How to Live Below Your Means and Be Happy
Living Below Your Means - What Does It Mean?
The ability to live within your means is a great asset in any financial situation. It becomes a true need during a financial crisis, like the planetary job loss due to the 2020 COVID-19 pandemic.
Many people struggle to make ends meet on a regular basis, and that's the focus of this article.
However, the advice can be applied to emergency situations.
Often, the family income could be enough to live in a more relaxed way, but it does take some effort and consistency to live below your means, adjusting your spending habits to be less than the money you bring in.
How do you do that?
We Are a Frugal Family that Likes Good Stuff
Maybe you are already good with money,always looking for good bargains, and you hate to waste resources.
In short, you do your best to get the most out of every dollar spent, you are frugal.
However, frugal does not necessarily have to mean to buy only at thrift stores, yard sales, and low quality groceries.
When it comes to food, drinks, medicines, vitamins, lotions, or anything that would end up in your family's bloodstream, be very suspicious of cheap products.
Stick with best/good quality items, trying to find them on sale; avoid the cheapest products, especially if you don't like what's on the label. I totally believe that we are what we eat.
That reflects my approach to spending. Below, I share some examples of my experience in handling finances.
In our family the rule of thumb is: "If we can't afford it, we don't get it."
To live below your means, the first thing you need to find out is “How much can I spend?”
Knowing how much you can spend requires sitting down and crunch some numbers together. If you need guidance on how to do your own budget, you can find plenty of personal budget articles that tell you how. I've written a few myself.
Once you know how much money you have available, make a plan to spend less than that.
One Family, One Financial Plan
It’s extremely important to agree with your partner on how to handle family finances and money.
Different opinions on what is necessary and what is frivolous can lead to escalating problems and arguments, especially when money is short.
You need to work as a team and be on the same page.
Here is an article to learn more about family budgeting.
Got a Raise? Don't Increase Your Expenses
My husband and I come from families that have lived through the hard times of World War II and have built their own homes slowly, saving up a little bit at the time, buying things only when they had the cash to do it.
Because of that common background, we fully agree on the main choices of how to handle our finances. After we got married, we rented for one year, and then we decided we wanted to pay for our own place, and we bought a house, starting a 30-year mortgage.
We both agreed that the mortgage would be the only debt that we would ever have, and so we made choices to make that happen - at least until the kids will go to college! When I say we have no other debts than our mortgage, I really mean it: we have bills, but no other monthly payment that includes interests.
How did we stay "debt free"? When we got pay raises, we maintained the same lifestyle as before. That’s the only way to set aside some savings. If you increase your monthly expenses every time your income increases, there will never be money for special purchases or emergency.
Buying a Car Only When You Really Need It
When we needed a car, it had to be a used one, valued whatever we had in the savings account at that time. In the 18 years we’ve been married we have been driving four different cars, but never paid a penny in loan interests.
Car dealers don’t really like that, they want your money, and they love to get you to sign up for a loan with them.
Three of the cars were used ones, purchased from privates. One was brand new, a 2002 Honda Accord, which we are still driving, and we chose it for the reliability, the great gas efficiency, and because we could afford it with our savings.
Avoid Bank Fees or Credit Card Interest
I’m very proud to say that in many years of using credit cards practically for everything we buy, neither one of us has ever paid one penny in credit card interest. That’s huge savings right there.
We use our credit cards for everything, but we know we can spend only as much as we can pay off the next month. I realize this takes some self-discipline.
Some people suggest controlling your budget by taking out the cash you can spend each week. I respect that opinion, but it’s not my style. I can self-regulate my credit card purchases not to go over a certain amount. I don’t like to use debit cards and checks much because if we both spend from the same checking account it becomes difficult to properly keep track of the balance, and we'd likely overdraft it.
When we need cash, we go to our bank’s ATM, to avoid foreign ATM’s fees. Sometimes I pay with my debit card at a store so that I can get cash back.
Charge Only as Much as You Know You Can Pay Off
Saving Money on Food
We all need to eat every single day, several times a day, so clearly, food has a huge influence on our family budget.
You can save quite a bit of money using coupons. Be careful not to fall into the trap of buying things you don't really need just because of the discount.
If available, use your supermarket’s fidelity card, or loyalty program. Not only it makes you eligible for the weekly store savings, but also it gets you discounts on gas at the affiliated gas stations, and when you purchase gas.
I love that program, it really works for our family. We usually save around $600/year just using our store card, without any other coupons.
Eating at home is way cheaper than eating out. Make a meal plan, but the groceries you need and enjoy the home-made food and the savings.
Packing Lunch Saves Money and It's Healthier
Pack lunch to work. Packing lunch is not only a great way to save money, it’s also extremely healthy. Leftovers are a great resource for packing lunches. I usually cook extra portions on purpose, refrigerate them in my super-useful plastic containers, and I’m all set for my husband’s and my lunches.
