Most people don’t want to have to worry about money. Living paycheck-to-paycheck is stressful and you don’t feel like you have very many options in life. The go-to solution is to work hard to earn more of it.

The problem with this approach is that every time we move into a situation where we earn more we upgrade our lifestyle.

Why wouldn’t you? You can afford it and it’s what everyone does.

A nicer car, a bigger house, and more exotic vacations are viewed as the stepping stones to success.

Unfortunately, they trigger the cycle all over again.

After a promotion you have hopefully paid down some debt and started saving more; but then you get comfortable. Suddenly you realize that you’ve bought a new wardrobe, an electric bike, tickets to a show in New York City, booked a cruise, and own a cottage (because you’ve earned it)!

Before you realized it’s even happening you are back to living paycheck to paycheck. You have nicer things, but you still need to work hard to keep them.

What if there were another approach?

If you could live below your means you would have money to spare every month. What would you spend it on?

What are you shopping for?

I’m shopping for retirement.

If I can live 10% below my means (i.e. save a tenth of my earnings) every 10 years I work buys me a year of retirement.

If I can live 33% below my means (i.e. save a third of my earnings) every 3 years I work buys me a year of retirement.

If I live 50% below my means (i.e. save half my earnings) every year I work buys me a year of retirement.

As a bonus, those years of retirement are at my current standard of living. I don’t have to eliminating anything.

Most of us have about 45 working years between the ages of 20 and 65 years old. Some people work even longer. They start working sooner and end later.

What if you could turn your 45 years of work-life into 40 years, 30 years or even 25 years? Is that a significant motivator? To me it is!

Your motivator is likely not the same. You might be shopping for something else entirely.

It’s Not Impossible

First things first. Let’s get your objections out of the way.

As soon you saw the phrase “live below your means” your monkey mind started chattering at you and saying things like:

• • That’s impossible.
  • I’m already too far in debt for this to ever work for me.
  • I can barely live on what I make. How could I save even 10% of my earnings.
  • Maybe if you’re married, but I have only one income!
  • Maybe if you didn’t have children, but I have two kids!
  • Maybe if I was single, but I have a family to support.
  • I don’t know anyone who could save half their salary!
  • I would need to work two jobs to make this happen.
  • You must have to give up everything. I don’t want to live like a pauper!
  • Forget that! I’m a single mom.
  • Sure this could work…if you make 6 figures!
  • Maybe where you live, but the cost of living where I am is too high!
  • I already contribute to a pension at work. I can’t save any more.

Did I miss any?

I have voiced every one of these objections at one point or another. This is my actual list of objections.

They are all utter nonsense.

A-Ha Moment

It’s not impossible. I know because I am doing it.

At one time, I was barely scraping by on what I was making.

In fact, I wasn’t even scraping by. I was going into debt.

Ironically, the debt was super easy to acquire because at the time it was incurred I was in a double income household where both adults had a university degree and decent wages.

Need a student loan to get that university education? Sure. Here you go.

Need a car loan so you have a ride to the job that university education got you? We can finance that for you.

Need a line of credit to cover your wedding? You’re both working? Sign here.

You’re entrepreneurial? Awesome. Have a small business loan. And here’s a company credit card to go with!

I also know it’s possible because I was a single mom of two when I turned things around, paid off the debt, and started saving at a rate that has accelerated my retirement plans.

Like many newly SAD (Separated and Divorced) people I had my moment of woe where I felt like a total victim of life.

I was feeling sorry for myself and thinking “I don’t know how I am going to survive financially”.

Then I had an A-Ha moment.

I had been obsessing on going from a two-income household (where debt was accumulating) to a single income household that had just acquired a brand new mortgage (that would take me until I was 65 to pay off, never mind my other debts).

I was convinced I couldn’t survive on one income. But I had to. I had two little girls to support.

I had to stop and think.

When I got over myself, put away the emotions, and re-engaged my brain it occurred to me that I make a decent wage. There were definitely families who were living on what I was making.

Before your monkey mind comes up with yet another objection – that my wage is better than yours – stop and think.

Forget about what my wage might be. What’s yours?

Someone is living on what you are making. If you are actually looking , you will find someone who is living on what you are making and doing well.

When I’m at work and I come across a problem I don’t know how to solve I go to Google. (I honestly don’t know how the world operated before internet searches were a thing!)

I never waste time re-inventing the wheel when, with a little research, I can find someone else who has already solved the problem.

