5 Budget Tricks To Live Frugally & Easily

Do you find it difficult to live frugally, budget and live below your means?

I also found it very difficult until I was shown these 5 ways that will be shared here.

This is the biggest problem most people have financially. It becomes a particular problem to not be solved when it becomes nearly impossible to achieve one’s financial goals.

What Does Living Below Your Means Actually Mean?

Living below your means is simply not living paycheck to paycheck anymore. But why do so many people have problems with it?

Living below your means is an action in which your outgoings are significantly less than your incomings in an attempt to save as much money as possible. This helps a person get closer to their financial goals as well as assist them in everyday living.

With all this in mind, have you ever thought about what else it might bring to spend less than you take in?

It gives you a more stress-free life, more flexibility in your career, and if it’s your goal, achieving financial freedom as well.

No matter what your goal or intention is, it starts with living below your means, gaining control of your finances and saving money.

Way 1: Track Your Money And Spending

The first way is to track your money and spending.

This is and must be the first step to even see where you stand. Are you living below your means, within your means or above your means?

In order to determine this, you must first have clarity about what your financial situation actually looks like, because many underestimate by far what they spend per month. So, how can you do that?

3 Steps To Tracking Your Spending

It’s easy with the help of 3 steps.

• Put your income and expenses in one place

Many have multiple bank accounts or multiple credit cards where money is put in and taken out every month.

It’s easy to lose track of your expenses and you’ll find that 1 or 2 bills are no longer on your list. To be able to do this, there are providers such as Mint or you can do it in your own spreadsheet for free.

Whichever way you choose: List your total income versus your total expenses.

You can already start categorizing your expenses such as: rent, electricity, internet, living expenses etc. and also look at what are fixed and variable expenses.

• What’s Left After Expenses

Is there any money left over at the end of the month? Does it add up or do you pay even more than you take in?

Please keep in mind, even if it adds up exactly you could still get into trouble.

There can always be unexpected expenses, which, by the way, are the ones that bring most people into financial ruin and into debt.

• Track Your Expenses Monthly

The final step is to keep track of your expenses monthly and include them in your way that you use to track.

With this you pursue the goal of firstly getting an overview of which unnecessary expenses you can reduce and secondly also to avoid impulse purchases and if they do happen to reconsider, because you must finally include them in your monthly bill.

If you have done this, then you have created the foundation.

Way 2: Pay Less Interest And Get Rid Of Debt In Your Budget

The second way is to pay less interest and get rid of debt.

Debt is the biggest nightmare for your income and financial situation and makes it almost impossible to live below your means, which we discussed earlier, really has a lot of advantages.

The interest you have to pay every month reduces the income you get every month which makes the difference between income and expenses lower.

But we want the difference to be bigger, be it an increase in income or a reduction in expenses.

So how can you specifically get rid of your debts and reduce the interest?

Here are 3 ways that you can make this possible:

• Refinance Your Debt

When you refinance your debts, you bundle your current debts and exchange them for a loan with lower interest rates, so you pay less interest every month.

Again, there are several providers for this, but your bank can also assist you.

• 50/50 Rule

The 50/50 rule works like this: if your income increases and you get a bonus, you don’t use this money to spend it completely, but use 50% of it to pay off your debts.

As an example: if you get a bonus at your work of $2000, then you use $1000 of it for your debt repayment and the others you have at your free disposal.

For more information on getting rid of your debt, click here.

The third tip is budgeting, which brings us onto way 3!

Way 3: Create A Budget

The third way is to create a budget. Creating a budget is the most important step to stop living paycheck to paycheck, to gain financial security and to reach your financial goals.

The bulk of it should be done by now, you’ve put your income and expenses in a place where you can keep track of them.

Your income should really include all income you have too, for example child support and tax refunds etc.

But what’s the point of keeping track of everything if you want to reach your financial goals?

Right at first nothing, which is why it is now important to restructure your budget in a way that you live below your means and can then achieve your financial goals with the money you save.

The easiest way to do this is to create a percentage budget.

50–30–20 Rule

You probably know the 50–30–20 budget, where 50% of your income is for needs, 30% for wants and 20% for saving and debt repayment.

In itself, the distribution is good, but usually not individual, which is why I recommend you to adjust the % numbers to your current situation and where you want to go.

To give you an example of how I do my budget, I have left the 50% needs as they are but have 30% for savings and investments and 20% for my wants.

The 30% investments and savings split again into 10% savings and retirement savings and 20% in my investment portfolio.

Way 4: Cut Down Your Expenses

The fourth way you should use to live below your means is to reduce your expenses and this is now relatively easy after you track your spending and create a budget and see everything at a glance.

When you look at your expenses now ask yourself: “What are meaningless or unnecessary expenses?” or ask yourself at an expense “Do I really need that?”

There are some areas where you can definitely save money and reduce expenses. Some areas would be: memberships, car, food and drinks and clothes.

There are a few more areas, but ultimately it’s up to you.

If you don’t know what meaningless or unnecessary expenses are for you, it helps to determine your values in life and then ask yourself if this expense is in line with those values.

As an example, for me investing plays a big role in my life and it is a great passion, so I save on clothes so that I can invest elsewhere.

Way 5: Fix Your Money Mindset

The biggest problem is not the lack of knowledge or techniques that we need to use to be financially successful.

The biggest problem is exactly in ourselves, in our head, in our thinking. The problem is that we simply don’t do the right things. But why do we do that?

To keep it short: it is our ego that tries to keep us in our comfort zone and “protect” us from the unknown.

It is a primal instinct and also the reason why we find it difficult to discard old patterns and adopt new ones in the form of habits.

But how do you change your mindset in such a way that you can establish good habits related to your finances?

It starts with making the decision to be financially successful. Sounds too simple? Then I ask you, do you really have specific financial goals?

If not, then you haven’t decided to be financially successful. Define what financial success means to you by setting clear and specific goals and including them in your budget.

How To Set Financial Goals

For example: my goal is to have $500,000 in my investment portfolio. I have this goal built into my budget where 20% of my income is invested in my portfolio each month.

So set yourself clear goals, decide to be financially successful and you’ll be living below your means.