over time. At first, you’ll feel weak and tempted to buy impulsively.

But, as you practice these 5 habits listed below, you’ll increase your ability to resist those temptations because you’ve achieved a certain level of contentment in your life.

Be Content Tip #1: Practice gratitude

Gratitude is an attitude. It’s not dependent on circumstances or relationships or money or even emotions.

*You* control how grateful you are for the people and things in your life. And, the more you choose to be grateful, the more grateful you become.

Being appreciative of what you have – no matter how much or how little – leads to a deep level of contentment that can sustain you through any adversity.

In other words, a grateful heart is the doorway to a contented mind.

You can start practicing gratitude by being mindful of how immensely blessed you are with those gifts you may take for granted:

  • the air you breathe
  • the roof over your head
  • the food on your table
  • the person you married
  • the job you hold
  • the car you drive
  • the ability you have to speak, to move, and to think

When you consider that any of these gifts can be lost in a moment, that none of them are guaranteed, your priorities start to shift. Your focus is what’s in front of you, instead of what’s beyond you.

A helpful habit is to keep a gratitude journal, where you can record your thanks and appreciation and stay connected to the blessings you experience every day.

Start developing a deeper sense of gratitude in your life, and you’ll find you also experience a greater level of peace and contentment as well.

Be Content Tip #2: Change your perspective

Money can’t buy happiness. But, it’s sure nice to try sometimes, right?

As I’ve gotten older, buying stuff has taken a back seat to collecting experiences. Having coffee with a friend, going to a bible study, streaming a funny movie with my kids.

I’ve realized that I don’t need to have more things to feel better. I can find a lot of fulfillment in what I’ve already been blessed with, and create more joy through relationships and focusing on what’s truly important to me.

Now, I’m more mindful about what I spend my money on. What will it add to my life? Is it something that will last? These questions help me stay on track with my values and be content.

Be Content Tip #3: Serve others

Scientific studies have shown that focusing on the needs of others can help you lead a more fulfilling life.

When you lend a hand to someone less fortunate than you, the receiver of your generosity isn’t the only one who profits. In fact, your own well-being may experience the greatest benefits from serving others in need.

Volunteering your time and energy to help someone else provides the opportunity to boost your own happiness and mental health.

This could be the result of feeling a heightened sense of purpose, increasing physical activity, or engaging in meaningful social activities.

Whatever you get out of it, serving others less fortunate can help you maintain a healthy perspective in life. You increase your awareness of the needs in your community, and decrease the focus on yourself.

When you choose to engage with how you can give instead of what you can get, you’ll feel more content with what you have.

If you struggle with emotional spending and living beyond your means, find an organization you can support with your time and energy.

It’s a great opportunity to make a difference in others’ lives – and improve your own.

Be Content Tip #4: Stop comparing

Comparison is the thief of joy.

When you compare yourself to others, it’s easy to feel like you don’t measure up. This can lead to feelings of inadequacy, envy and discontentment.

These negative emotions are often the trigger that causes overspending and increased debt.

A helpful strategy is to write down a list of your core values, and then align relevant financial goals with them.

When you feel the tug to keep up with Mrs. Jones next door, pull out this list to remind yourself of what’s truly important to you.

Your path is your path. Don’t get distracted by the road someone else is taking.

Put your blinders on and stay committed to the priorities you’ve chosen for your own life.

When you take your eyes off what other people have and stay focused on your goals, you’ll be content with the financial choices you’re making to achieve them.

Be Content Tip #5: Adjust your mindset

Practical applications are more effective when performed with a positive mindset.

In other words, if you want to successfully live below your means, you need to ditch the stinkin’ thinkin’.

Portraying yourself as a victim of frugality will only result in resentfulness and discontentment – both of which will work against you when trying to live below your means.

Instead, trade the scarcity mentality for an abundant mindset by being open to new ways of finding enjoyment and having fun.

For example, rather than paying airfare and staying at a 5-star hotel for vacation, take a road trip and go camping instead.

