10 Tips to Live Within Your Means — Painlessly

Got more month than money or know someone who does? Here are some tips to make it work, without feeling deprived in the process.

Americans have a love affair with credit cards. According to the latest Federal Reserve figures, we have $853 billion in credit card debt.

As a nation, we love to shop, but sometimes that consumerism leads to debt and monthly financial struggles. If you’re having trouble living within your means and staying out of debt, Money Talks News founder Stacy Johnson has some advice for you in the video below. Check it out, then read on for tips to make sure you never end up with more month than money.

1. Know your income and expenses

The first thing you need to know is what’s coming in and what’s going out. Make a list of any and all income you have from your job, side work, pension or anywhere else. Then make a list of every bill you have, from rent to car payment. (Don’t forget bills that may not arrive monthly, like car insurance.) These are your fixed expenses — the ones you have limited control over.

The difference between your income and fixed expenses is what’s left for the expenses you can control — your variable and discretionary expenses.

Most of us have sufficient income to cover our fixed expenses. After all, we wouldn’t have taken on obligations we couldn’t pay. It’s the variable and discretionary expenses that so often get out of control.

2. Track your expenses

A spending plan, otherwise known as a budget, is the single best way to ensure you live within your means.

A spending plan is exactly what the name implies: It lays out what you plan to spend. To keep tabs on your progress, or lack thereof, you’ll need to track your money as you spend it. This used to involve the laborious process of writing down everything you spent, dividing the expenditures into categories, adding them up, and comparing those totals with your plan. These days online budgeting services make the process easy. See “How to Automatically Track Your Spending and Goals.”

If you want to live within your means and reach your goals, you have to track where your money’s going. It’s the only way to nip problems in the bud.

3. Separate wants and needs

When it comes to shopping, knowing the difference between a want and a need will help keep you out of debt.

Before you make a purchase, ask yourself if you really need it. If you don’t, wait before you buy it. I use the 48-hour rule. If I see something I want to buy but don’t think I absolutely need, I’ll wait 48 hours before I buy it. More often than not, I change my mind.

4. Don’t compete

Don’t fall victim to the “keeping up with the Joneses” mentality. Sure, your friends or neighbors might drive nicer cars, have the newest technology, or take expensive vacations, but that doesn’t mean you have to do the same.

Think of it this way: Your neighbor might have financed that Mercedes, put the new flat-screen on his credit card, and taken out a personal loan to pay for a vacation. You’re not a lemming; don’t follow the group off a cliff.

5. Pay in cash

It isn’t always easy or immediately gratifying, but adopting a pay-in-cash lifestyle can save you from falling into a debt trap. For example, when I first moved out of my roommate’s place and into my own apartment, I didn’t have a TV. At first, I planned to pay for one with my credit card, until I did the math.

Once I realized that interest would radically raise the cost of the TV, I decided to wait. I watched TV on my laptop for a few months, saved up, and bought the TV I wanted outright. I didn’t miss out, and I didn’t pay extra.

If you can’t afford to buy something now, don’t pull out the plastic. Instead, save up and pay cash.

6. Keep an emergency fund

Life is unpredictable. In the last year my car broke down, I fell ill twice, I had to take unexpected time off work for family issues, and my AC sprung a leak. But I haven’t taken on any debt because I have an emergency fund to tap.

If you don’t have three to six months of expenses saved up, start saving now. When something goes wrong, and it will, you won’t have to reach for your credit card or take out a loan to pay for it.

7. Save money wherever possible

Saving money will help you stop overextending yourself financially. Try these tips to get started:

  • Never walk into the grocery store unprepared. Before you shop, clip or print out coupons, check the weekly circular, and make a list. I estimate I save about $40 a trip this way.
  • Don’t pay retail. Sign up for a store’s newsletters to get coupons and learn about sales. When shopping online, always compare prices at several sites and look for a coupon or promotional code. Sites like Dealnews, Savings.com and RetailMeNot will help you find the best deal.
  • Skip designer coffee. Sure, it tastes fantastic, but it’s also $4.50 a cup. Make your coffee at home.
  • Buy secondhand. You can find incredible deals at garage sales or in thrift shops.

