I was speaking to a girlfriend that was looking for advice on how to manage her finances better. She was proud to share that she had no debt, but when it came to savings, she had none.

Living Beyond Your Means

I know for some, this is a hard concept to grasp. We usually hear of people living in debt and with no savings. It seems like it’s one problem. However, having debt and having no savings is two problems; problem one is debt. Problem Two is the lack of saving.

This is the quintessential example of someone “living beyond their means.”

Living At Your Means

Someone living without debt but simultaneously without savings is a case of “living at their means” which is also a financial phenomenon of excess, mismanagement, poor record keeping or a combination of the three.

“Living at your means” is definitely financially more sound than “living beyond your means” but not that much better. There is no financial buffer to offset financial emergencies or to take advantage of an opportunity that would require an investment, a job change, or start-up capital.

The solution to both of these financially precarious situations is to “live below your means,” which means that you strive to save at least 20% of your income.

Here are four tips to help you move to a “living below your means” philosophy and lifestyle.

 Living Below Your Means

Automate your savings. Those that live at and above their means could easily live below their means if they automated their savings. When you automate your savings, you deduct a set amount of savings each and every pay period without you having to think about. When the money comes out, it goes directly into a savings account. If you have trouble with dipping into your savings, establish an online account that requires 48-72 hours before you can make withdrawals.

Think wealth. With a “living at your means,” mindset, you meet your current financial obligations and spend the rest. With a “living beyond your means,” you may meet some of your obligations, spend the rest, and then use credit cards to supplement even more spending.

Eliminate financial distractions. Financial distractions come in all shapes and sizes. Financial distractions include over-the-top friends with over-the-top spending habits that want to pressure you into debt and lifestyle inflation. It also comes in the form of email marketing. If you sign-up to sites like Gilt, Living Social, and Groupon, you will be more tempted to buy what you don’t need. Simple solution: unsubscribe.

Earn more money. One of the best ways to live below your means is to have a lot of “means,” assuming that you’ve incorporated the aforementioned tips to ensure that there is a big difference between the amount of money you spend and the amount of money that you save.

Sometimes the simplest solutions to savings are the most effective. If you use all four of these strategies, you will go from “living beyond your means” and “living at you means” to “living below your means.”

Frugal Feministas Family- How can you live below your means? What strategies can you share?