My mom has always taught me how to live within my means. But I naively and stupidly ignored that valuable lesson once I started earning money. My mom was from the province, just like most people who are living now in Manila. She only finished grade school and has been a blue-collar worker since her early teens. She only experienced earning the minimum wage which oftentimes even below the minimum wage.
But despite her very low income, she still tries her best to save a little money on a monthly basis. She does not buy anything for herself even until now. I know that her frugality is not really by choice but rather by necessity.
When I was young, I actually didn’t feel poor even though we’re really poor. We were renting a small 10 – 15 sqm studio apartment. Our living room was also our bedroom, and it’s also our kitchen and dining room. We were sharing our bathroom with our neighbors which were our relatives. It’s located in a very small alley filled with other families who were living the same kind of lives.
We didn’t even have a TV so whenever we wanted to watch something, we would huddle around the window of our neighbor. And if they’re in the bad mood, they’ll close the window and you won’t be able to watch the TV program anymore.
But even if our household income was way below the median, my parents made sure that we get to eat three times a day. We had access to clean water and they also made sure that we get to go to school.
I didn’t notice the poverty that much because everyone around me was living the same kind of life. And a lot of people were even living way below that. It felt ok. It felt normal.
It was only in high school when I started noticing that we were living a different kind of life. I had classmates and friends whose monthly allowance was bigger than what my mom used to make. They can afford to buy this and that and go to various places. Luckily, they were also generous and I got treated to eat at various places that I could not otherwise afford to go to.
I then realized that I want that kind of life. A life that has more options. A life of abundance. A life wherein I don’t have to plead to the store owner in our neighborhood just to be able to buy (on loan) canned goods for lunch.
Poverty made me a very hardworking and ambitious guy. I studied very hard. I got good grades and got a scholarship for college. I finished my degree when I was only 19 years old. I rented a place on my own when I was just 22. I got promoted multiple times and I was earning a lot of money at a young age.
I started buying things that I felt deprived of when I was growing up. I ate at places I could not afford to when I was younger. I partied a lot. I traveled a lot. I spent all my income just to make myself feel that I have made it. I spent everything I earned just to make me feel that I finally got myself out of poverty.
Only to realize later on that the mindless spending that I did in all of those years, put me back to the place that I want to escape from. I’m now in my late 30’s, in debt with no savings (except for the one small condo unit that I invested in). Oh, d*mn, what have I done!
The weirdest and saddest part is, a lot of people that I know are also in the same situation. A lot of them are high earning individuals who live grand lives but with no savings and some don’t even have any kind of investment at all.
If you are reading this post, and if you’re in the same boat as me, then chances are, you’re also looking for a way out. You’re also looking for a way to turn things around and change past financial mistakes. Know that you are not alone and that it’s not too late to save, invest, and protect our future. And we can all start by doing the most basic of basics – live within our means.
Here are 10 easy steps to follow on how to live within your means:
Track your Expenses
The first step that you need to take in order to live within your means is to track your expenses. List down everything that you spend on to see how much it’s costing you on a weekly and monthly basis. From that list, check if there are things that you can live without. Check if there are things that have cheaper alternatives.
Create a Budget
After tracking your expenses, you have basically identified the most important things that you need and want to spend money on.
Some of the basic things that we need include rent, utilities, groceries, and daily allowance to go to work (transport and food). Include in your budget the amount that you want to save and the amount that you can allocate for investment.
Having a clear and well-crafted budget will definitely help you to live within your means. It will also be helpful if you will review your budget once in a while as our lives change every now and then.
Maybe, your budget now fits your current needs, however, what if you decide to get married, or what if you decide to have kids, then your budget should change.
Increase your Earning
It’s very difficult to live within your means if you belong to a low-income household. For a lot of people, even if the budget has been trimmed down to bare necessities, there’s still not much money left for savings and investment. In cases like this, you have to increase your earning. You can do this in a lot of ways. You can:
- Look for a higher paying job
- Get a second job
- Create sources of additional income
Surround Yourself with Like-minded Individuals
Regardless of how many times you track your expenses, or how many times you create a budget, or how many additional paying gigs you get in a month, if you still hang out with people who spend money like there’s no tomorrow, then chances are, you might still end up broke and you won’t be able to live within your means.
This is the sad truth that we all have to understand – behavior is very contagious. If the normal activity of your friends every weekend is to hang out and drink at pubs or bars or gamble at casinos then it might become the normal thing for you as well.
If the normal thing for your friends to do is to save, invest, and indulge in activities that will not suck your wallet dry then it will become the normal thing for you too.
One of the reasons I started this blog is to give myself the chance to connect to like-minded individuals. Since I don’t know anyone here (yet) that are into financial independence, I realized that I might as well connect to people online who are into FI.
This also applies to almost everything that you engage your mind with, including your social media and traditional media exposure.
Minimize your exposure to TVs because it bombards us endlessly with advertisements about products we often don’t need.