Applying the same logic I searched “How to live on $XXX per year” and “how to pay down debt”.

Although I was still feeling overwhelmed at being financially responsible for my little family, at least I had taken the first step.

No problem ever gets solved without a first step. You have to just begin.

It took some time (months) of sifting and sorting through ideas and recommendations. Trying to figure out what would work best for me.

It took years before the debt was gone. But not as many as I would have expected. It only took about 6 months before I started to feel some sense of control again, and that I was making progress in the right direction.

Although I can’t give you the secret sauce that will have you living below your means over-night, I can give you the shortcut to get there. If you are serious about getting a handle on your income, becoming debt free, and maybe even retiring before you are 65 read on.

1. Know what you are shopping for

I’ve already shared that my motivation for living below my means is early retirement. I was 39 years old when my marriage ended and felt like I was at square one with no savings, lots of debt, two kiddos to raise, and any hope of retiring before I was 65 out the window.

I really wanted to get out of debt and have the option to stop working sooner.

That’s me. What do you really want? Why did you click on a blogpost with a title about living below your means? Something motivated you.

Maybe you just don’t want to worry about how you’re going to pay your bills anymore. Perhaps you have a disabled child and you want to stay home to take care of them. Maybe you want to travel or send your kiddos to college.

There’s no right or wrong answer. You can be shopping for anything, but you have to know what you are shopping for!

2. Be content with what you have

A good life is not about stuff and it is not spending money despite a world of influencers who would have us believe that we need our own jet, a white-sand beach, designer clothes, mansion on a hill and a sports car to be happy and successful.

If you can step off the consumer treadmill that markets to us to upgrade, upgrade, upgrade and be content with what you have, then you have arrived. You will easily be able to live below your means.

We often use material things like big houses, new cars, vacation locations, and brand clothing to gauge success in ourselves and others.

Being content with what you have doesn’t mean settling for whatever life dished out.

This is important.

It means getting crystal clear on what’s important to you (instead of what society, advertisers and marketing teams tell you is important to you) and focusing on choices that align with that.

For me doing work I love, learning new things, being debt free, and being able to explore options in life (including early retirement) are what success look like.

I can do those things in a small house while driving a second-hand car and wearing off-brand clothing.

Knowing your motivation and changing your mindset about success are the two most important steps to living below your means. However, I know you are looking for some more practical tips you can put into practice so here they are.

3. Simplify Your Budgeting Approach

I may be a CPA, but my budgeting consist of 3 simple steps and doesn’t require a calculator or a spreadsheet. It really only requires you to do anything special on one day – payday.

When payday comes 1) Save. 2) Pay debt. 3) Pay in cash; in that order. If you do these 3 things consistently, you will soon be living below your means with ease.

1. Save

One of my favorite quotes is from Dave Ramsey who says “An emergency fund turns a crisis into an inconvenience.” I really hate a crisis.

The first thing that I did to start living below my means was to start building an emergency fund. It doesn’t really matter how much you save to start….just start saving something!

Saving money to live below your means may seem counter-intuitive but a little money in the bank made me feel less stressed and like I was more prepared for the unexpected.

As the savings grew, it gave me flexibility to make choices that saved me even more money in the long run.

Simple things like paying my car insurance up front to avoid the finance charge all insurance companies tack on if you pay monthly. Did you even realize you pay more because you pay monthly? You do.

I was eventually able to keep a minimum balance in the bank so I don’t have to pay any bank fees. That’s a great monthly expense to eliminate.

I know you think you have no wiggle room in your budget to scrape up some savings, but this probably isn’t true.

I can tell you how to save yourself $1,200 a year in the next 10 minutes (or less). Call and cancel your TV subscription.

Check out these posts for more information on how you can leverage your TV to improve not only your savings account, but your life! Lifehack to Downgrade Your Life Fast (NO TV) and Mindful Living. 25 Things To Do With Your Time Instead of TV.

Have this money go into your savings account automatically every pay day. This way you don’t see the funds, and you don’t even realize they are missing.

2. Pay debt

Debt is pretty non-negotiable. If you don’t pay your mortgage, you will lose your house. If you have credit card debt, loans, or tax debt and you are behind you will be getting unpleasant calls.

Go to the bank (or online) and set up your minimum payments to come out automatically on your pay day.

If your pay dates don’t correspond with your mortgage payments ask your lender to switch them. They will do this for you.

