• Post category:Personal Finance
  • Reading time:8 mins read

Living below your means has almost become a cliché. It is widely used but rarely practiced. The idea of living below your means is exciting but requires great discipline to implement consistently.

To live below your means simply implies spending less than you earn. It means having fewer expenses and more income.

The secret to wealth creation is not earning money but multiplying what you earn. This is the whole idea of investment. Investment is the process of having money work for you; using money to make money.

No matter how much you earn, if you cannot multiply it, it will diminish rather than increase. This way, you become poorer rather than wealthier.

This is the mistake most people make; they think the ultimate goal is to get income. That is just a step in the progression of wealth. Read How to create wealth the easy way to understand more.

If therefore, investment is the vehicle by which wealth is created, it means that you have to save enough money every month to put in a deal.

How do you save if you do not live below your means? It is impossible.

Savings + Consumption = Income.

  • Consumption accounts for every expense you make that does not bring you extra income (This includes food, rent, fuel, gifts to friends and family, children’s school fees, etc.)
  • Savings refer to everything you put aside for investment purposes. This does not include what you save for precautionary purposes (An emergency fund).

Therefore, savings equals investment. We assume that you invest everything you save. Many people don’t. They save only to consume in the future.

  • Income is everything you get after all external deductions. This is after you pay taxes, social contributions, etc.

If your consumption is below your income, you are living below your means. If it is higher, you are living above your means. This means that you have to borrow to finance your consumption habits.

In this regard, you have three factors to control if you want to leave below your means:

  • You can increase your income.
  • You can reduce your consumption.
  • Still, you can increase your savings

These 10 secrets will helps you in taking care of all the three factors. You need not control one but all of them.

10 secrets of living below your means

  • Have clear financial goals
  • Increase your income
  • Avoid the rat race
  • Budget
  • Pay yourself first
  • Cut unnecessary expenses
  • Negotiate your purchases
  • Live off one income
  • Do not follow the Joneses
  • Track your spending

1. Have clear financial goals

This is the most important step to living below your means. You need to have clear financial goals.

Goals act as fuel for hard work. If you do not have clear goals, you will never have a reason to live below your means. Setting clear goals will enhance your financial discipline. This is important when implementing the other 9 tips to living below your means.

Characteristics of good financial goals

  • They are super-specific. They state exactly what you want to achieve.
  • Such goals must be measurable.
  • They must be achievable within a specific time frame.
  • The goals must be realistic.
  • They should be time-bound.

If you need more on this, learn the art of goal setting.

2. Increase your income

If you want to have more left to invest, you can increase your net income. This proves to be a hard strategy for many but it works.

This is the best secret of living below your means. It means that you do not have to cut your expenses. You can keep your lifestyle but increase your net income.

How to increase your income:

  • Get a second job
  • Start a business
  • Grow your profits
  • Get a raise at your workplace

3. Avoid the rat race

The rat race is a situation where your expenses always catch up with your increased income. This means that as you get more income, you also increase your expenses.

Many people get a raise at work and they move to a bigger house. This is the rat race. They are always finding ways of consuming everything they earn.

If you will live below your means, you have to avoid the rat race. Use the extra income to invest and not consume. This calls for financial discipline.

4. Budget

Budgeting is a crucial part of financial planning. It is the process of allocating income to needs, wants, and savings.

There is a famous 50:30:20 rule.

  • Spend 50% on needs
  • 30% on wants
  • 20% as savings for investment purposes

This is the least any serious person can do. Successful people save up to 70% of their income.

Having a budget and sticking to it, come rain or sunshine, is a step in the right direction.

5. Pay yourself first

If you will live below your means, you have to pay yourself first. This means saving/ investing before consuming. You do not invest what is left after consuming; you consume what is left after saving.

This is what successful people do. It shows that your priority is investing and not consuming. People who save whatever is left after consuming rarely have enough to save.

Learn more about how to pay yourself first.

6. Cut unnecessary expenses

Must I buy this? This is an important question if you want to live below your means. Asking that question and answering it honestly is invaluable to your personal finance goals.

If the answer to the question is yes, you can go ahead and make the purchase. In case the answer is no, do not make the purchase.

If what you a purchasing is not a necessity at that time, defer the purchase. Only spend on what is necessary; what you cannot live without.

This calls for delayed gratification and frugality. If you can cut all meaningless expenses, you can have enough left to save and invest.

7. Negotiate

Even if you have to purchase a commodity, you do necessarily have to purchase it at its stated asking price. You can always negotiate.

Many sellers will always state an asking price that is higher than what they are willing to receive for a product. This is more than a product is worth.

As a buyer, your goal is to buy something below its actual value. This is how you create value for yourself.

Negotiating is not a sign of lack or weakness, it is a sign of financial awareness and understanding.

I recommend you read Never Split the Difference by Chris Voss of black swan limited. I will give the link in the further reading section of this post.

8. Live off one income

If you have 2 sources of income, you can decide to spend one and save the other. This is crucial when it comes to living below your means.

Having multiple sources of income (MSI) is not an option for those who desire financial abundance. You need to have several of them.

You can then allocate different uses to different incomes. For example, you can consume income from your job and save the one from your business.

As a family, you can decide to spend the salary of one spouse and save income from the other. This will help you live below your means.

9. Do not follow the Joneses

Never adopt a lifestyle just because somebody else or a certain group of people has adopted it. Let your lifestyle be determined by your income and your financial goals.

Many people borrow to buy a bigger car just because all the colleagues at work are doing it. This big car, whose purchase was more emotional than logical, will kill your financial life.

Be yourself at all times. Looking poor does not mean that you are poor. If you want to have financial success, be ready to look poor for a while.

By not buying what other people are buying now, you will be able to afford in future everything they cannot.

10. Track your spending

As the saying goes, what can be measured can be improved. You must be able to track and measure your spending levels to be able to control and improve them.

Track and record everything you purchase and at what price. At the end of the month, compile it against your income. If you are consuming more than 80% of your income, you are in financial danger.

You can then repeat the process of living below your means and keep tracking. After tracking, keep measuring, and improving.

Final thoughts on living below your means

There you go. Here are the 10 secrets to living below your means. The goal is to keep increasing your income and your savings. You can increase your savings by decreasing your consumption.

It is a guarantee that if you live below your means and invest what is left, you will get financial freedom sooner than later.

You owe yourself and your family a good life. This good life will not come by giving them everything they ask for now but by sacrificing now to afford a lot more in the future. Live below your means.

Further reading


  1. 60 Super Simple Ways to Save Money
  2. 12 Ways to Increase Your Income This Month
  3. 10 Easy Ways to Cut Your Expenses
  4. How to Successfully Negotiate Lower Prices in Any Situation
  5. The 7 Ways to Escape the Rat Race


  1. Never Split the Difference: Negotiating As If Your Life Depended On It
  2. Live Below Your Means: The Art of Living With Very Little Money
  3. Live Your Life for Half the Price

This Post Has 2 Comments

  1. Sbusiso Mthethwa

    This is very profound, there’s always a lesson in everything you share, it’s quite interesting to find something to read more especially when it is always empowering,I really thank you may God bless you in abundance and please never stop what you have started, thank you so much brother.

    1. Wealthy Wolves

      Thank you Sbusiso, keep coming back for more. We appreciate your readership.

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