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10 Ways to Practice Living Below Your Means

Author: Maurie Backman | May 13, 2021

A yellow road sign says Cost Cutting Ahead.

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A more frugal lifestyle could be yours -- without making you miserable

When you work hard for your money, it's tempting to spend your entire paycheck month after month. But if you go that route, you may fall behind on other goals, like saving for retirement, putting your kids through college, or taking the leap and starting your own business. If you're not used to living below your means, here are a few ways to start.

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1. Set up a budget

Living below your means, at its core, means spending less than you earn, and a good way to make that happen is to follow a budget. That way, you'll see where your money really goes month after month. You can set up a budget using a basic spreadsheet, an app you download, or even plain old pen and paper.

ALSO READ: Want to Boost Your Savings? 4 Expert Tips to Get Started

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401k plan sheet showing contributions and match.

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2. Automate your savings

If you send a chunk of your earnings into a savings account or retirement plan before you get a chance to spend it, you'll effectively force yourself to live below your means. You can sign up for your employer's 401(k) plan or find an IRA with an automatic transfer feature that allows money to land there off the bat.

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3. Downsize your home

Your home is probably your largest expense, so swapping a larger one for a smaller one could help you spend a lot less. This especially holds true when you consider that your peripheral costs -- like property taxes, insurance, and maintenance -- are also likely to shrink if you downsize.

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4. Drive a less fancy car

While homes have the potential to gain value as they age, cars tend to do the opposite -- lose value. Therefore, it pays to not spend too much money on a car. If you're currently driving a nicer one, swap it for a used or basic model that gets you from place to place without all the bells and whistles.

ALSO READ: 4 Savings Tips That Actually Work

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5. Cook your own meals

Restaurants are known to charge a substantial markup for food. If you do your own cooking, you could substantially lower the amount you spend each month just to keep yourself fed.

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Two people relaxing on beach chairs at sunset

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6. Take modest vacations

The mere act of going on vacation and getting away is enough to work wonders for your mental health. Thus, there's no need to spring for a luxury hotel or first-class flight every time you travel. Instead, try more modest accommodations and enjoy the change of scenery.

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7. Cut back on nonessential expenses

There are probably things you pay for every month that you can easily acknowledge you don't need, like the streaming service you use for an hour a week, or the gym membership you could easily dump in favor of jogging at local parks instead. It pays to cut those expenses that are not only unnecessary but also don't bring you a significant amount of joy.

ALSO READ: Saving This Much Each Year Could Make You a Millionaire

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Young smiling woman sitting at laptop looking at camera and holding credit card in her hand

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8. Avoid impulse buys

Impulse purchases can bust your budget and make it difficult to achieve the goal of spending less. You can avoid them by not storing credit card information on your various electronic devices. That alone may serve as a deterrent and make it easier for you to walk away from those purchases rather than complete them.

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9. Set priorities

Living below your means doesn't have to translate to depriving yourself of everything you enjoy. Rather, it means making choices and spending on those things that are really the most important. Identify what those are so you can manage your money more wisely.

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Stack of credit cards on table covered with bills

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10. Lock your credit cards away

Credit cards make it easy to overspend. If you've been known to abuse yours, tuck them away in a safe place and reserve them for emergencies only so you don't go overboard when you shop.

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Hands holding a small chalkboard with the words Spend and Save, with Spend crossed out.

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Stop spending, start saving

Living below your means could set you on a path to financial security in both the near term and the long run. Follow these steps, and you may find that living below your means is actually not a difficult thing to do at all.

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