It's more than just balancing your budget if you live within your means.Being aware of the difference between what you need and want is what it means.Mark Twain said, "Comparison is the death of joy, and if anything, you need to learn to find a way of spending that works for you, not for your neighbors or best friends."Living within your means requires you to be aware of how you spend your money, but if you do it correctly, you won't be missing out on the things you really need.
Step 1: A list of essentials can be created.
Groceries, utilities, and clothing are included.You cannot do things without essentials.Even if you don't feel that way, you cannot survive without groceries or clothing.).
Step 2: Take your income into account.
If you use a monthly income, this will work best.This is usually very easy if you are on a salary.If you are part-time, unemployed, or dependent, this may be more difficult.Taking your monthly income or budget for the last three months is the best way to go.It will be close enough for you to be able to make ends meet.Remember to remove the amount that you would reserve for taxes when you estimate your income.Depending on how much you make, it may look like you have more money than you actually do.
Step 3: Don't forget to record all of your spending.
How much you spent and where you bought your goods should be recorded.This doesn't have to be very detailed.$100 on groceries at Walmart will suffice.This will be the best from a monthly perspective.Take a look at how much you've spent on your essential items and non-essential items.If this is hard to track because you pay in cash, it's good for you.You can start tracking your expenditures for the current or next month if you can't keep your bills straight.
Step 4: Compare your income to your expenditures.
See how you fare.You are doing fine if you are in the green.If your expenditures are much higher than your income, then you have a problem.If you're a student and don't have an income, you can still think about how to spend less money in the future.
Step 5: Evaluate what you spend.
You can see where your money is going.Pick out your purchases.Make it a category.The categories will be unique to you.One category might be eating out.To create a category total, add up all the purchases in that category.
Step 6: Take the fat out.
More than likely, you will see at least one category other than essential that is eating a large portion of your income.Look at that category.Cut out what you can.If you see nine or ten trips to Starbucks, try cutting this down to three or four.That could be a lot of money.Continue to cut until you make more money than you spend.Section 3 gives more information on how to save money.
Step 7: If you have to boost your income, do it.
If you want to make ends meet, you'll have to do a lot more than just cut your expenses.If you want to raise your income, you may need to take on extra hours at work, ask for a raise, or find a higher paying job.If you have teenagers or older children in your household, you should see if they can take on a part-time job.
Step 8: Save goals should be set.
Goals can be created within a reasonable amount of time.Maybe you want to spend $200 a month.Maybe you want to save $120 a month for a trip to Paris at the end of the year.The more specific your goal is, the more likely you will be to reach it.It's too vague for you to know if you're getting close to your general goal of spending less money.
Step 9: If you have an emergency, save for it.
If you want to live within your means, you can't allow an event like a car accident or job loss to ruin your finances.Even if you only save $100 a month, you need to save for rainy days.If you're spending your money down to the wire every month without having a penny to spare, this money will add up, and you will feel much more safe and confident.Throwing your change in an "emergency jar" at the end of every day will help you mentally prepare to set some of your money aside for the unforeseeable.
Step 10: You need and you don't need the same things.
You may think that you need a huge HD TV, but would you really suffer if you were stuck with your old TV for a while, instead?Would you be happy with a cheaper pair of shoes or sunglasses?Do you have to spend $90 every time you go out to dinner with your partner, or can you save money and have a romantic night cooking at home?It will help you live within your means if you realize that you don't really need all those things.It's okay to spend money on things you don't really need, but you should not make a habit of it.You should be aware that your life would be just as good without that thing.
Step 11: Don't try to keep up with the Joneses.
If your neighbors just got a swimming pool or built an addition onto their home, they may make twice as much money as you do.If you are too busy trying to keep up with everyone around you, you will never be able to live within your means, because you can never fully live up to the image you have of yourself.Your best friend's new jeans look great on her.Instead of being jealous and wishing you could afford the same, be happy for her cute new look.You will never be satisfied with what you have if you are jealous.
