How To Live Below Your Means

Written by Karen Bryan

live below your meansIf your planning for the future involves financial goals such as paying off your mortgage or retiring early, one of the ways of achieving this is to live below your means;  you’ll have to spend less money than you have coming in. As an example if your net household income (after tax and national insurance contributions) is £2000 and your living expenses are £2000, or more, it’s going to be impossible to save money toward achieving your goals, unless there’s a strong possibility of your earnings increasing substantially and/or you inheriting a good chunk of cash.

If you can both reduce your spending and increase your income you can accelerate the achievement of your financial goals. I think it’s wise to concentrate on things over which you have some control rather than rely on an inheritance coming your way.

Cut Your Spending

You could take our cut spending by 10% challenge, follow our frugal money saving tips and be smart with money.  If you have a spare room you can let it out under the Rent a Room scheme and earn up to £4250 tax free per year. You should aim to pay off debt, to avoid interest stacking up on your loans. If you already have a credit or store card balances you could look into a credit card which offers a long 0% interest period on balance transfers such as the Halifax Balance Transfer Credit Card, currently offering 22 months interest free on balances of up to £3,000 (there is a 3.5% transfer fee).

Increase Your Income

You can focus on career progression leading to higher earnings and examine various work options. You could work overtime or take a second job. Do research into where to save using the Cash ISA maximum allowance, currently £5340 per annum, to avoid paying tax on your savings. Depending on your attitude to risk, you could try share trading (but being aware that you can also lose your money).

This article was featured in Carnival of Personal Finance #333 on October 31 2011.

One Response to “How To Live Below Your Means”

  1. […] has a site about getting the fun stuff into her budget!Karen Bryan from Help Me To Save presents How to Live Below Your Means, and says, “Leaving below your means enables you to set aside money to reach your financial […]