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8 Tips to Help You Live Within Your Means

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8 Tips to Help You Live Within Your MeansThe first step to financial independence is to live within your means. To me, that automatically means living frugally, but that’s just how I think. My family struggled financially when I was growing up so I default to saving first. When I first started working, I lived modestly and saved what I could. I lived within my means, but I think I probably could have done better knowing what I know now. What would I tell my 21 year old self? Let’s see…

Track your income and expenses

When I was in my 20s, I never tracked my income and expenses. I lived within my means so I had more money coming in than going out and that was good enough back then. I was making pretty good money as an engineer and I didn’t spend extravagantly. Mrs. RB40 was also frugal, so we made a good team. However, I think we would have been better off if we started tracking our income and expenses when we were young. Here are the benefits.

  • You know exactly how much money you’re bringing home every month. Then you can figure out how much you can really spend every month and make a budget.
  • You know what you spend money on. Most people spend quite a bit of money on stuff they don’t need. If you track your expense, then you can consciously reduce those unnecessary expenses.
  • You can see how much you save every month. You should save at least 15% of your income. If you don’t track your finance, you won’t know how much you’re saving.
  • You can see your net worth grow. Seeing your net worth grow is addicting and it will motivate you.
  • You will develop a good financial habit.

We never spent more than we made, but after we started tracking our expenses, we became even more careful. I know what we spend money on and they are things that make us happier. You can track your expense with a simple spreadsheet, software like Quicken, or a free website like Personal Capital. I’m sure there are apps to help you as well. It can be difficult when you first start, but after a few months it’ll be second nature.

Spend less than you make every month

This is common sense, but it can be difficult to do. If you don’t track your finance, it’s easy to overspend and think you’ll make up for it next month. I think most of us are responsible enough to spend less than we make on a monthly basis, so it must be those big emergency expenses that get us into trouble. That’s why you need some extra savings to take care of emergencies like a car repair. Save about 3 months of living expense so you’ll have a cushion when something unexpected happens.

Get rid of consumer debt

If you’re like most American households, then you have some kind of consumer debt. That’s not good. When you pay those high interest rates, you’re just enriching the banks and derailing your retirement. It’s best to avoid any consumer debt altogether, but life happens and sometimes you can’t avoid it. In that case, just keep working on paying off your consumer debts as soon as you can and avoid them in the future.

Save a sizable portion of your income

The average American’s personal saving rate dropped to a dismal 2% in 2013. That’s just not enough to ensure financial security. Most financial advisors suggest saving 10-15% of your income. This saving will help you endure various emergencies that may arise and build up your retirement accounts. Personally, I think 15% saving rate is still too low. If you’re making a good income (more than $100,000/year), then you should be able to save much more than that. I’d shoot for at least 25%. Saving and investing more will give you options when you’re older.

Boost your income

As mentioned above, I gravitate toward frugality when I try to save more money, but that’s not necessarily the right way. There is only so much you can cut out of your life before you start feeling deprived. Increasing your income is probably the smarter way to save more.

The main source of income for most people is their fulltime job and it’s probably best to concentrate on that. Aim for a good raise every year and keep your eyes open for better job opportunities. An alternative is side hustling. If your career doesn’t pay that well, then side hustling can make a big difference in your income. The right side hustle can even lead to a more lucrative career and/or a more satisfying lifestyle.

Minimize lifestyle inflation

Lifestyle inflation is biggest enemy of living within your means. It’s good to boost your income, but the problem is that most people also spend more every year. Lifestyle inflation is unavoidable, but we really need to minimize it as much as possible. Do you really need that 2,500 sq ft home with 4 bedrooms and 3 baths? How big was your house when you were growing up? 5 of us lived in a 2 bedroom apartment when I was growing up and that was just fine. My mom had 9 siblings and they lived in a 2 bedrooms townhouse when they were growing up. Okay, that’s too crazy, but you know what I mean. The key is to make sure your income outpaces your lifestyle inflation. Don’t live it up if you can’t pay the bills.

Ignore the Joneses

live within your means

Wow, these are still 50 bucks!

Ignoring the Joneses seems to be difficult for most people. For me, it’s pretty easy because I don’t really care what other people think. Fortunately, I learned this lesson early in my teens. In junior high, I really wanted a pair of Reebok hi-tops. They must have been the fad back in the 80s. So I saved up $50 over the summer and finally got a pair before school started. It turned out nobody even cared what shoes I wore. The shoes didn’t help me jump any higher and I was still terrible in PE. From that day on, I don’t pay attention to cars, shoes, jewelry, or any other outward signs of wealth. Why spend money trying to impress the Joneses? They don’t really care what car you drive.