If you love shopping, try second-hand boutiques rather than a large department store. (Better yet, go treasure hunting every weekend at garage sales.) Just because you’re trying to spend less money doesn’t mean you have to deprive yourself.

You can still have a comfortable and fulfilling life by being a little creative and open to other, less costly options.

When you enjoy finding ways to have fun while still saving money, you’ll be content to live below your means.

Money tools to help you live below your means

Spending less than you earn really comes down to financial discipline. You must choose to live below your means, and then take the steps to make it happen.

However, there are some pretty helpful tools that can make this a little easier. Every little bit helps, right?

Here are 3 money tools to help you live below your means.


Mint is free web-based tool that helps you track your budget.

You can access Mint through through its website or mobile budgeting app. It connects all of your bank accounts to give you a personal and complete financial picture.

With Mint, you’ll have access to monthly reports, and you can set up financial goals.  You can also create alerts to notify you of due dates, balances, and if you go over your budget.

Mint helps you know how much you’re spending and where it’s going, so you can live below your means.


Start automating savings with this helpful money management tool.

Not only does Acorns “harvest” the change between every purchase you make and the next highest dollar – it then invests that change into an investment portfolio you select.

It’s never been easier to maximize your spare change and turn it into substantial savings.

Acorns has 3 paid plans that range from $3 to $5 a month.

If you’re not ready to venture outside of your 401(k) and explore other investment opportunities, give Acorns a try. You can get your feet wet in the investment game with little risk.


Trim helps you save money by inspecting your financial transactions in order to find recurring expenses. 

Like a personal subscription guard, Trim will notify you when it’s identified repeating expenses and give you the option to cancel them. This handy tool will even notify the subscribed service of your decision!

If you love signing up for free trials but you’re terrible at cancelling before the monthly fees kicks in, Trim will help you stay alert of these unnecessary expenses.

Why living below your means is important

I have given you many reasons so far why living below your means is a smart financial practice. We can sum them all up into one major benefit:  financial freedom.

What is financial freedom?

When you create financial freedom for yourself, you’re building security for your future and your family.

Financial freedom ensures that you’ll keep your financial independence throughout retirement.

Financial freedom allows you to achieve your biggest dreams.

Financial freedom puts you in control of your life, and provides financial peace instead of financial chaos.

Can you imagine what this would look like in your life? Are you willing to make small sacrifices today to attain a greater benefit later?

You don’t have to live a miserable, deprived life to live below your means. You just have to rearrange your priorities and build better money habits. You can still have the house and the car and the vacations – they might just look different.

In conclusion: Why I live below my means

One of the biggest lessons I’ve learned from living beyond my means is that the added expense for a little extra comfort doesn’t make up for the awful discomfort of being in debt.

Spending money I didn’t have for something I didn’t need never outweighed that loser feeling I would get when I was still paying it off 6 months later.

Living below your means takes some discipline, and part of that is just getting good at saying no. Eventually, I realized that joy attained on borrowed money eventually turns into regret if the debt outlives the experience.

And, now that retirement is in the foreseen distance, I’ve become even more aware of how the lack of self-control in my youth can affect my standard of living in old age.

As a result, I’ve gotten very good at denying myself the comforts I used to indulge in. I’ve learned to pause … consider … and walk away.

And you know what? It’s not that bad. I actually live through it every single time.

The cool thing is, the more I make wise decisions with my money, the easier it is to say no.

With each choice that gets me a little closer to my financial goals, I feel greater content with my current circumstances. I know that the sacrifices I make in the present will create the retirement I dream of in the future.

When you’re content, you don’t feel the need to compare. Then, you’re not concerned with how others spend their money, because you’re focused on your own priorities.

So, I encourage you to practice gratitude, serve others, and stay connected to your values. Get on a budget that works for you so you can follow a spending plan that fits your household income. You could even make it fun to build wealth by taking a money saving challenge.

You *can* learn how to live within your means and still be content. And, once you do, financial freedom is just around the corner.

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