3 Ways I Live Below My Means & Save Money
The gap between what you make and what you spend determines how quickly you’ll be able to save and invest to achieve your goals. One of the best ways to increase that gap is by living below your means. Here are three ways I live below my means, and it saves THOUSANDS each year:
1. I drive a 2011 vehicle that’s paid off. The average monthly car payment for a used car is $500, meaning I save about $6,000 per year by driving a vehicle I own.
2. I rent a very average home, which allows me to keep my housing costs below 20% of my gross income. The recommended cost is to be at or below 30% of your gross income. I’m able to save an additional 10% of my income ($10,000/year) because I rent below my means.
3. I love a good side hustle, especially one that comes with extra benefits. I work at a Lifetime Fitness part-time and one of the perks is that I get a membership for free. This saves me about $2,500 a year.
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Living below your means is a powerful financial strategy that can lead to greater savings and investment opportunities. The essential principle is to minimize your expenses while maximizing your income. One effective approach is to avoid high monthly car payments by driving a paid-off vehicle, which can save you over $6,000 annually as noted in financial studies. Additionally, keeping your housing costs under 20% of your gross income not only aligns with personal finance best practices but also enables you to save an additional 10% of your income. Renting in a reasonable area allows for a comfortable lifestyle while reducing financial strain. Side hustles can be an excellent way to supplement your income without overwhelming your schedule. Working part-time jobs that offer perks, like a free gym membership, can significantly cut costs, allowing for better financial management and increased savings. Engaging in side gigs that utilize your skills can create avenues for additional income streams, contributing to your financial independence. These strategies not only promote a balanced budgeting approach but also empower individuals to attain their financial goals with confidence.
You’re also throwing your money away by renting your house. You’ll never have any equity in it unless you purchase a home.