What Does Living Below Your Means Look Like Blog - BF

Living Below Your Means

What Is Living Below Your Means? It is more than just frugal living. You need to understand how much you have and how much you can spend. It is taking a few moments to pause when making an impulse purchase that will affect the dynamics of your life. What does living below your means look like and why is it so important?

The Importance Of Living Below Your Means

We all want to own nice things.  We all want to travel to nice places. However, can we afford all that we desire?  Living below our means will help to plan for many of these nice things.  It will also allow you to save for your future.  Your income is the single most important asset that you have to obtain the things you want and secure your future.  Every penny does count because it is not always how much you make but how you spend what you make.

Living Below Your Means is counting your pennies.

Those that live below their means know all about its importance.  They know that overspending today can enslave future money for years depending on the expenditure.  Living below your means is knowing how much of your money will be tied up in one or two purchases and for how long.  Is your Mind Over Money or are you going into debt for nonessential items?

Why You Should Live Below Your Means

Living below your means enables you to keep your debt under control. It means you will have more money in your pocket. Debt-free living allows for more flexibility in your budget to make cash purchases to end the cycle of credit card debt or living by the minimum payment. 

During the pandemic, Americans dropped their collective credit card balances by an amazing $157 billion per the ascent.  This was mainly due to people unable to dine out, travel, shop, and doing other leisure activities.  However, the trend may be short-lived as almost 50 percent of Americans say that they are willing to go into debt to treat themselves per creditcards.com survey. Think of the Roaring Twenties after the Spanish Flu of 1918. Folks just wanted to get out and have fun.  You can’t blame them after the year we just experienced.

This calls to mind a great living below your means quote from Gloria Steinem:

Rich people plan for generations. Poor people plan for Saturday night.

Living Below Your Means Starts With Deciding To Get Out Of Debt

After basically being forced to reduce debt it would be a shame if folks decided not to stay out of debt. Thereby, returning to a state of indebtedness. Hence, losing their freedom and increasing worry again.  Not to mention jeopardizing their opportunity to increase wealth.  We have to decide that debt in any form is not good for us financially.  It takes away choices like traveling, changing careers, or moving to a better location. Also, the process of saving and waiting to make the desired purchase not only teaches you how to save but it teaches patience.  You will learn a greater appreciation from something you took the time to save for.  Living below your means allows you to delight in the anticipation of achieving the goal of purchasing without added debt, guilt, or anxiety.  The cost of debt can have a lasting impact on your future income.

Being Debt Free is part of Living Below Your Means

The Cost Of Debt and Living below Your Means

The cost of debt not only includes the interest you will pay over time but also the loss of income from the money that could have been invested. And even if you don’t invest now you are losing interest from just a simple savings account. Use this handy Cost-of-Debt Calculator to determine the cost of your debt. Now use this Simple Compound Interest Calculator to determine the lost interest from not investing. Since there is no such thing as good debt it should be avoided at all cost.  However, if you find yourself in debt it is time to adjust your relationship with debt.

Time To Define Your Relationship With Debt 

No matter how great the deal is or the experience it is not worth going into debt.  How do you define your relationship with debt?  Is it a one-night stand where you get in and get out of the relationship as quickly as possible? Or is it a lifetime commitment where you cannot see your way out of debt?  I have encountered many people who are willing to accept that they will never get out of debt.  It is now part of their life. I was once there but decided that I wanted out of this bad relationship. 

So I created a budget and a payoff schedule.  I decided that being in debt was not an option.  So I cut back spending, eliminating unnecessary expenses, and aggressively began to pay down the debt.  Within a short time, it was all gone. The multiple credit card bills, student loans, and car notes.  We are now working on paying off the house.  With a plan, it can be done. For me, it started with a personal balance sheet and living below my means.

Living Below Your Means - BF Blog - Define the Relationship

Creating A Personal Balance Sheet

Begin by taking stock in what you owe and what you make.  This is your Personal Balance sheet. List all your debt with an anticipated pay-off date.  I prefer a combination of the snowball and avalanche methods to pay off the balances. Some quick wins with the smaller balances to get them off my sheet.  Then, I started with the snowball.  Paying off one at a time by combining the paid-off balance’s payment with the payment for the next credit card.  For more details about this read Being Financially Sound for more details about how to get out of debt. To eliminate student loans we decided to live off one income and use the second income to pay off that debt. I have never really concentrated on personal budget categories when creating my spending plan but I am mindful of them being benchmarks to live by. I just keep track of the big ones.

Personal Budget Categories – The Big Ones. 

I believe to live below your means you need to keep track of the big-ticket items such as housing, car loans, and savings.  These are the three big-ticket items that make the other items such as food, utilities, insurance, and personal expenses unaffordable. If you are over the recommended guidelines for housing, car loans then that leaves nothing to save and barely anything for other living expenses.

Housing should not exceed 30 percent of your income

Auto loans should be at or below 10 percent of your income

Savings should be at least 20 percent of your income

To make it more simplistic follow the 50/30/20 rule 50% on necessities, 30% on the things you desire, and 20% on savings. Where necessities can be your home, car note, utilities, and food. 30% of wants can be considered items such as entertainment, leisure activities, etc. Finally, the 20% should be saved for your emergency fund, big purchases, retirement, education. This is a great rule since it allocates 100% of your income to your lifestyle.

