Tips For Living Within Your Means (Especially When You Have No Money)

by Andrea

books, clothing and shoes, debt relief, frugal tips, saving money

living-within-your-means-by-Jeff-Keen.jpg Experts tell us that the best way to stay out of financial trouble is to live within our means. Right?

Unfortunately, the phrase “living within your means” can be difficult to understand.

For example, there’s “living within your means”… and then there’s “living below your means.”

So, are you living within your means or below your means?


What Does It Mean To Live Within Your Means?

Living within your means is defined by CNN Money as…

…Spending less than you earn, saving some of your income and having no debt. The exception being debt that lets you build net worth, such as buying a home, getting a degree or making a home improvement that builds equity.’s Credit/Debt Management guru describes living within your means as simply “not spending more money than you make.”

Furthermore, in order to achieve that goal, you need to:

  1. Know how much you make.
  2. Spend less money than you bring in.
  3. Boost your income.
  4. Stop relying on credit cards.
  5. Don’t try to keep up with the Joneses.
  6. Save up for purchases instead of putting them on credit.
  7. Have an emergency fund.


How To Live Within Your Means

So, what does really living within your means look like?…

Some would say that once you are following the steps laid out above, you should be in good shape.  For some it is true.  For others, there are some major changes that need to be made.

Let’s start with your biggest expense… Your home!

Say, for example, that you make $60,000 a year.  If you use this real estate calculator, you will get a good idea of how much house you can really afford.  Plug in the remaining balance on your mortgage, along with all of your other regular expenses, then see if your home costs more than you can afford.  If you enter the amount of money you have in your savings account as your down payment, that will show you what you could pay if you were to refinance or purchase your home.

Using a real estate calculator like that will give you a maximum allowable payment (…which may very well blow your mind).  But if your car expenses are out of control, and your other monthly obligations are out of balance, then you may only be able to afford one-third of your monthly mortgage payment.  In that case, you will need to either find a way to lower your other expenses or increase your income in order to make this amount equal what you are paying on your home. Or, you will need to move.

You can do this same experiment even if you live in an apartment — because it will give you a good idea as to how much rent you can afford to pay.

I used the calculator with just my husband’s income and then with my income added, and found out that if I stopped working, we would not be able to afford our home, along with our other current expenses.

You can plug in those same numbers above to see if it’s better to buy a home or rent one.


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