If you get paid bi-weekly, pay your mortgage bi-weekly. This pays down your mortgage faster and evens out your budget better than having it come out only once a month.

Once you have a reasonable size emergency fund, pay more on debt because once the debt is paid off it is gone and you have a lot more room in your “pay in cash” budget.

3. Pay in cash

Everything else comes from what’s left over. Don’t use credit cards, a line of credit, or payday loans.

I’ll be honest. This is really hard at first.

Utilities, transportation, and food have to come first.

Set up a pay day ritual to pay your bills (even if they are not due yet). Fill your car with gas and get groceries.

If you know you will need another tank of gas or top up on milk and bread before next pay day take out the cash, fold the bills in half, and put them in your wallet. Folded bills do not get spent. They are earmarked. You can even write the purpose right on them – “gas” or “milk”.

In this way, any money that’s left in the bank is yours to spend as you wish. Clothes, coffee, dinner out. Whatever you want. Until it runs out.

If you know me outside of this blog, or even if you have followed the blog for a while, you know that I spend money.

I traveled from California to New York on an epic road trip last summer. I bought a van to deck out for wild camping last fall. I just bought a new cottage (which has now become my house but that’s a story for another day)!

Today things are easy. I put the designated portion of my earnings away in savings, pay my mortgage (my only debt) and I spend the rest.

The longer you live below your means the more you have saved, the more debt you will have eliminated, and easier it will be.

The more you can lower your recurring monthly bills (see below), the more you have to spend on the fun stuff.

In the beginning, I was saving much less, paying down much more debt, and didn’t have much left to spend on extras because my bills weren’t really under control.

If you don’t have the cash in the bank, stop spending. Don’t put it on a credit card or use a line of credit. Your future self will thank you.

It might be hard to decline going to dinner with friends, but somewhere along the line you decided living below your means was important to you. What were you “shopping” for? Remember your goal!

4. Simplify Your Life

The next most impactful thing you can do to improve your situation and get closer to living below your means is to start to simplify your life. Simplification is a long-game but you start to experience the short-term benefits immediately.

What does it mean to simplify your life?

In general, it means you keep everything in your life that is important to you and get rid of everything else. It will look different for everyone.

You can simplify your home, your finances, your commitments, your meals, your work arrangements, your hobbies, etc.

Here are some of the ways that I simplified my life that helped me to live below my means. Nothing stellar here. Mostly small common sense things that, when all added up, really worked!

Declutter

I bought the book The Life Changing Magic of Tidying Up by Marie Kondo and I decluttered my stuff.

The categories her book helps you to clean up and clear out are clothes, books, paperwork, komono (miscellaneous items like makeup, kitchen appliances, electronics, etc.), and sentimental items like photos and keepsakes.

She has a very specific step-by-step method to follow.

After I decluttered, I was hesitant to bring “stuff” back into my life. I also sold a lot of stuff and banked the profits.

Less House

A home right-sized to my needs. This varied over the years and has included home ownership, renting apartments, and even renting a room!

Housing is normally the largest household expense and you pay it every month.

You get big bang for your buck if you can lower your monthly housing costs.

Second-Hand Cars

I drive second hand vehicles that I pay cash for. Knowing you plan to pay cash for your next car is a great incentive to save!

I stayed away from SUVs and trucks that used more gas and had more expensive tires.

I hear a lot of people say they need a 4 wheel drive on our snowy Canadian roads. I am proof you do not.

Menu Plan

Menu planning (including packed lunches) is the best way to keep food costs low, reduce food waste, and avoid the cost of eating out.

Having rotating favorites keeps it simple. Pasta is on the menu every week. I just change it up with the pasta (spaghetti, macaroni, fettuccini, etc) sauces, and veggies and meats on sale or left over from other recipes.

We have a roast (beef, pork, or chicken) every week. I always buy salad options, based on the produce on sale when I’m shopping. We eat yogurt every week so stock up when it is on sale.

Having a plan keeps food costs down.

Don’t Spend Your Raise

I don’t spend raises. If you are lucky enough to be in a position where you get regular raises, don’t spend them. If you are living on what you are making today, you can live on that tomorrow.

If you decline to upgrade your lifestyle when you get a raise you are either increasing your savings or paying off you debt quicker, or both!

Free Fun

I find a lot of free fun. This was especially true when the kiddos were little, but still holds true today.

Family skate and swim times, concerts on the green, and activities at the local library are always available.

Our local art gallery has free entry on Sundays during certain winter months and I love to visit.