Creating A Budget Is How To Live Below Your Means

Create a budget so you can begin to control your spending, keep track of all your purchases especially the small ones.  They can add up quickly when you spend $5 here and another $10 there.  Before you know it you have dropped $50 without even noticing.  Go through all your bills and begin to eliminate unnecessary expenses and subscriptions. This is how to live below your means.

Finally, take a look at your income because, if you are not making at least a living wage all of these expenses can strain your basic budgeting endeavors. You may want to consider obtaining an additional income from a second job or simply explore possible side gigs. If this is not an option consider looking for a new job or industry that pays higher wages.  Here is a list of high-paying jobs that don’t require a college degree from The Balance Careers.  However, is this enough to live below your means what more should you consider?

What Is Considered Living Below Your Means

To live below your means typically means that you try to keep more of your income than you spend.  The goal should be to keep 50% or more.  That 50%+ should go towards saving and investing.  At this point, your money will begin to work for you in overdrive with compounding interest.  Compounding interest works best the younger you can start, the 20s, 30s, and even 40s.  Time to make the decision.

Deciding What You Can Live Without

You have to decide to want to live below your means.  It requires self-discipline and fortitude.  You are in this for the long haul.  Decide today to begin by paying off all debt.  You will have to decide what you can live without for now to reach your goal. It may require you to also wait a little longer for the things you do want.  Like having to save for a big-ticket item i.e. new car, house, or a vacation.  This is how you can successfully live below your means. Taking the time to save to purchase the finer things in life. Once you have made all these decisions getting to living within your means becomes that much easier to achieve.

Debt Is Paid Time To Party

Wait just a minute, it is time to build wealth this is the main benefit of living below your means. It is not a get-rich-quick scheme but a planned strategy for your future. This is what makes living below your means worth it.  Achieving all your dreams and maintaining a debt-free status.  Nothing is more satisfying than purchasing something where it is paid in full while you are using it. Besides, the new adulting is building your Net Worth. Learn more by reading Wealth Accumulation.

Let’s recap What Does Living Below Your means Look like:

1. Decide to live below your means

2. Create a Budget

3. Eliminate Debt with a Payoff Schedule

4. Eliminate Non-Essential Expenses

5. Keep Expenses within 50/30/20 Rules

6. Strive to save up to 50% of income

7. Build Wealth by Investing

Don’t get discouraged as life can happen that prevents you from staying on plan.  Be flexible to pivot and then get back on track. 

Additional Reading:

What Is The Purpose of a Budget?

Emergency Fund Savings

Why Can’t I Save Money: 10 Reasons You Can’t Save Money

Let’s Budget, Spend, and Live!


Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.


24 thoughts on “Living Below Your Means”

  1. This is a very important message! I had been working on many things you mentioned in here while I was working, but unfortunately just recently lost my full time job. But thankfully, I have a cushion thanks to living below my means which will enable me to spend some time working on getting my blog up and running to the point it needs to be.

    1. I agree. My husband and I are very mindful of our spending, and intent on paying off his student loan. In about two years we’ll be debt free, as well as have enough saved for a good home down payment.

  2. Such incredible wisdom here! And it goes against the grain of what is being taught out there. Well done!

    Setting aside 50% of one’s income seems very difficult – thank you for the great suggestions!

  3. Great article! Living below your means is defintely an important lesson to learn to stay out of debt! We do a great job with this, but are working on saving for an emergency fund.

  4. Saving for a rainy day seems to have been lost in our culture of keeping up with the Jones’. Great tips and suggestions you’ve made here!

  5. Living this way helped out greatly this year! We’ve had thousands of medical and vet bills come up suddenly and we’ve been able to pay for it all out of pocket thanks to the work we did the last few years

  6. Great article and inspiring! We are not very good at living below our means, especially without our added income this year while I was on LOA from work. Its time to get down to business and take control!!

  7. $157 billion dollars of debt lowered at the height of the pandemic is phenomenal!! So sad people are just going to go rack it up again!

  8. Great suggestions! No debt here. We live below our means so that we can help our family when they need it and so I can travel!

  9. Seriously great tips! Although we have some debt (student loans), we are mostly debt free and it is so much easier to live and breath, especially during hard financial months.

  10. Great guidelines. Creating spending categories was a huge step for me in my (ongoing) journey to financial freedom.

  11. This drives home with me the fact I need to get back to better meal planning. I was only doing the grocery every two weeks a year ago and it kept the grocery bill lower. Especially with the increased food costs, this will save a ton. Thanks for the reminders.

  12. Your information is right on target. With the US in the condition that it is with job loss, housing crisis your posts are something that everyone needs to read. Keep up the great info

  13. I am a firm believer in budgeting and living below my means. Kudos on having paid off your debt. Our debt is our mortgage, and we are trying to get rid of that sooner rather than later. If anyone is as serious about getting out of debt as you did, your points are great guidelines to achieving that goal.

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