06 Nov

10 Rules for Living on Less Income

Flickr credit: Cristiano Betta.

Check out a number of “money saving” forums and you’ll see that there’s always a healthy discussion about both saving money and learning to live on less income. Even people who are not earning what they’d call a “limited” income are these days interested in building a long-term savings mindset.

One way to do that is to learn to live on less.  Of course, “living on less” might be great advice, though it’s easier said than done for most people. If it were so easy, would credit card debt be such a problem for so many?

Mindset for Living on Less Income

We follow the path of least resistance in our lives. If you want to learn to live on less, for whatever reason you have, you need to actually work on it.

1. Spend less than you earn. Theoretically, it doesn’t get any simpler than this, though it’s something you have to work at. You won’t get it right the first time, and that’s okay.
2. Have a budget. This is simply to help enforce the rule of “spend less than you earn.” Budgeting is a horror show for so many people. Start by logging your earnings and expenses, then review them each week and month. Where could you have saved? Also, where could you have earned more?
3. Reinvest your savings. Do this even if it’s just in a high-interest savings account until you feel comfortable with other investment vehicles.
4. Pay extra towards loans. If you get a cash windfall, try paying down a bit extra on a loan. Or add it to your savings pool.
5. Don’t pay if you can get it free. There’s a lot that you can get free online, including software, books, articles, news, video, music. Sometimes, there are even legitimate offers for phones and gadgets, though you need to exercise caution.
6. Don’t keep up appearances. In other words, live within your means.
7. Do you need this? Consumerism goes beyond keeping up appearances. Shopping can be an addiction. Any time you’re about to buy something other than food and other necessities, ask yourself if you really need that item.
8. Pay yourself. Ask what you want out of life. If your means are not good enough for what you want, think about how you can improve them. Living outside of them is not the answer. At the same time, you have to have a reason – an emotional motivation – to live on less, to save. Give yourself a legitimate reason, whether it’s to travel, reward yourself with occasional gadgets, or whatever. Consider the act of saving as a means of paying yourself funds for your future comfort or enjoyment. The interest you earning on your savings is an extra bonus for your efforts.
9. Delay gratification. Even if you do need some big-ticket item, ask yourself if it can wait. Is there an alternative for now? Alternatives are not always desirable, because they take us out of our comfort zones. The real question is whether you can cope with the “discomfort”, in order to save money for your future rewards.
10. Don’t use credit. Except when you absolutely need to. (Emergencies do happen.) That’s “need to,” not “want to.” If you want something, imagine having it one day, then save towards that event.

If you need some emotional support in your goals, want to bounce idea off of others, or want to learn how other people are saving, visit any number of “money saving” forums. One of our favorites here at The Money Saving Blog is Martin Lewis’ Money Saving Expert Forums.

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