Living within your means sounds boring and restrictive, doesn’t it?
Like eating dry crackers while staring at a big piece of double choc, gooey mud cake with ice cream and caramel sauce. You know you shouldn’t, it’s sooo not in the diet, but dang, it looks very tempting. And your friend there is gleefully stuffing her face while spitting out “Go on, you know you want to. Try some.”
I’ll do extra exercise tomorrow, it’ll be alright.
And that’s exactly what budgeting is like for many of us. We know we should stick to some sort of budget, but there’s temptation to spend everywhere, and easy credit is like your wicked friend, spurning you on to buy.
I’ll pay it off next week, it’ll be alright.
Can you have your cake and eat it too?
Is it possible to live within your means without feeling deprived?
And can you do it without spreadsheets, money tracking apps or knowing where every cent goes?
The answer is yes, with a few savvy money management practices and the right headspace, you can live within your means, enjoy today and save for a brighter future.
What Does it Mean to Live Within Your Means?
To live within your means is to consistently spend less than you earn and put the surplus towards savings.
When your savings are building nicely each week and you’re not in debt, then you are living within your means.
If you are not living paycheque to paycheque, then you are living within your means.
On the other hand…
When you are spending on credit card, you’re not living within your means.
When you have to rely on debt to cover unexpected expenses (because you don’t have an emergency buffer), you’re not living within your means.
Why Living Within Your Means Helps You to Thrive
If you’re on a small income, and you’re finding it hard to just make ends meet, then the advice to live within your means not only feels impossible, it feels condescending as well.
It’s not unusual to think ‘well, it’s easy for you to say, but…’
And I totally get that. It IS hard!
Putting a small portion of your income away to savings – even if it’s only a couple of dollars each pay – is one of the most important steps you can take to improve your circumstances so that it is less hard in the future.
You will have less financial stress and more financial choices if you build savings, no matter how big or small.
You will be able to pay everyday expenses without stress without doing the bill juggle (which bill will we pay this week?)
You will avoid the trap of debt and the endless wasted money on interest.
You will be able to invest your savings to improve your circumstances, either by saving more money or by earning more money.
For example, with a little savings, you can buy in bulk and save on the groceries, generating more savings. Or you could use your savings to take a course that will improve employment prospects and allow you to get a better paying job. Or you could invest your savings and build another income stream.
It will take longer if you don’t have much to put aside. But taking longer than you hoped is better than never starting and never getting there at all.
on what your focus goes, grows – how to live within your means without feeling deprived
I want you to think about something for a moment.
Our economy (and our society) is founded on perpetual growth, growth that is fuelled by consumer spending. No money? No worries! Here’s a credit card and a payday loan.
The tactic used to make you spend more money is to make you feel insufficient. Marketers are always trying to convince you that spending money will make you feel happy. Feeling a little flat? A new dress will help. And you don’t want to look out of fashion! Better get a matching pair of shoes in the right style.
Our whole economy, our whole society is based on you feeling deprived and unhappy.
Does that seem kind of sick to you?
There’s nothing wrong with spending money. We all need food to eat, want nice clothes to wear, comfortable homes and a few little luxuries. That’s all good stuff!
But when spending becomes the focus of life, it doesn’t matter how much money you have, or whether you live within your means or not, you will always feel deprived.
Just like constant negative self-talk can leave you feeling depressed, constantly focusing on what you don’t have, will leave you feeling deprived.
On what your focus goes, grows. What is needed is a shift in focus.
There are 7 keys to a happy, thriving life:
- Having a healthy, active lifestyle
- Experiencing emotional wholeness
- Having financial security (which of course, starts with living within your means!)
- Forming strong connections and relationships with family, friends and community
- Simple, sustainable living, particularly spending time in nature
- Being playful, creative and involved meaningful industry
- Knowing and living by your values and having a purpose in life
Notice how not one of these require shopping!
By focusing on these seven principles of a thriving life, rather than focusing on material possessions, you will feel less deprived.
Take time everyday to count your blessings. It’s cliché, I know, but super effective! It doesn’t change your circumstances. If money is super tight, feeling good doesn’t change reality. But a positive outlook will help you to change reality better than believing there is no hope.
The 4 super-savvy steps to always live within your means (without keeping a budget)
1. Pay yourself first
The rich invest their money and spend what is left. The poor spend their money and invest what is left.” Jim Rohn
And that’s if there’s any money left at the end of the week. Avoid this pitfall and pay yourself first.
Even if it’s only $2 every payday, pay yourself first and start building your savings. Use this money to build an emergency fund, and for long term investment.
2. Think ahead and save
When my son saw we had money in the bank his eyes lit up, imagining chuppa chupps galore. But I explained the money in that account is money already spent in the future.
It’s the opposite of debt. Debt is paying in the future for items purchased in the past. Saving a little each week for the bills and expenses now, will mean that you can pay them easily when they fall due in the future.
3. Spend what is left
Once you’ve got your savings and your everyday expenses covered, you can then spend what is left, without guilt and without worry.
The only catch is that when the money runs out, the spending must stop.
4. Avoid consumer debt
Unless it’s the mortgage, and maybe a car, or an essential household item (like when your fridge blows up), going into debt means you’re living beyond your means. Always paying for yesterday’s purchases, plus the interest, means you’re always on the back foot.
Instead, take the old-fashioned route, and save first, buy later, and you will always be ahead.
Living within your means is one of the foundational principles of good money management and the path to financial security. With a few savvy financial strategies and the right mindset, living within your means doesn’t have to mean counting every cent you spend or feeling deprived.
Melissa Goodwin is a writer and the creator of Frugal and Thriving who has a passion for living frugally and encouraging people to thrive on any budget. The blog is nine years old and is almost like her eldest baby. Prior to being a blogger and mum (but not a mummy blogger), she worked as an accountant doing other people’s budgets, books and tax.