Learn to enjoy free/cheap stuff

live within your meansSure, it’s fun to spend money. I like eating out, traveling, and other entertainments as much as anyone. However, I think I found the secret to spending less money. You have to learn to enjoy free/cheap entertainments. These days we spend most of our time enjoying hikes, reading, playing at the playgrounds, cooking, listening to various free concerts, and ferreting out free and discount days at the museums around town. There are a ton of free things to do out there and you don’t have to spend a lot of money to have fun. Spending money for fun once in a while is good, but it shouldn’t be the norm.

These tips should be helpful for young people who are just starting out and even older folks who need some reminder. Ok, I gotta cut this short. The sound of the symphony has been wafting through the windows all day and now we’re heading to the park to see the show. The 1812 Overture is coming up soon and there are fireworks afterward. Ahh… Life is good. Have a great Labor Day weekend!

Do you have any good tips to help people live within their means? 

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{ 56 comments… add one }

  • Blue Horseshoe August 29, 2014, 3:09 am

    Sound advice, all of it. Just wanted to share my thoughts on:

    “You can see your net worth grow. Seeing your net worth grow is addicting and it will motivate you.”

    Living frugally and saving money does indeed become an addiction. In periods, I find myself logging on to my bank/e-trade/401-k account way too often. I make projections for my future income, savings, etc. This creates a form of stress that took me a while to learn to recognize – it becomes an obsession. As with everything in life, saving for the future is about balance – the balance between living in the moment and maximizing your future happiness. Obsessing about early retirement could make you miss out on a lot until you get there.

    • SavvyFinancialLatina August 29, 2014, 8:16 am

      It can be stressful over time. Especially since not much really change in two weeks. I get paid biweekly, so there’s no increase in the accounts until payday. I look forward to payday so I can see my accounts grow!

      • retirebyforty August 29, 2014, 9:59 am

        I hope things will settle down for you guys soon. It’ll be nice to get back to normal without all the big financial changes.

    • VA August 29, 2014, 8:17 am

      So true, Blue Horseshoe! I’ve struggled with this a bit myself. Hard to enjoy a meal out with friends when you’re calculating how every item you order will affect your net worth.

      Automating my savings has helped a lot with this. It’s good to relax and enjoy life sometimes, and yes sometimes it costs money! Donating to charity and buying gifts is also bad for the bottom line but good in every other way 🙂

      • retirebyforty August 29, 2014, 10:02 am

        Well, I think you should enjoy your life too. You don’t have to think about every penny you spent. Just going over your accounts at the end of the month will give you a sense of what went right or wrong. If you spend 30% of your income on eat out, then you know you have to change, right? 🙂 Have a great weekend!

    • retirebyforty August 29, 2014, 9:30 am

      I was a bit obsessed with our finance before I left my job too. It’s a lot better now and I only check every other day or so. Personal Capital made it much easier to get a quick overview so I don’t have to update my spreadsheet constantly.

    • Frugal Pediatrician August 30, 2014, 12:11 pm

      I totally agree. I love reading this blog and other personal finance blogs, but my husband and I’ve realized that we do love our jobs and are lucky to make good incomes. We have always erred on the side of too much delayed gratification. We are saving 40-50% after taxes between retirement and other investments, and aim to keep lifestyle inflation down so that we remain at 40-50% savings. Otherwise we not going crazy, but enjoying the odd dinner out and splurging a bit at Costco. I think reviewing the investments and net worth and spending rates is good to keep lifestyle inflation in check. But I was getting obsessive about it too, and stopped and only do it once or twice a month rather than weekly.

  • Stefanie August 29, 2014, 4:41 am

    Tracking your income and expenses and knowing what I call your “make or break” number are the key to breaking the paycheck to paycheck cycle. I think some people hide from it because they’re afraid what the numbers will show, or simply because they think their reality is just fine, but there’s nothing like cold hard numbers to give you a much needed wake up call.

    • retirebyforty August 29, 2014, 9:32 am

      Some people just don’t realize how beneficial tracking your income could be. We were doing pretty well financially so I didn’t think I need to do it, but we’re so much better off that we keep track of our finance.

