Living within your means means working out a balanced budget. It means being aware of the difference between what you need and what you want. Mark Twain once said, "Comparisons are the death of joy," and taking his words true, what you need is a shopping method that's right for you, not your friends or neighbors. To live within your means, you need to be aware of how you spend your money, but if you do it right, you won't have to deprive yourself of the things you really need to be happy.
Steps
Method 1 of 3: Part One: Maintain a Balanced Budget
Step 1. Compile a list of what is essential
Write down things like grocery shopping, utilities, and clothes. The essentials are the ones you can't live without. For example, you can't survive without food, while you can easily survive without spending 1000 € on clothes a month (even if you don't believe it!).
Step 2. Estimate your revenue
This step is best if you have a monthly income. If you are on a salary, it is usually simpler. On the other hand, if you are a part-time employee, a freelancer or a salaried worker, it will be a little more difficult. To get an idea of the best way is to add up the last three months of income and make an average. Even if it is not a precise method, it is enough to get you an idea and to be able to develop a budget on it.
When making an estimate of revenue, remember to remove the amount intended for taxes. Depending on how much you do, you may believe you have more money than you have before paying the percentage to the sovereign state
Step 3. Record all expenses
To do this, write down what you buy, how much you spent and where you buy it. It doesn't have to be a super detailed log. "100 € of supplies at the Discount" is just fine. Again, it is best to make these estimates at monthly intervals. Note how much you spent on all essential and non-essential expenses.
If you find it difficult because you pay for most products in cash (and good for you if you do!) Or can't keep track, start recording expenses from the current month or the following month
Step 4. Compare income to expenses
See how you are doing. If you have enough money left, you're doing great! If, on the other hand, the income and expenses are the same, you are not saving anything and if, even worse, the expenses are more than the income, then there is a big problem. Obviously, if you are a student and do not have an income, this is normal! But that doesn't stop you from learning how to spend less money in the future.
Step 5. Make an expense assessment
Note where your money goes! Start by categorizing your purchases. Start from the "Essential" category, decide the other categories yourself. For example, among the categories there could be "eating out". As soon as you are done, add up all the categories and work out the total.
Step 6. Cut the fats
Most likely you will notice at least one of the categories that do not fall into the "essential" that sucks up a large part of your income. Take a look at this category. See if you can cut something. For example, if there are nine or ten lines under the heading "eat out", you could cut four or five. This way you can make an easy $ 25 easy. Keep cutting back on anything unnecessary until your income exceeds your expenses.
See Part Three for more information on how to save money
Step 7. Increase your income as needed
You may find that your expenses are so high that in addition to cutting waste, you need to do more to make it to the end of the month. You could work a few more hours, ask for a pay raise, look for a place with better pay, or join a part-time job. If you live with someone, you can ask them to do the same, or you can ask your child to look for a part time job if he is old enough.
Step 8. Set savings goals
Set goals that can be achieved in a reasonable time. You can decide to spend € 200 per month, or you can decide to save € 120 per month to travel to Paris at the end of the year. The more precise and achievable your goal, the easier it will be to pursue it. If your commitment is to "spend less money", you will not really be able to take the initiative to be able to achieve it.
Step 9. Save for emergencies
If you really want to live within your means, you have to take into account the unexpected, such as a road accident or job loss. You have to save some money for the sad days, even if it's only € 100 a month. This money will add up, and you will feel much safer than if you spent all the money you have running out of pennies.
Putting change into an emergency piggy bank at the end of the day also helps you be mentally prepared to save money for the unexpected
Method 2 of 3: Part Two: Change How You Perceive Expenses
Step 1. Make a distinction between what you want and what you need
Obviously, you will feel the "need" to own that HUGE HD TV, but are you sure that staying with the old TV for a while longer or getting a smaller one will make you suffer? Do you really need those designer glasses and shoes? Or can you get a couple cheaper? Do you really have to spend € 90 every time you go out with your partner? Can't you go somewhere cheaper, or have a romantic dinner at home? Understanding that you don't really need all these things will certainly help you live within your financial means.
It's okay to indulge in something not strictly necessary, sometimes, the important thing is that it doesn't become a habit. When you make a waste, remember that your life is fine even without that thing you bought
Step 2. Don't even try to compare yourself to the Reds
Yes, your neighbors bought their new pool or built an extra floor in the house, but they earn twice as much as you. If you compare yourself to others, you will never be happy, and you will never be able to live within your means, because you will be too busy trying to maintain a lifestyle that you cannot afford.
