Lavish dinners out on the town. Expensive cars perfect for road tripping and driving around town. Luxurious home decor for your over-sized house. Larger than life toys and stuffed animals for the kids. Exotic vacations twice a year. Designer shopping sprees with friends.
It’s easier than many people think to live outside of their means, spending ridiculous amounts of money on some of these things that aren’t exactly necessary. But today’s economy poses such a threat on everyone’s financial situations that it’s becoming increasingly important to stop and take a look at where you are spending excess money.
Do you really need the expensive dinners out on the town, or the fancy cars or overly priced home decor? The answer is no, and while some of these things may be difficult to give up at first, eventually you find an equilibrium where you can live happily within your means. Here are some easy ways to get started.
Make Your Own Food
Many people are shocked to see how much money they actually spend on eating out every year if they actually sit down to add up the costs.
Instead of going out all the time, make your own food at home, bring it to the office for lunch if you have to, or set a romantic dinner for you and your partner or entire family. It’s easy to simulate the look and feel of going out to dinner without spending a whole ton of money to get it.
Think of the food you’re consuming when you go out, too. It’s usually not as healthy as the food you could make yourself. And the food you cook and prepare yourself is almost always cheaper at the grocery store, so your wallet and your waistline will appreciate you taking the extra care when it comes to eating out.
Make Your Own Coffee
Consider the two or three dollars you spend every morning on your daily coffee before you head to work. Add that up over the course of a week, a month, even a year.
The numbers are shocking. Americans have this crazy obsession with overpriced "designer" coffee all of a sudden that advertisers tells us we all need. Think of the money you would save if you just made your own coffee at home every morning!
Even purchasing a Keurig machine or other single-serve coffee machine with a bunch of K-Cups will prove to be cheaper than hitting up the drive through every morning.
Ditch the Designers
There’s a popular slogan out there that tells people to "Never pay retail." If you see a designer dress at a department store that you just have to have, instead of purchasing it right away, check other outlets for the same dress. You’re likely to find the item for a far discounted price in someplace other than the department store.
"Designer" brands don’t just apply to clothing, though. If you opt for the generic brand of most common grocery items at the supermarket, you’ll be able to save a ton of money, and the quality is usually just as high as the pricey stuff (except in those very few unfortunate cases – but you’ll never know until you try!).
Worst case scenario, you can just wait for what you want to buy to go on sale. Whatever you do, just make sure you stop paying full price for the designer or brand name items that you can get for much cheaper either somewhere else or from a generic brand.
Collect and Use Pocket Change
What are you currently doing with all of that change that tends to pile up in the pockets of your jeans or your jacket? Instead of aimlessly tossing it around not caring, start saving it up. Designate a jar where you will collect all of your loose change before bed every night.
Set goals for yourself with the jar. Tell yourself that you’ll take it and cash it all in when the jar is full, or mark a line around it and only let yourself take change out of it when there is enough in there to fill it to the line.
You would be shocked at how much you can save in loose change alone that you never used to even think about. Then you can spend that change on a splurge or something totally unexpected that you’ll actually have the money to blow on!
Paying with a credit or debit card is all too easy these days. One quick swipe and voila, you’ve made your purchase without ever even seeing the money transfer from your hand to the merchant’s.
By paying with cash for everything, you’ll not only see the actual transaction with your very own eyes, but you’ll be more likely to be more careful with what you are spending your precious cash on. The thing with cash is that you have a limited store of it in your wallet, and there’s a psychological aspect to watching it dwindle down that stops most people from spending too much.
If you choose to pay with cash, you’ll also be more likely to stay within or even under your budget. Give yourself $100 cash per paycheck to spend as you please on whatever may come up that week or 2 weeks until the next paycheck. Once that cash is gone, it’s gone. Or, if there is some left over from one week, it rolls over to next week’s total, so you can actually even save for a large purchase.
Being realistic about how much money you make and how much you spend is actually the hardest part of living within your means. The general mindset of "I’ll be able to afford this if I pay it off over time" is somewhat of a dangerous one. The reality is, if you can’t afford it right now, you will never be able to.
Be realistic about your budget, too. How much do you really need to spend on groceries every week? How much can you properly allot yourself to do as you please with each paycheck? How much should you be putting away into savings or investments?
Trick yourself into believing that you make less than you actually do. For example, if you made $2,000 per month before your last raise, but now you make $2,400 per month, stash that extra $400 a month into your savings account and pretend it doesn’t even exist for you to use. You’re used to living within the means of the $2,000, so continue to do that while you build a savings account for emergency use.
Getting used to living within your means is a challenge for everyone who’s just starting out doing so, but it gets easier the more you get used to it. Learning how to budget and not over spend is critical to your financial survival. Keep in mind just how important it is and always remember your financial goals, and living within your means will become easy.
Krista Sampson is a freelance writer who is currently working to pay off her own Ballston Spa NY mortgage. She has experience with debt and loans and has been living happily within her means for over 10 years.