  • canadianbudgetbinder August 29, 2014, 4:49 am

    I did the exact same thing when I was in University and went on to buy my first house at 21 and again at 24. It wasn’t until the past few years using a budget really opened my eyes to how much we were actually spending. It’s amazing what simple math can teach us with determination. We then went on to pretty much do exactly what you suggest in this post and it’s worked out well for us.

    • retirebyforty August 29, 2014, 9:33 am

      Great job! It’s great that you got started so early. I wish we’d done that sooner, but better late than never. 🙂

  • Adam and Jane August 29, 2014, 5:32 am

    Joe, luv your common sense advice and luv reading your older posts to pickup tips from you and your readers!

    Tracking expenses is so important.
    – The first time we did this was 5 years ago. Expenses were in the upper mid 50s.  We saw exactly where the money was spent. Then we cut non essentails and it has been the LOW 40s since then.

    Our next biggest expenses is $4.6k per year.  Cable is $2k for just standard HD channels and internet service.  $2.6k insurance for 3 cars each year. 

    Thinking about going with FIOS for $69 a month but after the promotion then they will jack up the price anyway.

    If we get layoff or quit before 55 then we can save 2.7k by doing the following:
    – cut cable and get a Roku to stream videos.  Just get Internet service for $780 per year.
    – get rid of 2 cars to reduce car insurance to 1.1k per year.

    Do you really need full service cell phones? Saved $800 a year for 2 people. Now, we pay $200 for two cell phones.
    – T-mobile pay you go plan. $100 for 1000 mins and unused mins rollover.
    – Trac phone with Verizon service. Triple mins for life. $100 for 1200 mins, 1200 text mgs and 1.2G of data. Anything unused is rolled over.

    Passive income to boost income with muni bonds, dividend stocks, rentals, etc.
    – We only have and like triple tax free indivdual muni bonds.  Do whatever floats your boat but gotta do something since bank interest is so low. We don’t want to deal with tenants, rental maintenance or with the stock market.  So we buy and hold the munis until they mature. We understand that our principal is not appreciating with munis and that is ok with us.  Our munis covers all of our expenses plus healthcare if we have to pay it when we are not employed.  We think of it as our private pension plan.

    Do you really need a land line for $35 to $40 a month?
    – Most young people only have their cell phones and that is good enough.
    – Consider replacing the land line with Nettalk, Ooma, etc. We paid $99 for 3 years of Nettalk service.  It ain’t perfect like a land line but we are happy with it since it only cost $33 per year for local and long distance. Take it to travel or relocate and you always have the same number.

    Save, save, save!
    – We each made low 20s when we started working. With each pay raise and bonus, we saved it.  We used it to pay down our mortage when rates were 9.5%.  We are extremely fortunate to make a good salary and to stay in the same company. We now saved 77% of our salary. Including the muni income, we now saved 83% of total income.
    – We never kept up with the Joneses. Same 1000 sq ft house and we never purchased a new one as our salary increased.
    – We can buy whatever we want but we choose not too.  We do have the occasional spurge when we are stressed from work.
    – This year we reduced eating out because it is healthier and it saves money. We did a lot of fast foods, junk foods and take outs the prior years.  We have the blood work to prove it. We cook dinner at home at least 5 days a week and cut out ALL junk food. 🙁
    – We shop at the asian markets. We find that vegetables and meats are just so much cheaper. 

    It helps that me and the Mrs are on the same page. Both of us are frugal and we hate our jobs. We are looking forward for a severance package or retiring at 55 whatever comes first. Things are blewing in the company again and talks of re-orgs and more layoffs.  Bring it on since we are ready for it!!

    • SavvyFinancialLatina August 29, 2014, 8:15 am

      Wow Adam! You and your wife have done great! We’re tracking our expenses again. The first six month of the year were pretty crazy with the new house and getting used to home ownership. Hoping we can save more money.

      • Adam and Jane August 29, 2014, 9:52 am

        To SavvyFinancialLatina,

        Thanks. Congratulations on your new house! I made the mistake of buying so many tools to fix up our OLD house 20+ years ago and now they are collecting dust. I spent thousands. Try to borrow what you need to save money and storage space.


    • retirebyforty August 29, 2014, 9:58 am

      Thanks for your great tips! Yeah, I think getting rid of 2 cars would be good. They cost a lot of money to run and maintain.
      Wow, 83% of your income! That’s the best I’ve ever heard. That’s really great. Do you have kids?
      You’re doing so well. Good luck with your retirement journey. I think you should start planning for life after retirement. It can be jarring so you should look into it.