Sure your best friend's brand new jeans look great. Be happy for him, and buy a pair that fits you, instead of being jealous and wanting the same jeans. Jealousy makes you unhappy, and dissatisfied with what you have
Step 3. Change the meaning of "wealth" in your head
Being rich doesn't mean driving a BMW or vacationing in Hawaii every year. It means having enough money to support your family and make them happy, it is having some money to spend on important things and some travel. Once you understand that this is being rich, you can relax and stop worrying about how others perceive your finances.
Step 4. Spending less money does not degrade quality of life
You can invite friends over for a glass of wine at home instead of spending a lot of money in a crowded bar. Why not take a train trip instead of taking the plane? Do things like this make your quality of life worse? Do the same things you love to do, only you do them differently. Don't think that if you spend less money, you make your life worse.
Indeed, spending less money can "increase" the quality of your life, because by doing so you will no longer be obsessed with wasting money, and you will feel more at peace with yourself
Step 5. Be grateful for what you have
Instead of thinking about what you might have, like a new car, a nice dress, or a bigger house, focus on the things you are lucky enough to own. Maybe you hate your TV, but you love your computer. You wish you had a new coat, but look how beautiful all those sweaters are. Make a list of the things you have, and don't limit yourself to objects, be grateful for the people around you, your children, your partner, or be happy with the place you live.
Being aware of what you have can spur you to limit your overspending, because you feel you already have everything you need
Method 3 of 3: Part Three: Save Money
Step 1. Eat as much as possible at home
Eating at home doesn't have to be any less exciting than eating out. Preparing a meal at home can make you a skilled cook, it can make you understand what is in the food you eat and can even create the perfect atmosphere for an evening with friends or a candlelit dinner. But most of all it saves you a lot of money. If one of your higher exits is based on eating away from home, try to cut as much as possible, leaving only two per week at the most. Continue progressively until you feel like you can eat out even once a week or once a month.
Sure, sometimes you are forced to eat out, for a friend's birthday or a colleague's retirement party, for example. When you eat out, however, think about how much you spend. Don't show up hungry, or you'll spend more money on food than necessary
Step 2. Wait for the sales
The rule is never to buy things at their market price. Wait for the sales to start, get some discount coupons, and with patience you can buy what you want at a lower price. You don't have to buy the latest version of the iPod, nor do you need to buy the game just released on the market; wait a few months, you could save hundreds of euros.
There is nothing wrong with buying second-hand things. There are some great deals on accessories and clothing
Step 3. Have fun at home instead of going out
Throw a house party instead of going to bars with friends. Invite people to your house to see a movie instead of spending 10 euros to go to the cinema. You can have a lot of fun staying indoors, you don't have to deal with strangers and you know what you eat and drink! The next time you want to organize an event, invite a few friends over instead of taking refuge in the usual expensive and noisy bars.
Step 4. Eliminate unnecessary expenses
You can spend up to € 100 per month for services that are not really needed. Cancel some of the unnecessary expenses by eliminating some subscriptions like these:
- The gym. If you only go to the gym once or twice a month, unsubscribe and go for a run.
- The magazine subscription. If you only read one or two magazine articles that come to your home each month, you better save that money. Read the same news on the internet.
Step 5. Ask for a loan when you can
Go to the bookstore to borrow a book, rather than buying it from a store. Get a friend to borrow a DVD rather than rent it out for a high price. If you need an elegant dress for a single occasion, borrow it from a friend, you will save a lot of money on a dress that you would never wear. Share your stuff with friends, they will do the same with you. Borrowing things + a perfect way to save money.
Step 6. Maintain a garden
Gardening is not only a fun and relaxing hobby, it is also a terrific way to save money. Instead of spending money on vegetables and spices, buy some seeds and some soil, you will save a lot of money every month..
Step 7. Never shop without a list
If you go to the grocery store and plan to get what you think you'll need, you could be spending a lot of money. Bring a list every time you go shopping, and only take what is written on it.
Even if you go to the supermarket to get only 3 things, make a list anyway. The list helps you stay focused and prevents you from buying trivial things
Step 8. Wait 48 hours before doing any major shopping
If you see a beautiful coat or a cute pair of shoes, don't buy them the second you decide you can't live without them. Give yourself 48 hours to think about it, to assess if you really need it or if there is a cheaper alternative. If you have carefully considered and decided that you really need it, you will feel better about the choice you have made.
Advice
- If you can cut expenses, use this extra money for emergencies or rough times
- Don't overdo the cuts. If you work hard, you should reward yourself. If you don't reward yourself every now and then, it will make it harder for you to cope with the cuts.
