I wrote this post back in 2015, however it is totally perfect for the 31 Ways to Save $100 a Year series. Living above your means HURTS your budget, but you are also spending a LOT more money doing it. Cutting back on your spending to what you can actually afford will many times save you a lot more then $100 a year!
When you sit down to pay the bills and you are wondering how you are going to pay all the bills with the money that you have and realize it is not enough to cover it all it can really freak you out. It can send you down a spiraling tunnel where you just want to rip your hair out and scream. I know this because I have sat at my own dining room table when Tom first joined the military wondering how the heck I was going to stretch the money to cover everything we needed.
Living above your means doesn’t just mean spending more money then you make it also means you are not prepared for if something were to happen. Every month you are paying your bills on time and you think you are doing great, you are living with in your means and then the car breaks down, the kid gets hurt and you have to go to the ER (and pay that deductible) and the dishwasher breaks (you know because everything bad seems to happen at once and in threes) and then you realize, crap how am I going to pay for these things. My bills are covered but these extras not so much. Making sure you have the ability to cover those extras is an important part of living with in your means. You want to make sure you are able to live with in your means with everything not just the monthly bills and expenses.
How to stop living above your means
- Know how much you make. Ok so this sounds a bit silly, as one would assume that if you are looking at your paycheck each month that you know how much you are making but that is not entirely true. Your take home pay is less then you really make because of taxes and you need to make sure you know how much you are actually bringing home. Also you need to know how much you are making combined in the household if there are two people working. It could be more or less then you actually think you are making.
- Know how much you are spending. Yes the bills are paid but do you really know how much money each month you are spending? Making sure you know exactly how much money you are spending is important.
- Build an emergency fund. Even if you are living pay check to pay check building that emergency fund so you have the money if something were to come up is important.
- Build your savings account. If you lose your job you want to be able to pay your bills while you are hunting for another one.
- Rework your budget and don’t spend every cent you make. When you are doing your monthly budget allow the room for there to be extra money. Figure out how much you need for the bills, how much you need for savings and how much to put in your emergency fund but make sure there is money left over after you are done budgeting. You want to spend less then you make.
- Cut out the extras. You can save a TON of money and spend a lot less then you make by cutting out the extras. Dining out, that coffee at Starbucks in the morning on your way to work. While you might have the money to spend think about how much you are spending that could help you get started living below your means.
For example: 1 cup of coffee in the morning at Starbucks = $4 a day. If you work 5 days a week thats 20 day making it $80 a month on coffee. You can buy 72 kcups (which is 72 cups of coffee) for $35 bucks on Amazon.
Here is the break down for 3 months of coffee at Starbucks to buying Kcups to help you save.
3 months of Starbucks coffee: $4 a cup, 20 days a month for 3 months = $240
Buying a 72 count pack of kcups on Amazon for $35 = $35
Total Savings = $205
That $200 is a nice chunk of money you could put in your savings account. You would now have that $200 over 3 months time that could be used incase of an emergency that before you would have been trying to figure out how to get the money for.
- Be aware of your expenses. Do you know exactly what you spend money on each month? Do you forget to include things like oil changes, pet needs, clothing and many other things in your budget? There are things you might not even think of including in your budget that you spend money on. The budget is more then just the bills you pay for your house and if you are not aware of the other expenses then you will end up living above your means.
These tips will help you to stop living above your means and it may even make it so you are able to live well below your means 🙂
Also check out More Ways to Help you in your financial journey:
- 5 Tips for putting more money in your Savings account
- How to get $1000 in Your Savings Account in a Year
- 52 Week Money Saving Challenge to build your savings account for ways to put money into your savings account.
- 31 Ways to Save $100 or More Per Year Series
- Things forgotten when making a budget
Everyday for the month of October we are sharing a different way to save money. Each of these ways can help you save over $100 each per year! See the rest of the 31 Ways to Save $100 or More Per Year posts here. Using these ways to, you can save $100 in 31 different ways and you have a savings of $3100.00 in a year (if not more!)!