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How to Live Within Your Means and Be Happy

Updated on March 31, 2017

Tally It Up

If budgeting didn't seem like such a horrible chore, more people would probably live within their means.

Here are some proven tips on how to make budgeting really easy, effective and enjoyable.

Changing the Mindset

The word budget automatically means deprivation to most people. The thing about deprivation is that human beings are not very good at self-imposing it for any length of time.

Therefore it's really important to talk in terms of planning spending. Working out what we can spend, rather than what we cannot, is much more positive.

The second thing is to prioritize. Before asking yourself where you can cut costs, first take a look at where your money is currently going.

First Things First

How much do you spend on gasoline in one month? What do your kids' school lunches cost per year? Would it work out cheaper to buy the good dog food in bigger sacks, rather than the low-quality chow in smaller packages?

The only way to answer these kinds of questions is to keep track of your earnings and your spending.

If you note down everything you earn and spend this month, you'll have a good idea how much you'll need for next month. If you repeat the process for a few months, then your forecast for future spending will be pretty accurate.

How to Track Spending

There are many free apps, like iSpend on Android or Toshl on iPhone, that allow you to track your spending. You'll be able to collate your expenses under different categories, like housing, bills, healthcare, transport and so on, and see how they contrast with what you earn.

Alternatively, a spreadsheet – or simply a pen, a small notebook and a calculator – will do just fine.

ONE MONTH OF TRACKING - Let's start with your spending over one month. If you note down every single penny you earn and spend during 30 days, at the end, you'll have a whole bunch of small and large figures. What to do with them? To make sense of your expenses, each week, or at the end of the month, you need to quickly group them under headings. Once your spending is categorized, you should then calculate the totals.

To explain this another way, take a look at the categories below.

You'll probably find that your monthly costs fall under some of these basic headings:

INCOME (Wages, Grants, Benefits, Gifts)

SAVINGS (Pension Plans, Periodic Savings Plans, Investment Accounts)

HOME (Mortgage, Utility Bills, Maintenance or DYI, Council Tax, Furniture, Appliances)

TRANSPORT (Car Insurance, Car Maintenance, Gasoline, Parking, Public Transport)

GROCERIES (Food, Groceries, Household Items)

CLOTHING (Clothes, Shoes, Accessories, Jewellery)

SELF-CARE (Cosmetics, Hairdresser, Massages, Gym or Exercise Classes)

MEDICAL & HEALTH (Health or Dental Insurance, Prescriptions, Vitamins, Supplements, Optician, Dentist, Orthopedic Equipment)

ENTERTAINMENT (Eating Out, Cinema, Books, Magazines, Online or Cable TV, Subscriptions to services like Spotify, Audible)

CHILDREN (Clothing, Toys, Nappies, School Fees, School Bus, Classes and Clubs)

PETS (Vets, Food, Kennels, Taxes and Licenses)

DEBTS (Credit Cards, Loans, Unpaid Fines, Late Taxes or Social Security Payments, Money Borrowed from Friends or Family)

*TOP TIP*: On many smartphone apps and computer programs, you can just feed your figures in, assign categories and the work is done for you. At the end of the month, you'll see exactly where your money went. But it does not take that long to do by hand. Just us a pen, paper and a calculator – about 15 minutes per week, or about an hour each month.

What Next?

So what do we do once we've kept records for a certain length of time, and grouped our expenses into categories? Well, this is where we confront the reality of our spending in black and white, and begin to plan a better future.

How much did I spend on coffee? Does my grocery bill really come to that much? Would it be cheaper to swap my gas guzzling car for a smaller one, or take public transport?

Once you know what you are dealing with, it is so much easier to start crunching the numbers and looking for ways to move money around.

EXAMPLE: The goal should not be to merely cut money from, for instance, the grocery bill (=deprivation), but perhaps to shop smarter. How? Perhaps by always carrying a shopping list, instead of buying things willy-nilly? And then reassigning some of that excessive grocery spending to treat yourself to a much needed night out at the cinema (=planned spending and enjoyment).

When we take control and actually see where the green stuff is going, then it is much easier to divert it elsewhere, as needed. This kind of simple money management can be done with absolutely anything in your spending categories, including debt.

Watch out for the next article on credit card and payday loan debt cycles, and how to manage yourself out of them without too many tears.

Spending Plan to Get You Out of Debt


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    • John Holden profile image

      John Holden 4 years ago

      "It is an easy thing to triumph in the summer's sun

      And in the vintage and to sing on the waggon loaded with corn

      It is an easy thing to talk of patience to the afflicted

      To speak the laws of prudence to the homeless wanderer

      To listen to the hungry raven's cry in wintry season

      When the red blood is fill'd with wine and with the marrow of lambs "

      William Blake

    • sarahd profile image

      sarahd 4 years ago

      Thanks for the useful spreadsheet Johanna. The other good reason for living economically is that it tends to be more environmentally friendly. When I am feeling jealous of the fat cats I remind myself that by living more simply I have a smaller footprint on the earth. This can be spiritually satisfying.

    • Johanna Bergstrom profile image

      Johanna Bergstrom 4 years ago from Fuengirola, Malaga, Spain

      Thank you very much! I also liked your hub about family values. Spot on, in my opinion.

    • Johanna Bergstrom profile image

      Johanna Bergstrom 4 years ago from Fuengirola, Malaga, Spain

      Thank you! It's lovely to know you enjoyed the hub. And I LOVE your recipes! Wow! The sweetpotato recipe has gotta be tried ASAP...

    • Claudia Tello profile image

      Claudia Tello 4 years ago from Mexico

      I love your positive approach to budgeting. As you well say, sometimes stretching out our incomes is a matter of spending money in a smarter way.

    • stephanieb27 profile image

      stephanieb27 4 years ago from United States

      Great hub! I totally agree about changing the mindset! :)

    • patchofearth profile image

      patchofearth 4 years ago from somewhere in the appalachian foothills

      Your preaching to the choir here. I'm a big fan of budgeting. I think it is good that somebody is out there spreading the word. Nice work.

    • Michael Tully profile image

      Michael Tully 4 years ago

      I admire your psychological approach to budgeting. Thinking of it as "planned spending" rather than "deprivation" makes it easier to stay on a budget. As the old saying goes, you catch more flies with honey than with vinegar. Voted up, useful and interesting.

      Welcome to HubPages, Johanna, and thanks for following me! I look forward to reading more of your articles.