Spending more than you can afford doesn’t sound like a smart idea, but the reality is that most people in our country fall into this trap. According to a recent survey by CareerBuilder, 78 percent of U.S. workers live paycheck to paycheck and more than 1 in every 4 workers do not set aside any savings each month. That’s a really scary statistic, considering most Americans aren’t saving for retirement.
The easy answer to fixing this situation for most people is living below your means. It’s, of course, much easier said than done though. How do you live below your means when it already feels like you’re barely scraping by? The answer isn’t easy, but here are 4 things you can do to ACTUALLY live below your means:
1. Dissect Your Discretionary Spending
We know how important it is to have a budget and stick to the numbers. Most of us have some kind of category in our budget for discretionary spending, whether it’s on gizmos and gadgets or entertainment, but many of us don’t really know what exactly goes into your discretionary spending category though. Look at every transaction and try to understand exactly what you’re spending your extra money on.
You might be surprised to find that many of those transactions are totally unnecessary and some might even make you mad. Remember that feeling because it’s time to start making cuts. Keep a few things you spend on monthly that makes you tick but double check that this category doesn’t represent a significant part of your budget.
2. Downsize
The biggest expense for most people is housing, and the truth is that a lot of people live in houses that are either too big for their needs or one they cannot afford. Do you fall into either of these categories? At some point in everyone’s life, we should all consider downsizing. While you might not be very comfortable with the idea in the short-term, it’s more important to save for your future than have more space.
Plus, you may even realize that the freedom of not needing to maintain all your stuff can help free you to find what truly makes you happy.
3. Make Extra Income
You might get to a point where you can’t cut back your expenses any further but you’re still spending more than you earn. Don’t panic. If you find yourself in this situation, think about what you can do for extra streams of income. After all, finding more ways to make more money while spending the same can also lead to you living below your means.
With the internet, there are so many jobs you can do right from your own home, such as freelance writing or graphic design. Think about what you’re good at and then figure out how to make that an income driver.
4. Stop Trying to Keep Up
Stop trying to keep up with the Joneses. The most important thing to remember is that life isn’t a competition. There will always be other people who have more or better or bigger. If you live your life trying to pass them, you might actually just be digging a bigger hole for yourself. Societal pressures can definitely be hard and overwhelming, but you’ll find that it’ll be much easier to make smarter financial decisions that are right for you once you stop caring about what other people think about you.
At the end of the day, finding the right balance for you and your family and sticking with it is what will make you happy. Forget everyone else, even the Joneses.
Editor's Note: Did you know about the service called $5 meal plans? For $5 a month, they send you recipes of delicious, healthy, yet cheap food that costs just $5 a meal.
Several of my friends signed up and they are able to eat at home more because the instructions are easy to follow, making everything convenient. The deal also comes with grocery shopping lists, which saves them so much time. Check it out yourself by clicking here and you too may be able to save more and become healthier at the same time.
{ read the comments below or add one }
On #4 maybe pick a better Jones to keep up with? No matter what your income and circumstances there are people who are in a similar situation who manage a good savings rate. Why not choose these people to emulate? You don’t have to sweat all the fine details, if you can match their savings rate, you’ll be much better off in the long run.
Short and sweet list! When I relocated to the suburbs, I upsized the house but downsized the cost. It drastically helped towards lowering our expenses and allowed my wife to leave her job and stay home with our kids.