Checking out a library book can get you a free pass to the zoo, Provincial parks and more.

Many towns have “open door” events where places like museums, heritage buildings, or botanical gardens are free to enter. Parades and fireworks can always be found.

Once you start looking and liking free events on Facebook they show up in you feed all the time!

I never attend something just because it is free. I do find lots of events that interest me that also happen to be free!

Free Hobbies

I have a lot of free hobbies.

With the purchase of some basic (and often second-hand) equipment I have enjoyed many no-cost hobbies like hiking, biking, snowshoeing, walking, or canoeing. As a bonus these are also my exercise. No gym membership required!

I love to read and do puzzles (both available at the library).

I’m not settling for hobbies that are free. These are all things that I really enjoy and would have picked anyway. I do have some hobbies that cost me dearly.

Stop Shopping

If you treat shopping as a hobby. Stop.

If I am being honest here, I never shopped. I just don’t enjoy it.

Unless I need something I don’t go to a store. And then I buy what I went in for. Mindless shopping really adds up.

It is so easy to pick up this or that when, until you saw it sitting on the shelf for a good deal, it had never occurred to you that you might need that particular item.

Second hand items are always great but again, just buy what you are looking for. There are a lot of great deals on marketplace or at yard sales.

That doesn’t mean you should bring them home with you.

Capsule Wardrobe

A capsule wardrobe not only makes getting dressed in the morning much simpler, it also saves money on clothes.

No more buying things that I won’t ever wear.

I buy quality items that last, or fun items that I intend to replace when they wear out.

I do a capsule for each season (there is overlap in clothing items) and store the off-season items in an under the bed storage container. Living in Canada, winter especially, requires warmer clothing than the rest of the year.

Monthly Bills

I minimized recurring monthly bills.

At one time I paid a mortgage, a car payment, TV subscription, gym membership, phone, internet, insurance, utilities, bank charges and property tax monthly.

These all seem like normal things to be paying for, but they weren’t all helping me to reach my goal of early retirement. Furthermore, some of these are avoidable payments and some are not.

I have worked hard to minimize my monthly bills. Currently my only monthly bills are electricity and my mortgage.

My Sweetie pays for internet because he needs it for his work, but I would pay for internet if he didn’t.

It probably seems weird to you, but I haven’t have a personal cell phone in years. I’ve always had a work phone (sometimes a cell phone, sometimes not) that friends and family use to reach me. Along with Facebook messenger for evening chats, this has met my communication needs.

I have discovered I don’t need a personal cell phone and I don’t miss it.

I don’t subscribe to entertainment services (movies, music, etc.) anymore. I don’t watch much “tv” but do use YouTube occasionally for documentaries, comedy shows, Christmas specials, etc. Before Netflix got so expensive I had a subscription, but it’s not worth it to me anymore because I watched it so rarely.

I pay insurance up-front to eliminate the financing fee you must pay if you pay monthly (did you realized you paid more because you pay monthly?)

I drive second-hand vehicles that I have paid cash for to avoid a car payment.

I keep a minimum bank balance (part of my emergency fund) so I don’t have to pay any bank fees.

I exercise by pursuing outdoor activities mostly, and sometimes with YouTube videos for yoga or other workouts. I skip the gym membership.

Whenever possible I pay up front for things like sewer bills, property tax, etc. I know this might seem impossible today, but trust me, it becomes easier to do the longer you live below your means and eventually you can just do it every time a bill like this arrives.

I didn’t get rid of all my monthly bills at once, but as I had less and less monthly costs living below my means got easier and easier.

Take a look at annual subscriptions too. Things like Costco memberships or Amazon Prime accounts. Are they really helping you to meet your goal to live below your means? Probably not.

The Simple Summary

Living below your means doesn’t happen overnight, and that’s okay.

That being said, it won’t take as long as you think either.

It doesn’t matter how slow you start, you start to see improvements right away. This takes on a momentum of it’s own and before you know it, there you are with more money than month!!

To live below your means:

1. Know what you’re shopping for (your motivation).
2. Be content with what you have.
3. Simplify your budgeting approach. Save. Pay debt. Pay Cash. In that order.
4. Simplify your life.

BONUS HACK:

Figure out what you make an hour. When you pay for something or wish to buy something think about how many hours you are going to have to work to pay for that item.

There were many things I decided weren’t worth an hour (or more!) of my time.

When you think of items in terms of how many hours of work they cost you, you start to look at everything differently!