8. Cut down on expenses

If you’re still struggling to live within your means, take a hard look at your expenses. There is probably something you can cut out or at least cut down on. For example:

  • Gym memberships.
  • Hair and nail salons.
  • Cable TV.
  • Cellphone bills.
  • Shopping trips.

Go through your bills and cancel any service you don’t use frequently. For the stuff you do use, call the provider and see if you can get a better deal.

9. Boost your income

If all else fails, boost your income. The simplest and most gratifying way is to make more at your current job by getting a raise. If that’s not in the cards and you routinely find yourself struggling to make ends meet, it’s time to look for a better-paying job.

You have no right to complain about being underpaid if you’re not at least looking for better alternatives.

Of course, there are many other ways to increase your income, from selling your stuff to side jobs to turning a hobby into a business. Where there’s a will, there’s usually a way.

10. Don’t deprive yourself

While this is the last tip, it’s the most important one.

When you hear terms like “living within your means,” especially when combined with words like “budget,” it’s natural to think about deprivation. You might think there’s no difference between “budget” and “diet.” They’re both about deprivation, right?

Wrong. A diet is deprivation: Cottage cheese isn’t anything close to ice cream. Living within your means, on the other hand, doesn’t have to be about deprivation. Spending less on insurance by raising your deductible doesn’t negatively impact your life. Nor does having a drink at home with friends instead of paying $8 each at a bar.

In short, you can live within your means and still enjoy life. The trick? Substituting imagination for money. Think about what you really enjoy — then find a way to get it for less.

Take a minute to share your experiences and inspiration on our Facebook page.

Stacy Johnson contributed to this report.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. Take 5 seconds and join our family by clicking here. You'll be glad you did. I guarantee it!

More Money Talks News


  • Robert Eisman

    Who pays $8 a beer at a bar? Around here, they are $2.75 which is high enough.

    • Jcatz4

      I have 2 words for you Ribbert – HOME BREW!! It’s a joke. I don’t even drink.

      • Robert Eisman

        I don’t either. Beer taste horrible. When I drink, I drink Monster Energy. lol

    • ps

      People who have money n don’t care.

  • NanC

    Grrrr. Diet does NOT mean deprivation. It simply means WHAT you eat. If you eat properly for your body, you will have a healthy body. Simple–coming from a dietetic educator. So please don’t compare diet and budget. If furthers the misunderstanding of what a diet is and what budgeting is. BOTH are wonderful and highly useful guides in our lives.

  • Steve Hickey

    “The difference between your income and fixed expenses is what’s left for the expenses you can control — your variable expenses.”

    No, this is dicretionary income not variable expenses.

    • Vince Ryder

      Agree. “variable expenses” should be often called “broken expenses”, as in “my car is broken and it’s EXPENSE-ive to fix it”. Discretionary income is what you have left after both fixed and variable expenses are deducted. As a result, discretionary income is “variable” as a function of variable expenses.

  • Terry Sanders

    I especially love no.9: ‘Boost your income’. Brilliant. If you don’t have enough money, simply make more. Now why didn’t any of the 99% ever think of that one?!

    • ps

      Yeah..me 2..esp when ur I’ll and can’t work.

  • Calfwih222

    Waiting 48 hours never works for me. I just go crazy and at the end of the 48 hours figure I had better buy it because I’m going crazy 😛

  • Jenifer Lewis

    I observe #5 as seldom as possible because my no-fee Amex card has a cash-back plan. I use it for groceries, gasoline, you name it: all things I would be buying anyway. I pay the bill in full every month by living within my means, and I earn many hundreds of dollars every year which I can use to pay for all kinds of things, from emergency purchases to the occasional treat. If I can’t use the Amex, I use a M/C which earns me Amtrak points. The key to credit cards is to pay the balance in full every month. It took a while to get into the habit of logging every purchase in Quicken, but after that I could create reports (e.g. income/expense), reconcile the Amex statement quickly, and easily track how I’m doing as the month goes along.

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,057 more deals!