How To Live Beneath Your Means: 3 Ways To Be Financially Fit

Keeping your finances in shape is essential to living a meaningful life. If you’re financially successful, you can go far in life. Many people struggle with their spending habits regularly. If you want to learn how to live beneath your means, I’ll simply explain how to do that in this article.

Throughout this post, I will go over a recent situation I went through at my job. Also, I’ll provide some basic guidelines on how you can manage personal finance effectively.

Pay raises do NOT mean increasing lifestyle

Not too long ago, the company I work at raised the pay rates for most employees. So when I was informed about it by my manager, I felt neutral about it. When something like that happens to you, it should be exciting.

However, I thought of it a little differently. Unlike a lot of people, those feelings of greed did not set in immediately. Or, thinking about all of the things I can buy with earning more money.

I’m at a point where I think about money differently than most people would think. When people think it’s about increasing their lifestyle, I see it as a way to keep living below your means.

How Do You Stay Below Your Means? ??

Spending less is the easiest way to live below your means. As soon as you can live on less than you make, put some money into an emergency fund, then invest the rest in things you understand.

Keeping up with the Joneses

I’m not into all of the fancy stuff or living a luxurious lifestyle; to put it in another perspective, I’m not someone who believes in “keeping up with the Joneses.”

Myself, I’m not a rich individual or very wealthy, but I do have lean spending habits. Keeping my spending on track has helped me stay in great shape.

Spending more on “stuff” is not the best way to make yourself happy. Once you increase your spending, nothing really changes. Most of the time, people will go back to their old spending habits.

How to live beneath your means: An increase in your pay does not mean an increase in lifestyle.

What does it mean to live beneath your means?

I won’t go over common tips for keeping your finances together. There are a lot of articles on how to do that, and I don’t want to make things complicated.

Living below your means can have more benefits than consequences. When it comes to long-term planning, opting for a cheaper cost of living makes sense. Over time, that’s something to keep in mind.

There are only three things you need to do when it comes to personal finance. If you understand these well, you’ll never have to read another article or book on personal finance again.

  1. Spend Less Than You Make
  2. Save The Right Way
  3. Invest In Things You Understand

Spend less than you make

It may sound obvious, but many people don’t do this one accordingly. A lot of people will spend most of their income quickly- with little to nothing left over on a monthly basis.

As a matter of fact, more people are living paycheck-to-paycheck than a year ago. According to one report earlier this year, around 61% of individuals live paycheck to paycheck (April 2022). That’s up nine percent from the year prior (52% in April 2021).

Here’s a further breakdown of some of the numbers of those living paycheck to paycheck:

  • 36% earning $250,000 or more a year
  • 36% earning between $100,000 to $150,000 a year
  • 31% earning between $150,000 to $200,000 a year
  • 26% earning between $200,000 to $250,000 a year

It’s astonishing to think that more than a quarter percentage of those earning six figures a year live paycheck to paycheck. It’s one thing to think that would be the case for those making under six figures. So even those who make these types of salaries have money problems.

How to live beneath your means: The first step to achieving personal finance is spend less than you make.

How to spend less

It’s not a fun thing to do, but it’s necessary to keep yourself in shape. If you can spend less than you make, you’ll be one step ahead to financial success.

Common things to do include the following:

  • Cutting back on expenses (i.e. cutting or eliminating a cable bill)
  • Cancel subscriptions (i.e. Netflix)
  • Downsizing to a smaller home (to reduce your mortgage or rent payments)
  • Budget regularly

It may not be easy if you’re raising a family. Yes, you have to pay the bills and support your children. But regardless of your status, it’s best to keep your spending habits lean. 

I think this step is the easiest one to do, but not the most desirable. If personal finance is something you want to master, it starts with reducing your spending habits.

Save the right way

Saving money is important, but not the way you think. Oftentimes, people will follow the “scrimp and save” approach to get by from time to time. 

But I’m not a fan of that, as that’s having a poor mindset. Also, I’m not quite in favor of traditional savings accounts.

Savings accounts may have worked well 40 years ago. But with interest rates remaining low for nearly two decades, you’re not getting a big return on your savings.

So with low-interest rates (and the effects of inflation), having your money sit in a bank does not do you any good. Following that approach will likely lose you more money in the long run.

How to live beneath your means: Keeping your savings in an emergency fund can help prepare for unexpected expenses.

How to save accordingly

My personal approach to savings is you need to reserve funds for the short-term and the long-term. I’m someone who plans out big purchases in the future- but at the same time, I’ll put aside some money for unexpected expenses.

  • Short-term savings: Have savings for bigger purchases down the road (i.e. getting a car or furniture for your home)
  • Long-term savings: Have an emergency fund for unexpected events. Anything can happen, and it can come with big costs (i.e. going to the emergency room, losing your job, or one of your children getting injured). 

