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10 Tips for How to Start Living Below Your Means Today

Last updated 05/27/2022 by

Erin Gobler

Edited by

Fact checked by

To live below your means, first create a realistic and comprehensive budget. You can then start tracking your spending and identify unnecessary expenses that to cut out of your finances. By living below your means, not only can you help your current situation, but you can also plan for an easier retirement.
If you’ve ever tried to get ahead in your finances, you probably know just how challenging it can be. Sometimes you might struggle to cut back on unnecessary spending. But other times it feels like there just isn’t enough income to get through the month, even if you’re already living frugally.
The good news is that if you’re struggling to save money or reach your financial goals, there are steps you can take to start living below your means and finally get ahead with your finances. This can help you reduce stress and reach financial freedom. Here are 10 ways to live below your means today.

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What does it mean to live below your means?

Simply put, living below your means is spending less than you earn. But as you can probably guess, there’s a lot more that goes into it than that.
When you’re living below your means, you have plenty of money in your budget to cover all of your monthly expenses, save for your financial goals, and even have a bit of a buffer left in your budget.
It’s important to note the difference between living below your means and living paycheck to paycheck. When you’re living paycheck to paycheck, you may be able to cover your bills and expenses each month. But you also probably aren’t able to save or invest. When you live below your means, you can pay for your living expenses and still save for the future.

What are the advantages to living below your means?

Living below your means comes with plenty of benefits, and not just for your wallet.
  • Affordability. The first obvious advantage is you’ll be able to comfortably afford your expenses each month without going into debt or falling behind on your bills.
  • Reduce financial stress. Living below your means can also help to reduce financial stress. Money is a leading source of stress for a large percentage of people, and that stress can easily bleed into other areas of your life. Living below your means and getting ahead with your finances can improve your overall quality of life and help you to feel more relaxed.
  • Plan for future expenses. Embracing this financial life today can help you live comfortably in the future. Many people don’t start investing for retirement when they start working, simply because it seems so far away. But time in the market is critical when it comes to investing, and living below your means can help you have additional funds to invest from a younger age.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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How to live below your means

Living below your means can be easier said than done, especially if you’re living on a small income. We’ve rounded up 10 of the best tips to help you start living below your means today.

1. Create a budget

Many people are resistant to budgeting since it can feel restrictive and seemingly prevent you from spending your hard-earned money. But budgeting doesn’t have to be restrictive — in fact, if done correctly, it can actually give you more freedom to spend money on your priorities.
The first step to creating an effective budget is starting where you are now. Go through your bank and credit card statements to identify your monthly income and your average monthly spending in each category.
Seeing where your money has been going will be a huge help in creating your budget moving forward. You might find that you have plenty of extra room in your budget to start sending money to savings. On the other hand, you might find that you spend more money than you earn, and then you know something needs to change.

Pro Tip

If you need to make changes to your budget, start small. It’s not realistic to go from spending $500 per month on groceries to spending $100 per month. Focus on small and steady progress.

2. Track your spending

Once you’ve made your budget, your work isn’t over. To ensure you’re actually following that budget, you’ll have to track your spending. There are several ways to do this, depending on your budgeting style. Some people prefer to connect their bank accounts to a budgeting app like Mint or You Need a Budget (YNAB), while others prefer a more hands-on approach like a spreadsheet where they can manually track their spending.
The benefit of tracking your spending throughout the month is you have time to make changes. If you check your budgeting app on the 15th of the month and see you’ve spent more than half your dining-out budget, you have time to make changes to finish the month on track.

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3. Identify unnecessary spending

It’s easy to say you’ll cut back on unnecessary spending but often more difficult to actually do it. What makes it even more complicated is the fact that “unnecessary” is entirely subjective. What’s an unnecessary expense to one person might feel entirely necessary to someone else.
The best thing you can do is be curious about your own spending rather than critical. If you find you’re spending money in one area that’s more than you’d like, ask yourself why that is and whether those purchases were really necessary.
Once you’ve identified those unnecessary purchases, you’ll have an easier time reducing them in your budget.

4. Use credit cards with caution

Some personal finance experts will tell you not to use credit cards at all. It’s true that, for some people, not using them at all is the best course of action. But if you can learn to use them responsibly, then credit cards can be a great tool.
The most important rule of credit card spending is to only spend money you have in your bank account. If you’re making a $250 purchase on your credit card, you should feel just as comfortable putting that purchase on your debit card because the money is already in your account.
Additionally, make sure you’re paying off your credit card balance in full each month. Otherwise, you’ll end up paying interest, which is another unnecessary expense.