      • Adam and Jane August 29, 2014, 3:03 pm

        Thanks for encouraging words! No kids!! DINK. Double Income No Kids.

        I am curious. What is jarring about planning for life after retirement?

        I am 50 soon and have been planning/saving since age 30 to retire. What is there to plan? After being on call for 24×7 for SO many years, I just want a peaceful night sleep. I don’t want to get panic attacks whenever the phone rings thinking that our systems are down. I will NEVER want to work again. We just want to chill, remodel the 2nd floor and attic or just do NOTHING :). Do some traveling and hopefully nothing stressfull.

        • retirebyforty August 29, 2014, 10:17 pm

          From what I read, doing nothing sounds good in theory, but it’s not good for the long term. You get restless and bored without a purpose. It will be great to relax for a while, but I think it’ll be too boring for the long term. You need projects – like the remodel. Maybe join a local organization that you like. It’ll help you feel connected and make some new friends. At 50, a lot of your old friends will still be working and they won’t have a lot of time to spend with you.

          • Adam and Jane August 30, 2014, 6:04 am

            Ah! Too much idle time and the need to keep busy. I understand your point now.   

            The Mrs was concerned about me too since I am a hermit but I like being a loner.

            At first I want to chill but there are always things to do
            – lawn work, weeding, build lattic fence under the deck, and exterior maintenance of the house
            – remodel the 2nd flr and attic
            – I have several hobbies and collect different types of toys.
            – I recently started building 1/24 scale garage scenes dioramas. 
            – I purchased an air compressor and air brush many many years ago and I want to learn to paint and customize my RC (radio control) cars.
            – I have several model cars that I want to build and convert to RC
            – Start selling my extra toys on EBay.
            – Put up more shelves in my man cave to display my collections.
            – I have basic power and wood working tools that I make simple small tables, radiator covers, trims for the house. Sometimes, people ask me to help them with their simple wood projects. 
            – Since I am on the tail end of being a baby boomer, most of my co- workers are retired. Although, I am 10+ years younger than them, I gave them career advice, personal advice, finanical advice to prepaid their mortage and coached them to retire soon after 55.  Many said that they wanted to work until 62 but I explained to them that the company is changing and that they may not be able to do so. One day when each of them realized they had enough, one by one retired and they are so happy now! They just can’t imagine working under the current new mgmt. Our jobs are a lot more stressfull than theirs.  I am not a fortunate teller but I keep my eyes and ears opened to see what is happening in the company. My former co- workers are old schooled and don’t like changes. Now, we must be able to adapt to constant changes in order to survive. Our company is still good compared to others. We still have health care, 401k and a pension plan. Enough of talking about work for now!
            – Eventually, we want to sell the house and get a condo or apartment so that we don’t have to deal with exterior maintenance and shoveling snow.
            – Travel and visit state parks. See the glaciers in Alaska before they melt. Take 30+ day cruises to see other parts of the world. Visit Thailand and maybe retire there. I heard medical care is great there.  Food and rentals are affordable too. 

            Joe, maybe you can do a future piece on how to retire in Thailand!

            – Consider moving or just renting 3-6 months in Hawaii or to any other parts of the world. Having a condo at this point will help.  Just lock the condo door and just travel.
            – Request paperless for many accounts as possible to reduce mail. So that when we are away, we just pay bills online.
            – Visit friends in California, Florida, Japan, etc
            – I LUV retro cars and classic cars. Go to car shows. Buy a classic car or a new retro car. I always LUV the older SL Mercedes.

            As you can see, I am a NERD that have OLD conservative finanical values that is still child- like collecting toys.  We have plans to downsize and to simplify our lives so that me and the Mrs can travel and not worry about a house.

            Therefore, I believe that I will be able too keep busy. I have been thinking and planning for retirement 20 years ago. The Mrs want to work in a bakery for fun whereas I want to do “nothing”.

          • retirebyforty August 31, 2014, 9:45 am

            Here is a post – How much it cost to luxuriously retire in Thailand.
            I’m planning to go for an extended visit next year so I’ll be able to write more in dept articles.
            Wow, you have a ton of things on your todo list. They will keep you busy for quite a few years. I think you will have a great retirement. A small bakery might be fun. 🙂

          • Adam and Jane August 31, 2014, 11:22 am


            Thanks for the info! I will read your post on Thailand and do some research because you just do not know what will happen in the future. I recall reading that in order to move to Thailand you need to show you have money. I think you only need 24k in the bank. Of course, we will need to visit first before we make such a leap. Will look forward to your extended stay!


