How to Live Below Your Means: 15 Practical Tips

If you’re trying to find out how to live below your means, here you’ll find very practical tips to put into action right now! You’ll end up under-spending, and saving a nice amount of money every month.

It has happened to all of us: getting to the end of the month and wondering where our money has gone, struggling to make ends meet… It is a dreadful feeling, and it can leave us clueless and anxious. 

There are many contributing factors that can lead a person to this point: maybe you’re just starting out your career and are not making enough money yet, or you are paying off debt, or the sheer state of the economy. 

Whatever it is, there is always something you can do to help the situation. Small lifestyle changes and building new habits can take you a long, long way.


But first, what does it mean to live below your means? Let’s start by defining what “living below your means” really refers to, because there are many misconceptions around the idea.

It is not about being cheap or depriving yourself. It doesn’t mean that you will have to stop buying things that you love. It is simply spending less money than you make.

Ultimately, living beneath your means it’s all about creating greater financial wellness and freedom. Start by asking yourself these questions: Where are you now, where do you want to be in the future, and what are you willing to do to get there.

Now, getting there will require action, there’s no way around it. Here’s how to live below your means, and practical tips to achieve it.


1. Know how much you make

Sit down and put pen to paper. It might sound silly, but seeing it in writing can help a lot. What’s the net amount of money that you have available every month —the one you see in your paycheck after taxes?

Do you have any side gigs or other sources of revenue? This includes child or state support, your tax refund —literally any money that’s coming in on a fairly regular basis for any reason.

Write it down. Add it up and there you have a number. How does this help me live within my means, you’re asking? Your goal is to keep your expenses below that number.

2. Track your expenses

You can’t make effective changes in your finances if you don’t know where your money is going. Again, write everything down. You can use the good ol’ pen and paper, a simple spreadsheet or one of the many budgeting apps on the market, like Mint, Wally or EveryDollar.

You should take note of every single dollar you spend, from big expenses like rent and bills to that donut you got on the way home. Everything. It’s a bit of a pain at first, we know. But you will get into the habit pretty quickly.

At the end of the first month, you will already have a rough idea of what you’re spending your dollars on and, after a few months, you will start seeing a pattern.

3. Budget

Wait, don’t run. Yes, the word “budget” itself can be scary (and boring, ugh), but budgeting will help you more than you can imagine. Budgeting, at the core, is about making decisions about where you want your money to go and sticking to those decisions. It gives you clarity and focus.

How do you want to spend your money? Decide how much money to allocate to different areas of your life. Start with the basics: food, transport, housing.

Then move on to more peripheral expenses, like hobbies, the gym, outings, etc. See which of those activities you can afford and which not.

And, just as important: decide how much you can realistically save every month. Now you have a budget. Stick to it.

4. Consider staying away from credit cards 

Credit cards are the quintessential double-edge sword: there’s room for benefits but they can be dangerous if you’re not financially responsible.

Credit cards are very useful in emergencies or to make payments on something big, like a car (do you really need the car, by the way?), and if you are sure you can pay them in full, then they are great to help you build your credit score and get extra benefits (airline miles, cashback, lower or no foreign fees, etc.).

However, credit cards give you the false idea that you have way more money than you actually do, and if you have a tendency to overspend or are unsure whether you will be able to pay the bill the following month, then by all means, stay away from them.

If the latter is your case, start by taking them out of your wallet, so you don’t have the temptation of using them every chance you get.

5. Pay with cash 

Old fashioned? Maybe. Useful? You have no idea how much. If you were looking for how to live on less money effectively, you just found a way.

Person paying with cash in a post about how to live below your means.

Paying things with cash makes you more aware of the fact that you are spending money in the first place, since you physically have to hand it over and see it disappear. It will help you stay away from meaningless spending. It’s so easy to swipe a card, but the problem with that is that you don’t really see what you’re spending. 

You don’t need to use cash everytime, of course, but get into the habit of doing it more often. If you’re not using cash, use only your debit card, so you know you are spending money you actually have.

6. Pay off your debts first

Make this your top priority. One trick is to set apart some money to pay off your debts first thing when you get your paycheck. Then you can budget the rest. Getting out of debt will be the first big step towards financial independence.

Close your eyes for a minute and picture it. Imagine that you get your paycheck and you have zero debts to pay, and you are free to decide how to use all the money that you just got. It feels good, right?

7. Choose where you shop for groceries wisely

The corner store may be great to get that loaf of bread you forgot to buy for dinner, but it’s not really helping you.

