The 5 Steps to Living Within Your Means — and Being Happy About It

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Heather K Adams734
Content + Copy Writer
June 12, 2024 at 5:35PM UTC
The world is full of advertisements and temptations:
"Buy this and feel better."
"Take a trip here and be happier."
"Wear this and be beautiful."
Being surrounded by endless messages like this, especially via the carefully-curated social media feeds of influencers and brand spokespersons, means at least some of these messages of false hope are going to take root. Which means that when you're having a bad day and looking for something, anything, to make you feel better, the urge to reach for your wallet is that much harder to fight.
Today more than ever, it's important to understand your needs versus your wants, manage your impulses and maintain a healthy internal mindset. Because living within your means is all about knowing how to budget: your money and yourself.

What is living within your means?

We all want to live well, attaining not just career goals but also living comfortably along the way. What does that mean? Most of us can agree on the basic factors: a home that's safe and suits our needs, food in the pantry, clothes on our backs and a little cash squirreled away for both emergencies and fun. But when it comes to living within our means — not spending more than we earn — most of us could do with a little more vigilance. Because "luxury" items will always beckon, and the urge to splurge (hello, holidays!) tends to sneak up on you. Extravagant spending, no matter how you try to justify each purchase, is a quick way to credit doom and financial serfdom. It can also be a sign of unhappiness.
Real talk here. Look at how you spend your money. Ask yourself, "Did I really need a new pair of pants, or was I feeling sad/mad/bad about something? Do I use shopping as a distraction from those feelings?" So much of our impulse spending can be in avoidance of some other need, or wound. Much like eating your feelings, it might feel good for a minute, but in the end? That habit can really weigh you down.
Living beyond your means is an easy habit to fall into. Your little splurges can be as small as a daily drive-thru snack, a little "treat" to get you through another day at that job you actually hate. But snacks aren't going to make your job any better, are they?
Listen, living within your means isn't just about balancing your bank account or improving your credit score. We totally want that kind of financial stability for you, but more than that, we want to show you that living within your means needs to be about your emotional well being as well. It's a way to take your psychological pulse by cultivating an awareness of your spending habits, impulses, patterns and cycles. Because sure, a new pair of boots for winter is an easily justifiable expense. But being able to buy a pair within your budget and only because you really need it? To be happy only spending a little? That's just... so much better for you.

5 steps to living within your means.

1. Know what you're working with.

Your first step is getting an idea of the real bottom line: the bills and expenses you have every month. Rent or mortgage, auto loan, household utilities, phone and groceries. And then go ahead and add on the gym, the streaming service accounts and that daily cup of joe. Once you have this list, divide it into essential and nonessential expenses. Then hold on to it. We'll come back to it.

2. Keep a money log and journal.

Knowing, bare-bones, what money comes in and how much goes out in any given period is essential. For the purpose of creating a general budget, a month is the ideal amount of time to track. That's long enough for you to get a clear picture of your spending habits. There's nothing complicated about this part either: two columns, one "+" and one "-," are all you need to see the stark reality of your cash flow. Just be totally honest about every penny you spend. Keeping a daily journal means you need to write about what you bought and what you were feeling when you did. Why did you even go into the store? What did you "need," and what did you actually buy? How were you feeling, before, during and after, and how are you feeling now?

3. Note patterns and triggers.

"Shopping therapy" is an unfortunate phrase. Therapy is a process, a way in which you deal with emotional and psychological concerns by means of hard work and persistence, with a bit of help from a trained professional. That clarity and resolution won't be achieved with the swipe of a credit card. And that salesperson is not there to help you work through your feels. So, it's up to you to divorce yourself from the quick-flush pleasure of new ownership, to recognize that pretty things might be nice to own, but they can cost you more than what's on the sales tag. So, if you're attempting to "deal" with (read: avoid) your emotions by way of buying things, then you're neither living within your means nor, let's face it, probably very happy. So take note of when you buy and how you feel when you do. Get the big picture in focus here.

4. Do the work!

Ouchy, but super necessary: you need to unpack the little boxes at the back of your psychological closet. You know, the ones you keep piling new shoes on top of? Seeing on the page exactly how you were feeling when you went into that shopping frenzy should help you start popping off lids and looking at what's inside. Continue journaling, addressing each issue and its underlying causes and emotions. If you're ready to do the work but need help, go ahead and consult a professional. Once you're ready to find happiness on your own and not in a shopping bag, an actual therapist is a good idea. And while therapy might cost you, yes, a bit of money, it's a much sounder investment than yet another set of flatware.

5. Create a budget and plan to move forward.

Remember that list of essential/nonessential expenses? Look at it again. By now you should be able to recognize what you really need and what you only ever bought or justified to help you get through your day. Are you surprised by what you want to list as nonessential now? Are you surprised by how easy it is? Good! Your goal here was to untie yourself from the idea that things equal happiness, in order to avoid the inevitable thought that more and newer things equal even more happiness. 
Knowing what you really need to spend money on and how much you actually have to spend, are the very basic elements of learning to live within your means. Those two things make creating a budget quite easy. Managing your emotional well-being, rather than reaching for your wallet when you're upset, makes actually sticking to your budget easy as well. You'll never keep to any money plan if you don't understand why you've been sabotaging yourself up to this point. 
If you want to curtail your spending and build up a savings account, you have to understand what makes you throw things into a cart until the sad goes away. That takes work, time and determination. But you know what? Living within your means — learning to budget and take care of yourself — is totally worth the effort. And you can definitely get there.

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