          • retirebyforty September 1, 2014, 4:54 pm

            Well, you can stay for 3 months at a time if you don’t want to get the retirement visa. If you plan to live there for half the year, then it’s pretty easy on a tourist visa. You can take a trip to Vietnam or some other country after 3 months and then come back.

  • Dividend Mantra August 29, 2014, 8:16 am


    Great advice. Couldn’t agree more.

    I think tracking income and expenses (every penny) is really the foundation of good financial habits. Hard to know where to cut, how much to make, or where you’re going without tracking everything.

    And I agree with enjoying free activities. They say some of the best things in life are free, and I think that’s right.

    Have a great holiday weekend.

    Best wishes!

    • retirebyforty August 29, 2014, 10:00 am

      Thanks for dropping by. Tracking your finance was eye opening. I thought we were doing well, but there were plenty of room for improvement. Everyone can benefit from tracking their finance. Have a great weekend!

  • kammi August 29, 2014, 8:50 am

    Blue Horseshoe is so right! It’s so addictive. I’m the worst when it comes to logging in over and over and counting every penny! I’m happy you mentioned inflation; it’s always worthwhile every few months to re-visit and see if you could trim some more here and there and it’s always worthwhile to have a goal. Also, I love the challenge of fixing things or making things instead of buying all the time eg. learning how to knit sweaters for your nieces instead of buying all the time. It adds up over time. Btw, Blue Horseshoe just makes me smile because I LOVE THAT MOVIE!!!!! (Wall Street) I used to come home EVERY day and watch the movie and will probably watch it again tonight 🙂

  • Tommy August 29, 2014, 9:09 am

    All excellent points and truly the path to living within your means. Once we started having children (3) and my wife stayed home to raise them until they were old enough to start school we slipped into a period of “over-means” living even with my taking a second (part-time) job. Not because of living extravagantly but just having lower household income and higher living expenses. All of the things you outlined still came into play then and after to clear our debt and set ourselves on the way to our early retirement. Even when finances were not going great back then we used the things you detailed to get through it. What also helped us with the Tracking, Budgeting, Debt Elimination, Income, and Savings was setting short, mid, and long-term goals to stay motivated. Giving ourselves time-frames (allowing us the time) helped us get past the short-term situation as finances do not improve over night without receiving a windfall (I have never been that lucky). Watching our finances improve in a measurable way and doing the positive things to make it happen became a habit and a lifestyle. Financial freedom is awesome and worth the effort to achieve. Your article has definitely provided the tips to what it takes. Prost!

  • John S. August 29, 2014, 9:29 am

    While all the points you make are excellent, I believe that it all has to start with knowing your expenses, and this becomes even more important as you prepare for retirement. Aside from the fact that it’s a little tough to determine some of your expenses accurately without some real effort, I think people see this kind of planning as some sort of budget or other device that will try to limit their spending. What you do with the information after you get it is up to you. At least you will know and can make a decision from there. We did an indepth spreadsheet of expenses before I retired so we could know EXACTLY what we would need to bring in in the way of income. I discovered that with just the two of us we spend more than $800 a month on groceries — and we’re not overweight. We could have used that as a place to cut back, but we didn’t. At least we know that it’s a place where we could economize if necessary. People also balk at this kind of plan because some numbers are hard to figure, particularly if you use cash. I had no idea what we were spending on groceries or gasoline until my wife and I both started using a debit card, particularly on these two commodities. Now these items are tracked on Quicken, where we keep our checkbook and I can run monthly or quarterly reports on just how much we spent on gasoline and groceries. My favorite planning template, by the way, is the Retirement Planning Tool offered on the Fidelity web site. Speaking of sites, I love yours. It has inspired me to start on a blog this fall.

    • retirebyforty August 31, 2014, 9:35 am

      That’s what I did before I left my job too. We kept track of everything for a year to make sure we can handle the change. It was difficult at first, but it became almost automatic once we got the spreadsheet setup. Thanks for the encouragement!

  • Tawcan August 29, 2014, 10:26 am

    Great advice. We certainly do all of them in our household. My favorite has to be ignore the Jones. Who really cares what your neighbours are doing right?