Try to plan your grocery shopping (for example, once a week or once a month). Make a list of the things you will need, so you don’t buy on the spur of the moment, and get the bulk of it at a big supermarket, where prices are lower.

Look for deals. Get your veggies at a greengrocer’s if that’s cheaper. The corner store is only for emergencies. And cut down on “luxury” items. You will survive without eating Brie cheese and almond butter every week.

8. Reduce the “little” unnecessary expenses 

This is a piece of advice you will see everywhere, and for a reason. The “little” everyday expenses can add to A LOT.

Let’s start with coffee and eating out. What if instead of buying coffee everyday, you do it once a week instead? An example of living below your means is making coffee at home or at the office, or preparing packed lunches and snacks instead of eating out. 

Are you paying for memberships you’re not using? (I’m looking at you, fake gym goers).

And do you really need a subscription to every single streaming platform? You don’t need to deprive yourself, but pick your favorite one and get rid of the rest.

Buy clothes at thrift shops, stop ordering takeaway, say no to expensive outings. This is how to live under your means, and you will be surprised at how much you can save with these minor changes.

9. Move to a cheaper/smaller place

It’s hard to part with a place you have come to call home, but moving to a smaller house or apartment, or to a different neighborhood that’s a little bit cheaper can be a big boost to your economy.

For example, if you live in the most expensive part of town and/or have spare rooms, you can definitely make a move, and with that cut make sure that you’ll (hopefully!) never live beyond your means, as rent is one of the biggest expenses we have.

10. Get rid of your car

If you live somewhere with good public transport, getting rid of your car might be one of the smartest things you could do to save money.

Cars take ginormous amounts of money out of your pockets: fuel, insurance, maintenance… and their value decreases over time. If you do need it, consider getting a used car instead of that shiny new model you’ve been ogling at the dealer’s.

11. Save first

When you get your paycheck, set some money apart right away, then budget the rest.

It doesn’t have to be much, whatever you can afford, even $10 will do (check the budget you prepared on step 3). It will get you into the habit of saving and planning.

12. Be careful with emotional spending

Start to become aware of when you’re buying out of necessity and when it’s out of anxiety or a spur of the moment thing.

Warren Buffett reportedly said that before buying something, you should ask yourself ‘What would happen if I don’t buy it?’ If the answer is ‘nothing’, then don’t buy it, because you don’t need it.

13. Be patient

How will this help you live beneath your means? Instead of swiping your credit card on a big or special expense, set some money apart for it monthly and wait.

Be patient. Only buy it when you have the whole amount. That way,  you won’t spend money you don’t have.

14. Make it a habit

What is living below your means if not a habit you incorporate to have healthier finances? Start by getting used to the action and feeling of saving and restraining from buying when it’s unnecessary.

The first days or even weeks will be a bit hard. That’s normal. Habit building takes some time, but with practice, it will become second nature, especially once you see the benefits. Keep at it.

15. Pick up a side gig

It’s not all about cutting expenses. A great way to start living under your means is to increase your income. If you have some free time, consider picking up a side gig. There are many opportunities out there to make money.

It doesn’t have to be a second job per se. Doing freelance stuff when you have the time, teaching a couple of hours a week, babysitting… the options are endless. 


Following these practical tips to live below your means will not only help you to get a grip on your situation and set you on the path to financial freedom. There are many good side effects that come attached: 

  • Reduced stress, for one. That feeling of living paycheck to paycheck will start to subside with time, reducing stress and bringing about more peace of mind
  • You will get more clarity on what’s going on in your life, since not stressing about money all the time creates room in your mind to focus on other things that matter to you. 
  • You will gain discipline and self-control, and become much more aware of your behaviors and what triggers them.
  • Independence and flexibility: When you encounter something you really want to buy or when something unexpected happens (like your car breaking down or a medical emergency), you know you will be able to afford it without incurring debt.
  • And, finally, fulfillment: When we are aware of the real value something has, we get more enjoyment out of it. Warren Buffett (again, sorry, we love him) said: Price is what you pay. Value is what you get. Imagine that, instead of buying that cappuccino every day, you only get it once a week. Can you imagine how good that cup of coffee will taste and feel? The joy you will get out of it will skyrocket. Try it. You’ll see.

You don’t need to become a monk —free of wishes and material desires— to accomplish this, as it’s about controlling your money instead of letting money control you, and while you won’t suddenly get rich by living below your means, you’ll gain financial freedom which could eventually lead to great wealth.

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