Pro Tip

If you’re currently paying off credit card debt, consider a balance transfer or debt consolidation loan to help lower your interest rate.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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5. Reconsider your biggest expenses

People often look to save money by reducing their small day-to-day expenses. And while that can certainly be effective, the biggest expenses tend to eat up the largest portion of your budget. As a result, those are the areas you can have the greatest impact.
Two major expenses for most people are housing and transportation. Consider whether there are ways to reduce your housing payment — perhaps by moving to a more affordable apartment. If you have a car payment, consider whether you can reduce — or even eliminate — that payment with a more affordable car.

6. Address impulse spending

Impulse buying is when you spend money you weren’t planning on ahead of time. And if you’re struggling with impulse spending, you know just how challenging it can be to overcome. This problem lies at the intersection of finances and emotions, making it even more complicated.
The first step is to get the root of why you’re emotionally spending. Some reasons can be addressed through effective money management, while others may require deeper work, like therapy.
One of the best ways to address impulse spending is to set a rule for yourself. If you’re considering making an impulse spending, set a rule where you have to wait at least 24 hours — or even longer — before you can go back and purchase it. Many times, you’ll find you don’t even need the item anymore.

7. Set your priorities

Setting priorities is the cornerstone to living below your means because it requires you to look at your finances both today and in the future.
The truth is that we don’t have money for everything we might want, and ultimately we have to decide where our money will go. Having clear-cut priorities can help you do that. Something might seem important and worth spending your money on. But when you compare it to your larger goals of buying a home or traveling with your family, it suddenly doesn’t feel quite as important.

8. Build an emergency fund

Financial experts generally recommend having an emergency fund of three or six months of expenses. And while building your emergency fund requires making extra room in your budget, it will have many benefits in the future.
Ultimately, a financial emergency that we’re unprepared for usually ends up costing us more money. For example, if you have an emergency $1,000 car repair you can’t afford, you may end up putting it on a credit card. Instead of paying $1,000 for that car repair, you’ll pay even more money because of the interest payments you’ll have to make on the credit card. That added expense makes it even more difficult to live below your means.
The great thing about an emergency fund is that, while it will take you a while to build it up the first time, you can then just allow it to sit, out of sight, out of mind. But once unexpected expenses pop up, you’ll be able to respond to them immediately and without stress.

Pro Tip

Not sure how much you need in your emergency fund? Add up all your monthly expenses and multiply the total by either three or six. Consider how difficult it would be to replace your income if you lost your job. The more difficult you think it would be, the larger your emergency fund should be.

9. Automate your savings

Saving money sounds easy in theory, but repeatedly setting aside extra money can be more difficult. Many people tell themselves they’ll save the money left at the end of each month. Unfortunately, without planning ahead, you may not have anything left when the end of the month rolls around.
Instead, automate your savings so it moves from your checking account to your savings account automatically, and preferably right after you get paid. This practice is known as paying yourself first since you’re prioritizing your savings over other expenses.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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10. Increase your income

There are many ways to live below your means by reducing your spending. But another option is to increase your income so that you’ll have more money to allocate toward living expenses and savings.
There are many ways to increase your income, including asking for a raise at work, seeking a promotion, applying for higher-paying jobs, or picking up a side hustle.

Pro Tip

A side hustle can be a great option when you’re saving up for a particular financial goal. Are you saving for the down payment on a home? Pick up a job you can do in your spare time and put all the income from it toward your down payment.


Is living below your means worth it?

Living below your means is definitely worth it thanks to the financial independence it can help you achieve both today and in the future.

What are the benefits of living below your means?

Not only will living below your means reduce financial stress today and help you cover all your expenses, but it will also help you reach future financial goals, including a comfortable retirement.

How can a student live below their means?

Living below your means can be challenging when you’re a student on a low income. That being said, the tips above can help you whether you’re a student or years into your career.

Key Takeaways

  • Living below your means is having enough room in your budget to cover your essential living expenses, as well as save for your financial future.
  • The most important first step to living below your means — or reaching any financial goal, for that matter — is creating an effective budget.
  • Other ways to reduce your spending to live below your means include tracking your spending, using credit cards responsibly, automating your savings, and more.
  • While reducing your spending can help you live below your means, so can increasing your income.

Effectively manage your money

Living below your means can help you create financial security and freedom, both today and in the future. Living below your means can be challenging when you’re just getting started, but just a few changes in your finances can help you do it.
If you’re trying to live below your means, you’ll need the right financial tools by your side. Visit our roundup of the best money management tools to help you take control of your spending.

Erin Gobler

Erin Gobler is a Wisconsin-based personal finance writer with experience writing about mortgages, investing, taxes, personal loans, and insurance. Her work has been published in major outlets, such as SuperMoney, Fox Business, and

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