How to Start Living Within Your Means
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How to Start Living Within Your Means
If you’ve ever felt like your money disappears faster than it should, you’re not alone. Living within your means is one of the most freeing things you can do for yourself, but it requires honesty and consistency.
Let’s break down what it really means and how to make it happen.
1. Understand What It Means to Live Within Your Means
Living within your means doesn’t mean you’re settling or missing out. It simply means you’re doing things that make sense for your income. It’s not about depriving yourself or living a boring life. It’s about making choices that match what you actually earn, not what you wish you earned.
You can still enjoy life, take vacations, and have nice things. You just do it on a scale that doesn’t leave you stressed every time a bill comes. That’s the real goal.
2. Realize That It’s Not Impossible
I hear people say all the time that it’s impossible to live within your means with the cost of everything going up. I get it, but it is possible.
Many people with average incomes do it every single day. The truth is that some people just don’t want to make the changes it takes to get there.
If you’ve been spending freely for a while, yes, it will take sacrifice. You might have to say no to a few things in the beginning. But it’s not about punishment. It’s about taking control. You’re not cutting out everything you love. You’re just learning how to make choices that give you peace later.
(Related: Download your mindful spending Money Mindset Bullet Journal — it’s your personal spending coach).
3. Figure Out Where Your Money Is Going
Now we get into the real work. You have to find out exactly how much outside your means you’ve been living. That means looking at your money for real. Pull up your bank statements, credit card bills, and any cash you’ve taken out for the last 90 days.
Break your spending into categories. How much do you spend on housing, car payments, groceries, eating out, travel, entertainment, shopping, subscriptions, and child care? Once you know that, you can compare it to what’s considered healthy.
As a guide:
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Housing should take up about 30 percent of your take-home pay. In high-cost areas, 40 percent can still be reasonable if you have little to no debt. But keep it as close to 30 as possible.
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Transportation, including your car payment, gas, and insurance, should be around 20 percent.
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Fun spending should be about 5 to 10 percent.
Then, total your “needs.” These are expenses you can’t avoid like rent, utilities, groceries (not takeout), insurance, debt payments, and day care. Divide that number by your take-home pay.
Ideally, your needs should take up 50 to 60 percent of what you bring home. That gives you room to save, pay off debt, and still have a little fun.
If you find that you’re spending more than that, it’s time to make adjustments.
Let’s say you have $300 left after covering your essentials. Put half toward savings or debt and allow yourself to spend the other half guilt-free. Even if that means only $100 a month for fun, that’s okay. You’re living within your means, and that’s the point.
(Related: Looking for an easy budget template? Here’s one you can start using today.)
4. Get Honest About Housing
Housing is one of the biggest reasons people struggle financially. You can’t get ahead if your rent or mortgage is eating up most of your income. It might sound harsh, but you have to decide what matters more – keeping the home that’s draining you or creating space in your budget to actually live.
You don’t need a massive house to be comfortable. You don’t need a brand-new apartment to feel safe. There’s a middle ground in almost every city between luxury and unsafe.
Ask yourself:
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Can I realistically afford this place without relying on credit cards?
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Am I staying here for comfort or pride?
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What could my life look like if I freed up this money each month?
If your housing costs are holding you back, it might be time to let go. Either lower your housing costs or increase your income. Those are your only two options.
5. Increase Your Income
Even if you make good money, I don’t believe in relying on one source of income. Having another stream can give you a safety net, help you build savings faster, and allow you to invest more.
Some of the most financially stable people have something on the side. Maybe it’s a rental property, an online store, a small cleaning business, or pet sitting on weekends. The key is to use the extra money wisely.
When your income increases, don’t immediately upgrade your lifestyle. That’s what keeps people stuck. Every time you make more, the goal is to save or invest more – not spend more.
6. Shift Your Mindset
To truly live within your means, you have to shift how you think about money. Here are a few practical ways to do that:
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Stop comparing your lifestyle to other people’s. You don’t know their bills.
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Take pride in being disciplined. Financial peace is worth more than luxury.
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Practice gratitude for what you already have. It’s hard to appreciate more if you can’t appreciate now.
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Redefine what “enough” looks like for you.
Living within your means isn’t a punishment. It’s power. It’s knowing that your life doesn’t have to collapse if your paycheck comes a few days late. It’s sleeping better because you’re not worried about bills. That’s not settling. That’s winning.