  • Sharon August 29, 2014, 12:37 pm

    I think the advice of putting your savings on auto pilot is the best, with living frugally, but fun coming in second place. Early on, when my husband or I got a raise, we saved 1/2 of all the raises we got and put the rest of the raise in emergency fund. Once we had a good 24-month emergency fund and on solid footing, we started saving 100% of all raises. Over the years, it really started amounting to a big chunk. When our house was paid off, we added that monthly amount to savings. When I took early retirement, we were saving almost $80K per year (together). You never notice it when you never had it to spend.

    • retirebyforty August 31, 2014, 9:37 am

      Great job with your saving. It’s a great idea to save some of your raises. Wow, $80k/year is really great. Not many people can do that.

  • Daizy August 29, 2014, 1:49 pm

    I saved almost $100 for a pair of white British Knights high-tops in high school. No one cared and they were mediocre shoes. I didn’t care much for brand names after that.

    • retirebyforty August 31, 2014, 9:37 am

      At least we learned out lesson early. 🙂

  • Mike August 29, 2014, 2:42 pm

    These are rather good tips! Sometimes we might just need to setup some automatic savings if need be to help us get going towards having enough reserves for those little hiccups!

  • Melanie August 29, 2014, 4:06 pm

    I’m happy to report I’m doing all of these things! I didn’t used to, though. It is so important to track your income and expenses — it really shows you where your money is going. I am putting 50% of my income to debt and I can’t wait to put that same amount to savings/investments instead. I have cut out almost all unnecessary things and have taught myself to not get attached to things or even experiences. I’m also in love with side hustling and trying to find new ways to make a buck.

  • Seth Sanders August 29, 2014, 8:09 pm

    Way to Go Joe!

    I used to pay $150.00 a pair for some of the fancy sneakers my son just had to have in high school and they usually fell apart in a few months. Advertisers attempt to convince us at every turn that if we buy the right clothes, drive the right car, wear the right cologne, use the right soap, toothpaste and other cosmetics that we’ll have the world at our feet. In reality the hot babes and guys could wear rags and ride a bike and people would through themselves at their feet while the more homely individuals are going to be mostly shunned no matter what they wear or drive.

    • Frugal Pediatrician August 30, 2014, 12:39 pm

      I agree. I never spent much on shoes for myself, but when we started buying shoes for the kids the first few years I got Stride Rite or whatever was popular (the light up girls sketchers). Now I’m taking the advice I give patients, I only buy on sale New Balance tennis shoes that give them good arch support, last at least a good 6 months and are available at the outlet stores. I was so mad when my daughters first Stride Rite and 3 pairs of Sketchers ripped within a few weeks. What a waste. Lesson learned.

    • retirebyforty August 31, 2014, 9:39 am

      My kid’s shoes last only 2 months too. He is so hard on his shoes so there is no point getting expensive shoes. Yeah, we should all watch less advertising. 🙂

  • Dividend Diplomats August 29, 2014, 8:39 pm


    Great article and simple to understand ways to live within your means. I like the – save more and also expand your income – if you can combo this – you will be unstoppable. I received a nice raise + am aiming to save more at a higher rate, stretching to 60%, and it’s proven to me how fast your assets grow. Also – lifestyle inflation always needs to remain in check. Thanks for the post! Talk soon.


    • retirebyforty August 31, 2014, 9:39 am

      Oh wow, 60% is really great. Good luck with your journey!

  • Rex August 29, 2014, 9:22 pm

    Thank you RB40 for this helpful post.
    Like you, I am frugal, and still do practice many of your pointers here. BUT, sometimes some of us need to break out of an obsessive discipline and have a treat – from time to time!
    When I bought a house a few years ago and – annoyed at the interest I was paying to the bank – accelerated my payments. This meant very little discretionary expenditure. After three years of this I was a little irritable! I paid the the house off, treated myself to a few sanity restoring treats, and the life felt better.
    My main point is – better not to take frugality to an extreme!

    • retirebyforty August 31, 2014, 9:40 am

      You’re right. We go out and eat once in a while and we are starting to travel more. You just need to spend on things that matter to you and save on the other stuff.

  • Kate August 30, 2014, 2:04 am

    That was totally a good lesson during your junior high! You’re right, nobody cares what you are wearing or what you are driving. I don’t really care about branded items or the latest gadgets.

