7 Practical Tips To Live Below Your Means (Saving Money With Frugal Living)

7 Practical Tips To Live Below Your Means (Saving Money With Frugal Living)

Living below your means and embracing frugality is one of the fastest ways to save money and achieve financial freedom. With salaries often unable to keep up with the rising costs of housing, transportation, healthcare, and education, it can feel impossible to build savings. However, by tracking your spending, creating a realistic budget, lowering major expenses, and limiting impulse buys, you can align your lifestyle with your income and savings goals. Implementing some practical frugal living tips makes it possible to spend less than you earn, bank cash, and still enjoy life.

This article will explore essential strategies to reduce your spending, highlight areas where you can make impactful cuts, and explain how to make frugality a habit. With some discipline and intention, you can master money management, cut unnecessary costs, and live well below your means. The savings you accumulate will provide the flexibility and peace of mind that makes frugality worthwhile.

1. Track Your Spending

The first step to living below your means is to know exactly where your money is going each month. Track every expense, big and small, to get a clear picture of your spending habits. Use a budgeting app or spreadsheet to categorize expenses and see where you can cut back. Knowing where your money goes will make it easier to identify areas to reduce spending.

2. Create a Realistic Budget

Once you’ve tracked expenses, use that knowledge to build a realistic budget that aligns with your income and savings goals. Account for essentials like housing, utilities, food, and transportation. Budget for discretionary spending but be honest with yourself about what you realistically need in these categories. Build in savings by paying yourself first. Review and adjust your budget monthly. A good budget helps you align spending with your values.

3. Pay Yourself First

Once you’ve budgeted, prioritize “paying yourself first” by setting aside savings each month before spending on anything else. Even if you can only start by saving a small percentage of income, making it a habit helps savings grow. Set up automatic transfers from checking to savings accounts to make consistent contributions. Consider saving for an emergency fund, retirement, and other financial goals before spending on wants.

4. Reduce Housing Costs

Housing is often the biggest expense. Consider getting a roommate, moving to a less expensive area, or downsizing to a smaller living space. If buying, opt for a modest starter home with room to grow later. Renters can negotiate lower rents, find cheaper options, or consider micro apartments. Set a reasonable housing budget at about 25-30% of your income.

5. Cut Back on Transportation Expenses

After housing, transportation is the next biggest expense for most. Avoid car payments by buying used vehicles in cash. Optimize insurance policies and shop around for the best rates. Use public transportation, walk, bike, or carpool when possible. Live close enough to work and amenities to minimize driving. Maintain vehicles so they last longer. Flying less and using mileage cards can reduce travel costs.

6. Cook at Home More Often

Eating out is usually far pricier than cooking at home. Plan inexpensive meals around what’s on sale at the grocery store. Make batch meals and leftovers so cooking takes less time. Pack a lunch rather than buying it. Limit takeout or delivery to special occasions. Entertain at home rather than going to restaurants with friends. The more you cook, the more money you’ll save.

7. Limit Impulse Purchases and Shopping

Avoid buying things on impulse without planning. Give yourself a mandatory waiting period for bigger purchases. Stick to essentials at the grocery store. Unsubscribe from promotional emails tempting you to spend. Stay away from stores, malls, and websites if you’re prone to overspending when shopping. Scale back your wardrobe budget. Institute a strict limit on miscellaneous personal purchases each month.

The bottom line is consistently spending less than you earn. Follow these frugal living tips to align spending with your savings goals and live comfortably below your means. The savings you accumulate will provide freedom and flexibility in the future. With some discipline and smart budgeting now, you can build the financial life you want long-term.

Frugal Living Case Study: How Amy Saved $20,000 in One Year

Amy is a 32-year old marketing manager who was struggling to save money. Though she made a decent salary, her expenses always seemed to eat up all her income. She wanted to save up to buy a house in the next few years but didn’t know where to start. That’s when Amy decided to embrace frugal living techniques to align her spending with her savings goals.

The Challenge

Amy’s base salary was $60,000 per year. After taxes and 401k contributions, her monthly take-home pay was around $3,200. Her monthly expenses consisted of:

  • Rent: $1,200
  • Car Payment: $350
  • Utilities: $150
  • Food: $400
  • Entertainment: $200
  • Miscellaneous: $300

This totaled $2,600 per month in fixed costs, not including discretionary spending on things like clothes, gifts, vacations, etc. Amy felt like she was living paycheck to paycheck without room to substantially save.

The Solution

Amy tracked her spending over the past year and made a detailed budget to see where she could cut back. Her goal was to save $20,000 for a downpayment within 12 months. Here are some of the frugal changes she made:

  • Got a roommate to cut rent costs in half ($600 savings)
  • Negotiated a lower internet rate ($20 savings)
  • Cut back on takeout and dining out ($200 savings)
  • Sold her car and started using public transit ($350 savings + insurance)
  • Limited shopping and created a $50 personal budget per month ($150 savings)

These changes enabled Amy to immediately reduce her monthly expenses by $1,370. She also started “paying herself first” by automating $1,000 per month into a high-yield savings account.

The Results

By cutting major costs like housing and transportation as well as discretionary spending, Amy was able to save $20,280 in 12 months! She exceeded her savings goal through frugal living techniques. Amy’s story demonstrates that tracking your spending, sticking to a budget, reducing big-ticket expenses, and limiting wants can lead to substantial savings. A little frugality and discipline can go a long way.

Key Takeaways

  • Monitor expenditures to identify spending habits and areas to reduce
  • Create a realistic budget aligned with income, savings goals, and needs
  • Prioritize saving by contributing to savings accounts before spending
  • Lower major costs like housing and transportation with cheaper options
  • Cook at home to save significantly compared to eating out
  • Eliminate impulse buys and establish limits on discretionary purchases
  • Align spending with values and long-term goals through frugality


Being frugal requires being aware of where your money goes and making intentional choices to spend less than you earn. Establishing a budget, finding ways to reduce major expenses, and limiting impulse purchases allows you to align your spending with your savings priorities. Frugal living is about forgoing wants to afford what matters most, whether that is financial freedom, retirement, or other goals. With discipline and smart money management, you can live below your means now to build the financial future you desire. The savings and flexibility you create will make it all worthwhile.