Living within your means is crucial to your well-being, but staying on budget doesn’t mean you have to deprive yourself of happiness. Here are five tips that can help you avoid overspending and keep you on track toward your financial goals—all while still having some fun.
1. Figure out what matters most to you
There’s no one-size-fits-all approach to living within your means. You can start building a strategy that works for you by thinking about your goals and what brings you happiness.
“What do you really care about?” says Brian Ford, head of financial wellness at Truist. “Write it down, and make sure you’re clear about what matters to you.”
Do experiences make you happier than material things? By tracking your spending, you may find that you’re paying more for things that are bringing you less joy. If you can reduce your spending on those items and create a budget that reflects your values, you have more money to spend on what you really love.
Ford recommends auditing any automatic payments—especially subscription services that you may have signed up for long ago. Feel like there’s never anything good on TV? By replacing cable with a less-expensive streaming service, you could have more discretionary money to spend on going out to eat—or something else you value.
“People tend to think that budgeting holds them back, but in reality, it can help you get more of what you want,” Ford says.
2. Create a social support system
Sharing your financial goals with friends or family members can inspire you and help you stay on track. Cheer each other on and come up with fun things to do together that won’t break your values-based budget.
“I encourage people to find other people who are doing what you value and hang out with them. Find out how they are saving and investing appropriately,” says Truist happiness expert Bright Dickson.
“One of the strongest reinforcers of change is other people,” she continues. “That’s why more people find success exercising in a group rather than on their own. Don’t be worried about ‘keeping up with the Joneses,’ but stay focused on those who are living the same values that you are.”
3. Reduce impulse buys
Half of Americans say they buy things they don’t really need.Disclosure 1 Anything you didn’t plan to buy counts as an impulse purchase—like a magazine at the checkout counter, the snacks that weren’t on your grocery list, or that sweater you bought after seeing an eye-catching ad online. The next time you find yourself about to make an impulse buy, think about the usefulness of the item. Is it worth the cost?
“We all want stuff,” Dickson says. “We have material wants as well as material needs. And sometimes we have difficulty with impulse control.”
Being mindful of what types of products, sales, or advertisements cause you to spend impulsively can help you resist the temptation. If you’re overwhelmed with targeted ads on social media, you can avoid the feed or use a filter to block advertising. When getting caught up in the moment at the store, pause and think about how this purchase aligns with your values-based budget.
4. Save incrementally, automatically, and with a purpose
Savings, no matter how small, can help guard against overdrawing your account. If your bank offers overdraft protection, enrolling will ensure that the money in your savings account covers depleted funds in your linked checking account. The more you can save, the more you’ll feel comfortable and confident with your finances.
Putting money away at the end of the month can be challenging if you’re living paycheck to paycheck. It can be equally daunting to think about trying to save a large amount of money.
So instead, think smaller and let your savings grow. If you get paid twice a month, could you afford $75 to be automatically transferred to your savings account instead of your checking account? If so, that’s about $1,800 (plus interest) you can save over the course of a year.
Check with your employer to see if your paycheck direct deposit can be split among multiple accounts. If they can’t do that, you can set up an automatic transfer from your checking account to your savings account to match your pay dates. You may find that you don’t even miss the money you’re putting into savings! It can also help to save with a tangible goal in mind, because it gives you a purpose and makes the effort seem more worthwhile.
5. Treat yourself
It’s important to remember that living within your means doesn’t mean that you have to deprive yourself of luxurious moments. Your mental health can benefit when you treat yourself. And if you’re making smart financial decisions, you should celebrate your wins. So it’s OK to have a nice meal out or buy that great outfit every now and then.
You can also be creative in terms of how you have fun. Instead of a night on the town with friends, how about a game night at someone’s house? Each person can bring something to eat or drink, and you’ll enjoy a fun evening at a fraction of the cost of going out.
How your financial decisions can change your outlook on life
As you start to make smarter financial decisions, you may find that it impacts your overall mental health.
“Not living within your means always means being in debt in some way,” Dickson notes. “And that’s stressful for us. Relieving that stress is super powerful, and you can do other things with that energy.”
For more help getting on the path toward better money habits, check out this collection of stories.