It’s best to set aside three to six months of expenses in case you have difficulty making payments. If you want to go further, my recommendation would be 12 months.

That may be stretching it too far, but I think it’ll be easier if you go through an extended period of financial struggles.

Invest in things you understand

By far, this step is the most difficult one to do because most people don’t know where to invest their money. By investing your money, you make it work for you, so you don’t have to work as hard.

People will usually turn to the stock market to invest their money. However, I believe that’s not the best way to go about investing.

How the financial markets have performed in recent years can be unpredictable. I think of it as gambling your money, especially in the US stock market.

In a short time frame, you can earn a lot, but you can also lose a lot. It’s best to expect you’ll lose money rather than make a lot of money through the stock market.

Follow the hype or do proper research?

Sure, some stocks are high and may be worth investing in. Although I believe the US stock market has been in a bubble for the last several years, which makes it riskier if the market crashes overnight. So you have to take precautions when looking at those patterns.

How to live beneath your means: Investing in yourself is the best approach to make you better off.

Let’s take the example of cryptocurrency. If you’re into Bitcoin and you’re tempted to buy because it goes up exponentially, do you understand how Bitcoin functions? Or do you have those FOMO feelings (Fear of missing out)?

If you don’t understand the cryptocurrency market, but still put your money into it, you did not do your homework. Therefore, you should not invest in cryptocurrency without taking the time to learn how that market works.

Where can you invest your money?

Besides the stock market, there are other ways you can invest your money. Some of the methods I’ll lay out are less riskier if you take the time to learn them.

Some common ways include:

  • Starting an online store

That can be starting an Etsy shop, or selling individual products through Amazon or eBay. Often, we refer to them as dropshipping businesses, since they can be very lucrative. I won’t go over it in detail here, but that’s one option to invest your money and get a big return on investment (ROI).

  • Taking courses on building your skillset 

These can range from coding, graphic design, or even copywriting. I believe taking the time to learn these skills will help pay off in the long run. These are highly specialized skills that can pay off down the road.

  • Building a blog/niche website

This one is one of my favorite ways to earn passive income over time. The best thing about it is it requires little investment to start a website. If you do it the right way, you earn a lot of money in the years to follow. It may take more time and effort, but the time you put in today can bring in nice dividends later on.

If you’re interested in going down this route, check out my recommendation for starting a website and learning the basics of online business.

Not sure how to go about it? Invest in yourself

When it comes to investing your money, it’s not always a slam dunk. If you don’t know where to start, the best thing to do is to invest in yourself.

It’s commonly said that investing in yourself will bring you the best return on investment. Learning new skills (increasing your human capital) can make all the difference.

Final Words

Living beneath your means may not always be easy, but it can help keep you above your finances. If you practice it long enough, you’ll slowly start to build wealth.

I believe that life should be managed like a business. Whether that’s your personal or professional life, you have to keep yourself accountable when it comes to finances.

If you follow the three steps discussed earlier, you will do very well in the long run. Furthermore, you will be less stressed and find yourself in constant struggle less often.

Your Turn: Do you struggle to live beneath your means?

I would like to get your thoughts on this issue. Do you struggle with finances in general?

Is there someone you know, or perhaps yourself, who lives above their means? What can be done to fix that?

Do think investing in things you understand can help improve the quality of your life? Can it bring more wealth and more control of your time back?

Feel free to share your thoughts by leaving a comment below. I look forward to reading your responses, and I’ll gladly respond promptly.

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Eric is the owner and chief editor of 

He takes great pride in helping people manage their time and grow their businesses. 

Eric is a firm believer in financial and time freedom, as he believes in financial independence and taking ownership of your time. 

“Time is your most important asset. It can be your best friend or worst enemy. How you use your time can shape the future you desire to have.” 

In his leisure time, Eric loves to write and read whenever possible. He enjoys going for long walks outdoors while doing in-home workout videos every week. 

You can also connect with Eric via LinkedIn.

Self Photo 2019: Here's a picture at a building in downtown Chicago.

2 thoughts on “How To Live Beneath Your Means: 3 Ways To Be Financially Fit”

  1. I strongly agree with you; your pay rise is not an increase in lifestyle. Developing the right mindset when it comes to spending and investing is essential. 

    A lot of folks spend all they earn and will always be broke. It is one of those powerful lessons my late father taught me. He ensured we learned to save right from my high school days.

    • Hi Ayodeji,

      Having the right mindset when it comes to finances will help in the long run. As someone who has great financial habits, it will make things much easier and not as stressful.

      It sounds like you’ve developed great money habits. You were taught well by your father back then, and I appreciate you being honest about it.

      If more people can develop better habits, they would be much better off for sure. It may not be easy to start out with, but it will make things not such a hassle.

      Thank you for sharing your thoughts- I greatly appreciate what you have to say.


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