I pack the kids’ lunches too, even if I have to admit, school lunches are pretty affordable, but my kids end up always getting the pizza, so I prefer to prepare for them something they like and varies their diet.
Don't waste food. After you paid for it, and you spent money and energy to cook and fix meals, any clean leftover should go into a plastic container, in the refrigerator or freezer to be enjoyed on another day.
Note: It is important, for safety reasons to refrigerate leftovers pretty quickly, when they are still warm, to avoid bacteria growing.
Be a Frugal Coffee Lover
Being frugal is great, but for some things, I don’t compromise. Quality and taste of what I buy must be good. One example is coffee.
We are coffee lovers, and can’t get started in the morning without our cup o’ Joe. And we kind of need one after lunch too; it’s our midday energy booster.
We buy the best coffee blends of our choice, no cutting corners there to get the cheaper ones. Only in special cases, we buy fancy coffee, barista style, like on trips.
My husband used to buy expensive take-out coffees during the work days, until he bought a good coffee maker, at a great price, that makes excellent coffee; now he keeps it in his office.
In only two weeks he paid off the coffee machine by making his own cappuccino, saving money and also time, since he does not have to go to the cafeteria anymore.
Switching to Home-made Coffee Can Save You a Lot of Money
Save on Clothes
In Europe sales are very seldom and short, that's what I was used to. When I moved to the USA, I found the US malls being super-stimulating for my shopping-lover self, because there are clearance racks on any given day.
It can be tricky to get out without buying anything, but I’m learning to control the urge to get the deal of the day – it might be a sign I’m getting old, lol! However, when I do need clothes, I only buy what is on sale.
I signed up for email notifications from my favorite stores, and they let me know when major sales are going on. Often, the email has a printable coupon as well.
I’m not big on buying used clothes, that were wore by strangers, and smell like somebody's shed. However, I love hand-me-downs. I raised my children on clothes outgrown by friends' children.
How We Save on Greetings Cards
Whenever we need cards for children’s birthdays, I ask my kids to make one using construction paper, stickers, markers, and other things that I have around the house. The money we save on the card can be spent toward the gift.
Besides the money aspect, I consider this a great learning moment for my kids, plus it makes a cute personalized card for the recipient.
When we need cards for adults, sometimes I do buy them, mainly because I run out of time to make my own. But if I can manage, I make a greeting card using a small original painting of mine. If that does not work out, or look in the $.99 section at the store, there are some cute cards that can definitely compete with the fancy ones.
For me, it's not really to save money, because I usually end up spending more on the gift, however, it could be. For us it's more about spending money wisely, I rather invest $3-4 more in the gift value than on the card.
How We Choose to Save Money on Movies
Like going to the movies? Me too!
Check out if there are movie theaters in your area that show movies for $1-$3. The films on view may not be new releases, but they are new to you. :)
You can cut on budget expenses by canceling cable subscription and getting Netflix, Amazon, or similar service. There might be some adjustment needed, you lose access to cable channels, but those streaming services have a lot to offer, and you can watch on smart TVs, computers, tablets, and phones.
How to Save on Books
A house without books… is not our house. We love books, and thank goodness the children do too.
Since books are expensive, we try to get them from the library as much as we can.
Some books we prefer to own, so I try to buy new releases on sale, and for older books, used bookstores or Amazon are a great resource.
We haven’t converted to electronic readers yet.
Maybe in the future, but for now the idea to give up the physical book makes me sad, so we’ll be sticking to paper for a while.
Great tips on how to live below your means. 35 Frugal Tips that Will Save You Money
These are just some of the way to can adjust your lifestyle and still get some good stuff, but making it a little easier on your wallet.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
Questions & Answers
My husband insists on buying a new car, even though his car is working just fine. I'm more in line with what you say in your article, and trying to live below our means. Do you have any suggestions on how I could convince him to wait?
When in doubt, I always like to give the power to the numbers.
I recommend you do some homework before you sit down and talk to your husband.
How much would the car cost? Would you pay using your savings or get a loan?
Write down a few scenarios showing the money you can spend or save if you buy the car now and if you wait 3-5 years.
Savings left in the bank earn a little interest and provide invaluable peace of mind.
A loan involves monthly payments and charges interests, increasing the actual cost.
What else could you do with that money?
Talk to your husband with your notes in front of you to support your point, and together compare the different scenarios.
Maybe it's worth to wait and use the money for something else, or maybe you decide to wait to be able to afford a better car in a few years.
It could be that you decide to go ahead and make the purchase now, it's all good as long as you both agree on the plan.
Good luck finding a nice compromise that makes both happy.Helpful 1
© 2012 Robie Benve