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Living within your means

Living within your means is something you WILL do, once you become financially literate, and you MUST do if you eventually want to become financially independent.

Most of us know someone who doesn’t live within their means, buying all the latest fashion and gadgets, new phones, TV’s, posh car, or living somewhere very expensive. They seem to have a dream life, but is it all on credit?

I know people who have lived this life, enjoyed several luxury holidays each year for decades, which I’m sure were great at the time, but are now in the position of realising they have no assets accumulated, and no savings to speak of, after 20 – 30 years of earning, and they still need to pay off the credit cards!

How to live within your means

In order to live within your means, you must understand, ‘Outgo must be less than Income”, or spend less than you earn or your allowance, each and every month.

Sounds simple enough, but with the constant temptation to spend at every opportunity, and the high cost of having to pay for your financial needs, as discussed in this page, it can be quite a challenge.

To live within your means is simply good money management, and once you have mastered this life skill, it will repay you back forever.

Think about money management as simply two boxes. One box for outgo, and one box for income. If the income and outgo boxes are the same size, then you are just living within your means.

If the outgo box is bigger than the income box, then you are not living within your means, and you are moving into debt.

If the income box is bigger than the outgo box, then well done, you are living within your means, and will hopefully also have some money left over to save, which is one of the key essential ingredients, in becoming financially independent. But more on that later.  


Unfortunately, there always seems to be far more costs in the outgo box, than there are deposits into the income box, which is just the way of the modern world. We will, however, address how to increase income and decrease costs, in later pages.

Budgeting is also a key part of money management and being able to live within your means, and we shall go on to looking at and preparing a budget in the next page.

Ten tips for living within your means

  1. Know what your financial needs are each month, and how much they cost. (This money must be paid, and comes out of the box before anything else.)

  2. Every time you have a “want” challenge yourself not to buy it.

  3. Do you really need to buy all the latest fashions and accessories? Could you skip out on some, or even buy some second hand?

  4. Try to find deals, offers and discounts on things you do need to buy. That way, you get more for your money and spend less overall.

  5. Bring lunch to school, college or work, it is far cheaper than eating in the canteen, café or restaurant.

  6. Do you really need a Costa coffee and cake every day? Try to make it a treat and not the norm.

  7. Check you are on the correct phone tariff and package for your needs. If you don’t need 5,000 texts per month, don’t pay for them.

  8. Are there any gym memberships, hair and nail salon appointments that you don’t need? If so cancel them.

  9. Do you need all of the TV packages at the same time? If you have Netflix, Amazon, Brit Box, Apple, Now TV, Sports TV, Movie channels and the terrestrial channels, you either have too much time on your hands, or you are wasting money somewhere. Only pay for what you can use.

  10. Prepare a budget and stick to it. See how to do this here.

But living within your means sounds boring!

Living within your means shouldn’t be boring, and it doesn’t mean depriving yourself of a good time, and a few little luxuries.


By increasing your financial literacy and skills, thereby improving your shopping, spending and savings habits, will enable you to do most things other people are doing, and still enjoy life to the full, without any FOMO! (Fear of missing out).

You can still go to the Mall with friends, just don’t buy three coffees and a millionaire cake out of boredom.

I’m also not saying don’t buy any luxuries, I’m suggesting you don’t buy too many luxuries, and when you do decide on whatever it is you really want, then you make a plan to save for it, and not just snap it up on impulse, or put it on a credit card, or your parent’s credit card for that matter!

When I was younger, much younger, I used to work out how much money I would have left each month, after all my bills had been paid, and after my monthly savings account standing order had been taken.

Whatever money was leftover, I would draw out in cash, divide up into four envelopes, and then know that I could only spend as much as was in each envelope each week.

This was an easy way for me to know I could live within my means, without having to guess how much I had spent each week or month. It’s still possible to do, although I appreciate spending habits have changed, as we move towards an almost cashless society. 

Reward time for living within your means

You can also give yourself the odd reward, or little treat every now and again, for achieving milestones or hitting targets.


We will discuss this in more depth in a later page, but by way of an example, if you planned to have £100 cash leftover at the end of a month, but managed to achieve £200, then that can be cause for a little treat. (But not a £100 treat by the way!). 

TIP: Another way to ensure you are living within your means, without having to make cost savings, is to increase your income.

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