I won't kid you, this is going to be a tough article. Living below your means takes self-control and restraint, but the payoff can be huge! Here are some tips to remember that will allow you to adjust your way of thinking about money and what it means for you.
****Divide Your Budget Into Fixed Costs And Flexible Costs****
You will need to prioritize your budget into fixed and flexible costs. Fixed costs include, of course, necessities like rent and utilities (or mortgage and electricity). Flexible costs are basically everything else: groceries, entertainment, clothing, travel and so on.
Now sit down with a notepad or computer spreadsheet and divide your finances up accordingly. Be honest with yourself. Don't just list the things you'd like to spend money on, write down what you really need in life, and make a conscious decision about which costs will be flexible and which will be fixed.
Be A Savvy Shopper
Learn everything about shopping for goods in bulk. Check out warehouse clubs like Sam's Club and Costco, where you can buy in bulk for a low price.
Use coupons: the Sunday inserts in your local newspaper are packed with offers and discounts on everything from movie tickets to toiletries to car insurance.
Cut out services you no longer need: cable TV, cell phones, memberships to clubs and gyms.
Barter with friends and neighbors: if you're not using something, chances are your neighbor isn't either. Maybe you can swap haircuts or trade babysitting time for home renovations in exchange for some carpentry work.
Buy Things Used
You can definitley save thousands of dollars per year by shopping for used or refurbished products instead of buying brand new.
Buy clothes from garage sales and thrift stores: you can pick up name-brand clothes in excellent condition for a fraction of the price.
Check out Craigslist, eBay and Amazon Marketplace for great deals on everything from lawnmowers to high-definition TVs.
Do It Yourself
As much as humanly possible, stop outsourcing to contractors and service professionals. You can save thousands of dollars per year by learning to do it yourself, especially when it comes to smaller jobs around the house.
Hang pictures, curtains and blinds on your own: you don't need a professional interior designer.
Repair that leaky faucet or squeaky hinge: these are fairly simple fixes, but professional plumbers and carpenters charge an arm and a leg for doing them.
DIY doesn't need to limited to home improvement projects either. You can learn how to cook your own food instead of eating out every night at the local diner or ordering in pizza. Teach yourself how to style your hair instead of going to a salon. Sew your own clothes instead of shopping at the mall.
Pay Yourself First
Take a portion of every paycheck and use it to invest in yourself, before you do anything else with the money. You can start an IRA or Roth IRA with most companies, or set up automatic monthly payments into an investment account via your bank's online banking service.
This is money you put away for your own future; it's not meant to be spent on regular bills, clothes or meals out. Whenever an expense falls into one of those categories, you have to question whether what you're buying is worth sacrificing your own financial security for.
The Bottom Line
Live below your means. It seems like an easy idea, but in practice it can be surprisingly difficult. Make allocating your funds a priority above the things you want in life, and try not to get caught in the hype of conspicuous consumption.
The payoff? You'll save thousands of dollars per year that can then be redirected toward paying off debt or building an investment portfolio. Trust me, it's worth it.