  • Lila August 30, 2014, 2:08 am

    Speaking of lifestyle inflation and the Joneses…

    I have a dear friend who likes to come by my house and show off his new car, he seems to get one every 2-3 years it seems. He especially likes to have my bf come out and look at it. Anyway, I really don’t care what car he drives. I really don’t. I like him fine no matter what car he drives. My bf doesn’t care what kind of car he drives either. He likes my friend as he is too. We’ve told him this but he has to realize this for himself too. I hope he realizes this one day.

    One of the best ways I’ve saved money is by driving used cars. I’ve only driven a new car once and that was an economical car that was paid for with cash for $16,000. That car was very reliable and never let me down, it was reliable during horrible mid-west winters, and it was even reliable during road trips. Honestly driving used cars or economical cars is one of the best ways to save money.

    Usually when my mother gets tired of her cars then she will hand them down to me, which she pays for with cash, she drives her for about 5-7 years and then I will get it. Which is fine with me because she takes care of her cars. I don’t really care for driving so I don’t care which car brand I drive, I like the independence of driving but I don’t like the act of driving.

    Anyway I normally like to do everything online, but since I live in the mid-west then there are times when you do need a car. Also when I moved out of my parents house, I never got cable. I ended up getting Netflix and later on Amazon Prime. When I visited my parents I’d flip through the channels and quickly got bored, by that point I was used to watching without commercials and I was used to watching on my own schedule.

    Anyway my bf and I don’t mind living this way and we have toys too: 1 smartphone we share and we were the last of our friends to get one, a tablet, HD TV, blu-ray player and movies, our own computers so its not like we deprive ourselves, we still have our toys, but we save up for these things and they come after bills, savings, retirement accounts, etc.

    I suppose it helps to live in the mid-west where cost of living is lower than in other places. Anyway we are happy with how we are living and don’t apologize for it.

    • retirebyforty August 31, 2014, 9:43 am

      Thanks for sharing. We got a Mazda 5 for about $18,000 and we plan to drive it for at least 10 years. I like newer cars because of all the latest safety improvement. I think that’s necessary for our kid. We’re driving it for a long time anyway so the cost averages out. Luxury cars are nice, but the maintenance cost is so much more expensive than regular cars.
      Great job saving when you’re young. You’ll be far ahead of your peers in a few years. Good luck!

  • Josh August 30, 2014, 8:51 am

    Good advices, but for me, live frugally and save like crazy makes sense when someone’s young and building a financial buffer or doesn’t come from a wealthy background, which I don’t. I’m in my late 30s now and advocate gradual lifestyle inflation, albeit still within one’s means, as one gets older. I take a lot more vacations, dine out at nicer places more frequently, and live in a nicer house compared to a tiny apartment back in my 20s. I don’t consider it as keeping up with the Jones, but rather realizing everyone’s time is limited. No point in sacrificing financially most of life just to end up with multimillion at an old age only. It’s good to work hard and save, but equally important to spend adequately on things and experiences you genuinely enjoy spending on.

    • retirebyforty August 31, 2014, 9:47 am

      Living frugally when you’re young is the way to go. It will keep your level of spending low. As you get older, I agree that it’s nice to spend a bit more for comfort. If you start spending when you’re in your 20s, then you’ll likely spend even more when you’re in your 30s. It’s all about level setting. 🙂

  • Seth Sanders August 30, 2014, 9:27 am

    A lot of you sound as if you are around 40. I’d really appreciate some advice. My son is 39 and has several tech school and college degrees. He could make close to 100,000 buck a year if he’d work, but he won’t. Every time he gets a job he somehow, and he swears that it’s not his fault, gets fired within a few weeks. He still lives with us and we pay his living expenses. I don’t want him hurt, is there any way to get him to strike out on his own, or at least work, without being mean to him? Thanks very much.

    • Lila August 30, 2014, 5:39 pm

      At some point he needs to learn to stand on his own two feet. Sometimes jobs don’t work out because of bad bosses or bad co-workers, I’ve been there but those jobs have been a minority. I have a friend who would get fired from every job, he took 10 years to graduate college from and by then he had been through 50 jobs.

      He later admitted he gave up on his jobs easily, he was around 30/31 by the time he moved out and graduated with a bachelor’s degree. Since graduating he has steadily worked in the business world and for the past 3-4 years held a job with one company. Sometimes tough love is necessary, and that might require hurting his feelings for the short-term so he can be a strong and better person for the long-term.

