How to Live on 80 of your Income

Living on less than your income is very challenging but can be so beneficial. Living below your means is one way to achieve financial security later on in life and is a skill or habit that can spare you from lots of financial strains later on. People want to save but what keeps them from saving is not knowing what to do in order to save. Saving has a lot to do with discipline, consistency, and even setting and working out a financial goal.

Living on only 80% of your recurring income is a very good way to save and live frugally. It keeps you from spending too much and make you spend on the things that are of priority. It makes you more efficient when it comes to finances. However, the biggest question is how. Here are some ways on how to live way below your income or means, maybe just 80% or less of your income.

1.) Go cheap. The easiest way to save while spending is to go cheap. Cheap doesn’t mean giving up quality but rather going for items that cost less. If you shop on malls, try to look for other alternatives such as smaller shops. Normally, items of the same kind are more expensive in malls than somewhere else. If you eat on a popular restaurant, try to find a lesser known one but of good reputation. Do some research on where to find cheap items and services. It can make you save or decrease the amount you save by a mile.

2.) Don’t follow the crowd. In most cases, you spend a lot on something just to follow everybody or in other words, to be “in” or “in fashion”. Fashion or fads are all about marketing, good and successful marketing that is. If you keep on following what’s hot, the tendency is for you to spend a lot all the time trying to keep up with everybody. Make a list of the things that really matter to you and as much as possible, minimize the wants. If you have a budget and a list of the things that you need, you are less likely to be drawn to impulsive spending and following the trend.

3.) Buy second hand. Second hand is cheap and sometimes, they cost 50% less than its original price. If you buy a car, shop for used cars but of good quality. Other things that you can buy used are electronics such as appliances and books. Some used clothes are even sold for a much lesser price. However, buying second hand items may require more effort because you still have to check their condition. Despite this added burden, it is still worth it because you can save a lot of cash. In buying a second hand car, you can also save a lot on insurance because used cars have lesser premiums than brand new ones. Just be sure that they are in very good condition and won’t require much maintenance as of the moment.

4.) Limit credit card use and debt. Debt can hurt your finances a lot and on different ways. One of the most common causes of debt are credit cards. Limit your credit card use so you won’t get into debt and keep interest rates from growing fast. As much as possible, bring and deal with cash all the time. If you want convenience, go for debit cards instead of credit cards. It is as convenient but safer on your side to keep you from getting into debt.

5.) Make a budget. A budget is a list of things that you’ll be spending on. In making a budget, be detailed as much as possible because small yet recurring expenses can add up into a huge amount later on. Discipline yourself to follow your budget. 80% of your income is actually a huge amount if you budget and manage it well. After you make and follow your budget, track your expenses if you really have followed it all through out. There are times where you’ll be forced to violate your finances but be sure to justify such expenses. Make it a point not to spend more than 5% or 10% the most of your budgeted amount.