The trick to getting ahead financially is to live on less than what you make. If you can create a lifestyle that costs less than your weekly paycheck, you will find it is easier to save money and live a healthy financial life. Living on less than what you make doesn’t have to be tricky; it just takes a little work. Take a peek below for some helpful tips on how to live on less than you make.
How to Live on Less Than You Make
1. Be honest about your earnings.
The first thing to do is look at how much you bring home each week. Taking a hard and honest look at these numbers lets you know what you are working with. Add these numbers up to see how much you bring home each week, each month, and each year.
2. Set a budget based on a fraction of your earnings.
When creating a budget, the idea isn’t to spend every penny you make. In order to spend less than what you make, create a budget based on ¾ of your earnings. Or, even half if you think you can manage it. Set budgets for all areas of spending including: housing, utilities, food, and miscellaneous.
3. Track your spending.
In order to stay within your budget, be sure to track your spending. This will help you keep an eye on your money and be sure you don’t overspend. Anytime you spend money, be sure to write it down in a notebook or ledger.
4. Learn needs from wants.
Many times it is not being able to decipher needs from wants that keep us broke. Any time you are tempted to make a purchase, ask yourself if it is a need or want. Needs should always take priority and wants should be few and far between. Set aside some savings for wants so that in time, the want can become a reality.
5. Re-evaluate your lifestyle.
Sometimes, you just need to ask yourself if your lifestyle matches your income. This can be a hard question to ask but it is necessary. If you love manicures, eating out, concerts, expensive cars, and new clothing, yet you make $15 an hour, it’s time to reconsider your spending habits. Think about how many hours you would have to work for that dinner out or new shirt. Is it worth it? While you don’t need to live like a miser on $15 an hour, you do need to make smart decisions to get ahead!
Learning to live on less than you make can offer you some real financial freedom. Give these tips a try and get on the path to financial freedom yourself!
What’s the hardest part of living on less than you make? How do you make it work?