Step 12: Change your definition of being rich.
Having enough money to keep your family and children happy, as well as having some spending set aside for fun with your significant other and some light travel, is what being rich doesn't have to mean.You will be able to stop worrying about other people's perception of your wealth once you see that this is your own definition of "rich."
Step 13: Spending less money won't affect your quality of life
Instead of spending money at a crowded bar, invite some friends over for some nice wine.Instead of flying to Portland, you and your significant other take a road trip.Does this affect your quality of life?Absolutely not.You will still be doing the things you love, but you will do them differently.Don't think that spending less money will make your life worse.Spending less money can increase your quality of life, because it will make you less stressed out about wasting money, and you will feel more at peace with your decisions.
Step 14: You should be thankful for what you have.
Instead of focusing on what you don't have, focus on the things you do have.You love your computer, but you don't like your TV.You have so many great sweaters that you may wish for a new coat.Make a list of all of the things you have and don't limit it to the material things, you may be grateful for an amazing significant other, wonderful children, or the amazing place where you live.Being aware of all of the things you have will make you less likely to spend money on things that you don't need.
Step 15: When you can, eat at home.
It doesn't have to be boring to eat at home.Eating at home will make you a better cook, be more conscious about what goes into your food, and it can even create an intimate atmosphere for a date night or a social gathering.It saves money as well.If one of your biggest expenditures comes from going out to eat, try to cut down how many meals you eat out by two a week, and then reduce that number further until you see that you're happy if you only go out once every week or two.Sometimes, you have to go out to eat for things like a coworker's farewell party or a friends birthday.You can be aware of what you spend when you eat out.Don't order too much food or spend a lot of money if you show up starving.
Step 16: Wait for the sales.
You shouldn't have to pay full retail price for something.Wait for the items to go on sale, get coupons if you can, and just have the patience to know that anything you really want will eventually cost less money.If you wait a few months for the price to go down, you can save hundreds of dollars.There is nothing wrong with buying second hand.There are great prices at a thrift store.
Step 17: Instead of going out, be at home.
Don't go to the bars with your friends.If you invite people over for a movie night, they won't have to pay to see the movie on the day it comes out.Having fun in your own home can be even more enjoyable than going out because you don't have to deal with strangers and you can control what you eat and drink.If you want to have a social event, invite a few friends over instead of hitting up expensive bars.
Step 18: If you don't need the subscription, cancel it.
You could be spending a lot of money on subscriptions that you don't need.Gym membership is one way to cut down on your spending.If you only go to the gym once or twice a month, cancel your membership and go running.There is a membership with netflix.You can save money by paying an extra fee for ordering DVD's when you never use this feature.A magazine subscription.If you only read one or two articles in the magazine that comes each month, you're better off saving money and watching the news online.
Step 19: Whenever you can, borrow.
If you want to borrow a book, go to the library.You can borrow a DVD from a friend.Borrow a dress that you will only need to wear once from a stylish friend instead of spending a lot of money on something you'll never wear again.If you share your stuff with your friends, they will do the same.Borrowing is a great way to save money.
Step 20: Have a garden.
It is a fun and relaxing hobby, and one that has been shown to increase your lifespan, but it is also a money saver.Make a one-time investment in a garden and see how much money you save each week, instead of spending money on vegetables and herbs every week.
Step 21: Don't forget to keep a list.
If you just wander around buying whatever you want, you are more likely to spend impulsively and recklessly.If you see something that you really need, but don't write it down, do not stray from a thorough list every time you shop.If you only buy three items at the mall, writing them down on a list will make you more aware of what you buy.
Step 22: It's best to wait 48 hours before making a purchase.
Don't buy a brand-new jacket or a nice pair of shoes if you decide you cannot live without them the second you see them at the mall or online.Give yourself 48 hours to think about it.Maybe you'll find that you don't need the item at all, or you can find a cheaper substitute.If you decide that you really need it, you will feel better about your decision.