      What about your own plans for life? I imagine that you can’t keep on paying for him forever, might you not want to retire one day? We don’t always have a choice of when we retire, many people are forced into retirement because of disability or corporate ageism or corporate downsizing. At 39 he really has got to learn to stand strong. What if something happens to you and your wife tomorrow? I don’t want to alarm you but it does happen.

      How would he support himself? I assure you that if for some reason something bad would happen to his parents, he would go out there and find a way to survive. Make a plan with him, find out what he liked and disliked from previous jobs. Find out which degrees and skills he wants to use and make a plan to have him out of the house in 6 months or less.

      I moved out in my mid-twenties, when my father laid down the law and said I need to be independent. Frankly I’m thankful now that it happened, I had been too afraid to be on my own previously, but now I’m on my own and I love it. I wouldn’t change it for anything. If he doesn’t like the working world…too bad, he must get out there and earn an income.

      Take him to the library and get him a library card if he doesn’t have one, introduce him to finance books and financial independence books. These books often teach that we can get ahead faster than we thought possible. You really need to do what my father did, he laid down the law and I was better off for it. He didn’t do it in a cruel way either, he was loving but firm.

  • debs August 30, 2014, 2:39 pm

    We’ve demonstrated that all the things on your list are what not to do. I’m a big believer now in tracking, saving 50%, ignoring the Joneses. It ain’t worth it. 😉

  • Dividend Diplomats August 31, 2014, 7:34 am

    Retire by 40,

    Great list, thanks for putting it together. It seems like the most important of your tips is to track you expenses. It can really help trim the fat and figure out what is your necessary spending and what can be eliminated. Unfortunately, that is not something I have been doing recently. I tried using mint.com but become frustrated when I found my self constantly reclassing all the expenses. I was going to track the expenses for the first time in September to see where I stand. It’ll be fun to track andshare my results with the community. Do you use an online program or do you just track the expenses manually in excel?

    Thanks again for sharing. These are 8 tips that can easily be implemented into anyones regular habits.

    Bert, One of the Dividend Diplomats

  • Myles Money September 1, 2014, 10:03 am

    Excellent advice. With the introduction of credit cards we seem to want the latest things *now* and we often forget about saving money while we push the payment down the line. Living within your means is definitely the way to go.

  • Syed September 1, 2014, 7:44 pm

    Rules to live by. It’s appalling to see the average savings rate in this country, but we don’t have to be average. I really think avoiding credit card debt is the key to it all. Too many people get into trouble with credit cards and the interest rates can simply crush you. Student loans and mortgages are not necessarily good, but you can leverage them (in the form of an education and a place to live), the interest rates usually are not too bad and you get a chance to get some tax deductions. No such benefits with credit card debt.

  • Cherry October 30, 2014, 7:06 pm

    Life will always have the makers and the takers. The makers will usually work hard and live reasonably within their means. The takers will usually not put the effort in and blame others for their “unfair bad luck”, then want the makers to pay for them in the name of “fairness”. The simple truth is everyone has a choice and if you choose to live below your means and save you will save. Period.

    Most will say they can’t live below their means because ..(insert excuse here). How many of these people that simply can’t save anything have I phones, computers, WIFI, new cars, big screen TV’s with cable, eat out all the time, etc.

    Of course they look at me like I’m crazy when I suggest they cut a $100+ a month cable bill. Or drive a car that is 3 years old. Or only fill up their tank from the cheapest place according to GasBuddy. Or get $25/month budget car insurance from Insurance Panda. Or cook their own food instead of spending a hundred a week on restaurant food (or far more if they like the bar).

    We make the beds we lie in. Be responsible for yourself.

  • Ayodele Oluseye March 10, 2016, 11:29 pm

    “Spending less than you make every month” is one of the points i argued here: http://www.nawesabi.com/live-within-your-means/ ..

    Ultimately, that might also mean “not spending close to what you make in a month” as individual battles with tough decisions as regard limiting his spending limit. Another known fact is that, when you try to set financial limit to yourself, logically, you can’t see beyond. Seeing beyond folds around being investment oriented and other benefits life has to offer us. Just having a different perspective of the entire topic though.

    I have lived way beyond my means all my life and maybe i need to state this fact. I tend to agree that it might not work for someone else though.

    • retirebyforty March 10, 2016, 11:53 pm

      I don’t disagree. “Spending less than you make” has two sides to it. You need to increase your income as well.
      Living beyond your means is simply spending more money than you make. You don’t need to overthink it.
      Taking risks to increase your income isn’t living beyond your means.

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