Unsubscribe to Facebook and Instagram feeds that constantly influence us to buy something. Subscribe to feeds or groups that are into achieving a similar goal which in my case – financial independence.
Buy Only in Cash
If you’re like me who’s still teaching yourself how to shop mindfully then I highly suggest that you only buy in cash in order to help you live within your means. This will prevent you from splurging on anything that is in zero interest promo using your credit card. I also leave my house only with a set amount of cash and I often leave my credit card at home.
If I’m traveling farther away from home (locally) whatever the reason may be, I only bring the credit card with the lowest credit limit. I only bring a couple of credit cards when I travel abroad (for emergency purposes).
This is another reason why I started this blog. I want to educate myself on how to improve my financial well-being by consistently reading how other people do it.
I read financial blogs on a daily basis and I try to learn as much as I can regarding different ways of earning and saving money.
I also believe in learning by teaching. Whenever I’m writing, I tend to read various sources (including opposing views and opinions on a certain topic) and I’m always amazed by the variety of things that I learn.
This information gives me a lot of choices and options on how I could help myself achieve financial independence in the near future.
Educating yourself will not only help you live within your means but it will also help you avoid financial traps in the future especially once you’ve decided to invest your hard-earned money in any financial vehicle of your choice.
Save Money and Invest
Saving money will be able to help you live within your means. Save money in every opportunity. An easy way to do this is by listing all your daily activities in life and their monetary equivalent.
- For example, if you commute to work using Grab or Uber, how much does it cost you?
- Is there a cheaper alternative?
- Will it be more cost-effective if you take a taxi or the bus instead?
- Do you often eat out at lunch?
- How much does it cost?
- Is it possible to cook at home and bring your packed lunch?
- How much do you spend on entertainment every month?
- Is there a way to minimize the cost?
- Are there cheaper alternatives?
Put your savings in the bank with the highest possible interest available in your country. Once you’re comfortable, invest some of your savings to make it grow.
Investing can be scary at first especially because of the risk associated with it and most especially if you’re not financially educated. But know that there are different kinds of investments depending on your risk appetite.
A little caveat, do not invest without learning and understanding what you’re investing in. This is the surest and guaranteed way to lose money.
Do not rush yourself into investing. And always remind yourself that it’s your personal responsibility to know and understand the things that you will invest your money into.
Don’t Deprive Yourself
Feeling deprived makes you want to spend more. Depriving yourself is a counter-intuitive act that will not help you to live within your means. This is one of the biggest lessons I’ve learned in my life.
You can enjoy a lot of things without depriving yourself. Do you enjoy looking good by dressing up? Have you considered buying your clothes from thrift stores? Or have you considered only buying off-season clothing items?
Do you like to eat seafood a lot? Seafood can be expensive in restaurants but it won’t cost you that much if you cook and eat at home.
Invite your friends over and have a potluck party instead of having lunch or dinner in a restaurant. There are so many ways on how you can enjoy a meal with your friends and family without breaking the bank.
Change your Behavior
This is one of the most important things that I know will help you live within your means. Changing one’s behavior is not a small feat. In fact, it’s a very difficult thing to do. It will require you to change your beliefs and eventually to command your willpower in order to execute your desired behavior.
For example, I used to believe that it’s ok to party a lot and live paycheck to paycheck because everyone I know is doing it anyway.
YOLO! You only live once as they say.
A lot of my actions that led me to stay poor is due to that belief. If I want to change that, I first need to help myself understand that there should be a balance between living my life in the present and protecting my future.
I also need to educate myself that enjoying life does not always equate to spending everything I earn.A change in our beliefs will lead to a change in our behavior. Click To Tweet
Be Kind to Yourself
If you’re just starting to change your behavior just like me, then chances are, there will be lapses. We will make mistakes. We will forget not to do this. We will forget not to do that.
Do not beat yourself up. It’s a counter-intuitive thing.
Instead of beating yourself up, focus your energy on reflecting or meditating to remind yourself of why you are doing this. Sometimes, it’s hard to execute even the most carefully crafted plan if we are not in sync with the reason why we’re doing it.
I used to beat myself up whenever I don’t achieve my target. But over the years, I’ve learned to not only focus on the things that I didn’t accomplish but also focus on the things that I was able to do.
It’s a tough balancing act but eventually, we will all get there. It’s ok to make a mistake but it’s better to learn from our mistake and avoid doing it again.How to Live Within Your Means: 10 Easy Steps to Guide You Click To Tweet
Do you have additional tips and suggestions on how to live within your means? Feel free to share your thoughts in the comment section below.
Reverse The Crush says
Nice story and great points, TH! It’s great that your situation growing up inspired you and made you ambitious. I went through some really broke times in college. I didn’t have it hard growing up, but I never had help with education or anything at all. So I’ve had to figure it out slowly on my own. I like your points on creating a budget and not depriving yourself. I think balance and finding a lifestyle you enjoy is important.
Thrifty Hustler says
Thanks Graham for sharing your thoughts.