How to live below your means
Spending less than you earn is the number one key to saving money, after all it’s impossible to save if you have more money going out than is coming in. If this is a struggle for you and you need a few tips on how to live below your means, read on.
Track all of your expenses
It’s extremely hard to truly know where your money goes if you don’t keep track of your expenses. If you ever find yourself wondering where your money goes, try tracking your expenses, even if it’s just for a one month period. You will pretty quickly start to identify the areas where money is being spent without you realising.
Track your income
While it’s important to know where your money is going, it’s equally as important to know how much money you have coming in, especially if you have a varying income, or receive income from a few different sources.
Create a realistic and honest budget
There is no point creating a budget if it’s full of unrealistic numbers. The idea is that your budget tells your money where to go, so it’s needs to be fairly accurate. Start by making a list of all of your expenses without rounding them up or down, you need to know exactly what you are spending. Also be sure to leave space in your budget for those unexpected expenses that inevitably come up.
You don’t want your budget to feel restrictive, which might cause you to lose motivation and abandon your budget all together, so set aside a small amount each time you get paid for ‘fun money’. This is money that you can spend completely guilt free on anything you like, which also works extremely well when setting up a budget with your partner. It help to remove any resentment that can come up when one person feels like the other is restricting their spending.
Reduce your expenses
After tracking your expenses and creating your budget you probably will have identified some areas where you are spending more than you would like. Have a think of ways you could reduce these expenses, which will free up spare cash in your budget, leaving more to save.
Increase your income
If you feel like you need a little more breathing room once you have created your budget, consider finding ways to increase your income. This could even include having a decluttering session and selling off some of your no longer used items. You could also start a small business, or find a second job.
Automate your savings
Once you have sorted your budget, it’s time to automate your savings before you have a chance to spend them. Your savings will be the difference between your income and expenses in your budget. Log into your internet banking and set up an automatic transfer for that amount, where the amount is transferred from your transaction account to your saving account as soon as you get paid.
DO YOU HAVE ANY TIPS ON HOW TO LIVE BELOW YOUR MEANS? LET US KNOW IN THE COMMENTS BELOW!