How to Live Below Your Means: Tips to Save and Grow Your Money

Living below your means is a powerful financial habit that can help you save more, invest wisely, and achieve long-term financial freedom. If you’ve ever felt like your money disappears as soon as it comes, this blog is for you. Here, we’ll dive into practical steps and examples to help you live below your means without sacrificing your quality of life.

What Does Living Below Your Means Really Mean?

Living below your means means spending less than you earn and redirecting the difference toward savings, investments, or paying off debt. It’s not about living a deprived life; it’s about making smart financial decisions that align with your goals and values.

Why It’s Important to Live Below Your Means

1. Avoids Debt: Spending less than you earn reduces your reliance on loans or credit cards.
2. Builds Savings: You’ll have extra money for emergencies, future investments, or big goals like buying a home.
3. Encourages Freedom: It allows you to make life choices without financial stress, such as changing careers or starting a business.

Steps to Live Below Your Means

Here are actionable steps to adopt this habit:

1. Track Your Spending

The first step is to understand where your money is going. Use simple spreadsheets or notebook to categorize your expenses into needs, wants, or fixed and variable expenses and savings/investment.

• Example: You might discover you’re spending Ksh 5,000 on lunch each month. Packing lunch instead could save you a significant amount.

2. Create a Realistic Budget

A budget is your financial roadmap. You can use the 50/30/20 rule where you allocate:

• 50% of your income for needs (rent, food, bills).
• 30% for wants (entertainment, dining out).
• 20% for savings or debt repayment.

Alternatively, you can use the Zero-Based Budgeting technique where you: List and organize all your monthly expenses by category including fixed expenses (like rent and utilities) and variable expenses (like groceries and entertainment). Also, you need to allocate a portion of your income towards debt repayment and savings & investments and ensure your balance is zero.

3. Cut Back on Unnecessary Expenses

Identify and eliminate non-essential expenses:

• Cancel unused subscriptions (e.g., streaming services).
• Switch to affordable brands or buy in bulk.
• Eat out less frequently.

4. Live Frugally Without Feeling Deprived

Living below your means doesn’t mean sacrificing everything you enjoy. Focus on low-cost activities like hiking, movie nights at home, or thrift shopping.

• Example: Instead of spending Ksh 3,000 on a dinner date, try a homemade meal and a cozy evening in.

5. Set Financial Goals

Knowing your “why” keeps you motivated. Are you saving for a house, an emergency fund, or a vacation? Define clear goals and track your progress.

6. Automate Your Savings

Set up an automatic transfer to your savings or investment account. Even small amounts add up over time.

• Example: Save Ksh 5,000 monthly; that’s Ksh 60,000 by year-end!

7. Find Additional Income Streams

Boost your earnings through side hustles, freelancing, or selling products online. Extra income can help you stay ahead financially while living below your means.

8. Avoid Lifestyle Inflation

As your income grows, resist the urge to upgrade your lifestyle immediately.

• Example: Instead of moving to a more expensive apartment after a salary raise, save or invest the extra money.

Mistakes to Avoid While Living Below Your Means

1. Trying to Keep Up with Others: Avoid spending just to impress people on social media.
2. Neglecting Self-Care: Frugality shouldn’t compromise your well-being. Prioritize your health and happiness.
3. Not Accounting for Irregular Expenses: Plan for occasional costs like car repairs, gifts, or travel.

How Living Below Your Means Benefits You

• Builds Wealth: You’ll have more money to invest and grow.
• Provides Security: An emergency fund shields you from unexpected expenses.
• Reduces Stress: Knowing you’re financially stable improves your peace of mind.

Practical Example for Kenyans

Meet Jane: Jane earns Ksh 50,000 per month. Here’s how she lives below her means:

• Rent: Ksh 15,000 (30%)
• Food and bills: Ksh 15,000 (30%)
• Wants: Ksh 10,000 (20%)
• Savings and investments: Ksh 10,000 (20%)

By sticking to this plan, Jane saves Ksh 120,000 annually, bringing her closer to her financial goals.

Take Action Today

Living below your means isn’t just a financial strategy—it’s a lifestyle change that helps you focus on what truly matters. Start small, stay consistent, and watch as your finances transform.

What steps are you taking to live below your means? Share in the comments!