Many Americans are guilty of risky money moves, according to a recent study. The nationwide survey found 1-in-3 people don’t have a spending budget, and 28% admit to overspending on their credit cards.
From random purchases to a head-in-the-sand mentality on budgeting, the study sheds light on the financial gambles Americans make every month:
- 16% don’t review monthly credit card statements
- 45% say credit cards incentivize them to live beyond their means
- 22% use a buy now, pay later mentality with credit card purchases
- 2 in 5 have naked out their credit cards
Americans point to large (necessary) purchases, poor budgeting, and inflation as the top 3 causes of credit card debt. For some, debt isn’t going anywhere anytime soon.
The study found 1-in-5 has no current plan to address their current credit card debt, and half say they aren’t concerned about the implications for their credit score!
How To Live Below Your Means: Top 5 Practical Tips and Tricks
Living below your means may seem overwhelming initially, so here are the top five practical tips and tricks to get you living within your means!
1. Identify Your Expenses
Making a financial plan is a crucial step in living within your means. Start by making a list of your everyday expenditures first, including things like rent, utilities, groceries, and travel. Secondly, create a realistic budget that you must adhere to for each category.
Remember to budget some cash for enjoyable activities, but keep it in check. It will be easier to stay on track and make thoughtful judgments about your spending if you have a realistic budget plan to follow.
It’s crucial to analyze your spending patterns if you want to live within your means. Sift through your spending to find areas where you might make savings. Look over your credit card and bank statements first to identify where your money is going. Being honest with yourself will help you track down unnecessary spending.
After assessing your spending patterns, it’s time to pinpoint wasteful spending. Search for memberships, subscriptions, or other services that you no longer require or utilize or that can be replaced by a free service.
For example, you don’t need to shell out money for a gym membership to stay fit and healthy. You can get a great workout in the comfort of your own home for free! With the abundance of great free workout videos available online, you can easily find a routine that suits your fitness level and preferences.
And if you want fresh air and sunshine, going for a run is a great way to exercise and enjoy the outdoors.
You also don’t need to subscribe to multiple streaming platforms to enjoy your favorite TV shows and movies. Instead of shelling out money for multiple subscriptions, identify which platform you use the most and cancel the others.
Whether it’s Netflix, Amazon Prime, Hulu, or another platform, choosing one can still provide plenty of entertainment options. So instead of paying for multiple subscriptions, focus on the platform that gives you the most bang for your buck.
2. Put Savings First
You must prioritize saving if you want to live within your means. Automating your savings is a helpful method. To earn extra interest, open a high-yield savings account and set up a direct deposit from your salary to a savings account. You can also utilize tools or applications for budgeting that can track your spending and help you save money.
You can utilize many types of savings accounts, such as emergency funds, retirement accounts, and investment accounts. Emergency reserves are essential for unforeseen costs like auto repairs or medical expenses. You can invest in retirement accounts, like 401(k)s or IRAs, while benefiting from tax advantages.
You can save a lot of money by paying close attention to your spending. There are many strategies to reduce daily costs, including bargain hunting, couponing, and purchasing in bulk. Also, you can reduce your transportation costs by using the bus, walking, or biking instead of driving. Simple adjustments to your everyday routine can result in significant savings over time.
3. Embrace a Minimalist Way of Life
Living a minimalist lifestyle involves prioritizing experiences above material possessions. Instead of buying new things, invest your time and energy in creating precious memories with your loved ones. Spend time outdoors, explore your city, or try some new, inexpensive hobbies.
Another aspect of minimalism is clearing the clutter from your life and house. After going through your possessions, make a list of anything you no longer need or utilize. Consider selling or giving away these items. By clearing your home of clutter, you can lead a more simple life and experience less tension and worry.
When it comes to buying new things, if something isn’t absolutely required or doesn’t spark joy, don’t buy it.
Throughout the year, there are numerous occasions when we’re tasked with finding the perfect gift for our loved ones – be it birthdays, Christmas, or other special events. However, rather than reaching for store-bought items, why not explore the world of DIY gifts?
By putting in the time and effort to craft something yourself, you’ll create a present that’s not only more unique and thoughtful but also has sentimental value that can’t be bought. Not to mention, by opting for homemade gifts, you’ll save money without sacrificing the joy of giving.
4. Make Wise Financial Choices
Avoiding debt is among the most crucial components of living within your means. Credit card debt, for example, may quickly mount up and be challenging to pay off. Avoid using credit cards for non-essential expenditures, and make an effort to pay off your credit card balance in full each month to avoid debt.
Planning for the future is another aspect of living within your means. Consider your long-term financial objectives, such as purchasing a home, launching a business, or saving money for your kids’ school. To increase your wealth over time, make sure you fund your retirement accounts, such as a 401(k) or IRA, and think about other low-risk investments.
Consider getting professional financial guidance if you need assistance managing your funds or struggle to make wise financial decisions. A financial advisor can assist you in developing a customized financial strategy that meets your needs and way of life. They can also help you make wise choices regarding investments, taxes, and other financial matters.
5. Surround Yourself With People Who Share Your Views
It might be challenging to live within your means if your friends and family have completely different spending patterns. They may be in a comfortable financial position where they can afford to splash out whenever they want, or they may live above their means.
Finding a network of supportive people who share your financial objectives is crucial. This could be a group of close friends, relatives, or neighbors committed to living within their means.
Having a community of like-minded people nearby can also help you learn from others. You can share money-saving tips, learn about new tools or resources, and discuss ideas to help you reach your financial objectives.