How To Live Below Your Means in 2026

When you live beyond your means you’re spending more than you earn. That can lead to a vicious cycle of stress and debt that prevents you from living the life you want. 

By living below your means you can take back control of your budget. This ensures you can afford the stuff that’s important to you – whether that be a new house, a holiday of a lifetime or simply the peace of mind that comes from being debt-free. 

Signs you’re living beyond your means 

Chasing a certain lifestyle – often heavily influenced by what we see on TV and social media – can be one of the biggest reasons we end up spending beyond our means. 

But it’s not just about shopping habits. The cost of living crisis means that budgets are under pressure like never before.

Here are some signs that you have been living beyond your means: 

• You’re in debt 
• You’re not able to save enough each month to meet your savings goals 
• You have no emergency fund 

Once you have recognised you are living beyond your means, it’s important not to shame yourself for this. Look at the situation with a clear head and decide to formulate a plan to make key changes that will help. 

How to start living below your means 

It may take a few steps for you to make changes that help you to live below your means. These tips may be able to help. 

Adjust your money mindset 

If you have struggled to live within your means then it’s time to take a step back and change your attitude towards money and how your spend it – also known as your money mindset. 

Consider what your negative thoughts and feelings are towards money, your budget and spending. 

For example, you may resign yourself to never saving money because it feels too hard. Or you spend because it gives you that little rush – that’s definitely been a spending trigger for me.

This isn’t an exercise that should cause you to feel badly about yourself. It’s about trying to make a change for the better. 

A positive money mindset means: 

• You tackle problems, such as debts, with a clear plan 
• You’re aware of your spending and in control 
• You invest time in learning about personal finance so you understand how to manage your money 
• You have financial goals and create a plan to achieve them
• You’re prepared to act when you need to make tweaks to your financial habits
• You avoid spontaneous spending 

Create a budget and stick with it 

Your budget is a plan for how you will spend what you earn to ensure key expenses are covered and that you are saving for the future. 

If you are in debt this may feel daunting, but it’s important to take control of your situation. 

To form budget follow these steps: 

• Write down all your income. 
• Identify your monthly expenses – these are the bills such as energy bills and your rent or mortgage as well as any subscriptions. 
• Identify other areas of spending – this includes shopping, days out, meals out and takeaways. 
• Consider annual expenses, such as your car’s MOT and insurance renewal, and work out how much you need to set aside per month to cover those annual bills. 
• Think about your savings goals and how much you need to be setting aside to meet that. 
• Review places you can make savings. 
• Consider a budgeting system such as 50/30/20 – where 50% of your moneys goes on needs, 30% goes towards stuff you want and 20% goes into savings. 
• Try cash envelopes to stick with your budget – this involves dividing your weekly spending money for things like food and fuel into envelopes.

Pay off debts 

Being in debt can be really crippling and with some debts interest rates can spiral and really hold you back. 

Make a plan to pay off your debts as quickly as possible. 

Some people like to pay off the debts with the largest interest rate first, while the snowball method involves paying off your smallest loans first to help you build on your success.

A method that’s often promoted by Martin Lewis is to transfer your debt to a credit card with 0% interest. 

Have an emergency fund

An emergency fund is there to cover unexpected costs such as a broken boiler and home and car repairs, or a sudden drop in income. 

When you’re prepared for the unexpected then you won’t be diverging from your budget and risking an overspend. 

How much should be in your emergency fund? A good starting goal is a pot that covers three months of expenses. 

In order to get your emergency fund going figure out how much you can afford to set aside for it every month and work towards building up that pot. 

Prepare for inflation 

The cost of food and other goods and services have risen steeply in recent years.

For that reason it’s smart to plan for the stuff you need to buy to cost you more. 

Inflation – the term used to describe rising prices of food, goods and services – has been staggeringly high due to a number of global factors such as the post-pandemic recovery.

Even now inflation is slowing, ie the price of the stuff you need is not going up in price as quickly, it is still going up. That means you’ll find the cost of your supermarket shop will continue to rise. 

And the rise in inflation also has knock-on effects on other bills you need to pay, like petrol, broadband and insurance. 

So if a review of your budget reveals you do not have much wiggle room, find ways to provide some kind of buffer to allow for price increases. Consider every aspect of your budget, including train season tickets. 

You can also look at my frugal living tips for ideas on how to save on day-to-day expenses and these tips for saving money on your food shop.

Use up everything you buy 

Get the most out of food, cleaning supplies and household items by using up every last drop or bit that you can. 

A few tips for ensuring you get the most out of the stuff you buy: 

• Squeeze every last drop from a tube of toothpaste. Food bag clips can help you put pressure on the tube so that the toothpaste is squeeze out of the top. 
• Meal plan. Ensure you do not throw any food away by planning how to use it before its use by date. 
• Look for recipes that use up leftovers. There are tips for using up random ingredients in your kitchen here.

Get stock down to zero before spending 

Shop your kitchen and cupboards before you go to the supermarket to buy more. 

You can make this process easier on yourself by organising storage so that everything is put away by category and you know where to go to check stock. 

Always search for the best price 

Loyalty to particular shops and brands rarely pays off. Prices can vary wildly between retailers and businesses when it comes to all sorts of things. 

So seek out the best price in every area of your spending, from your regular broadband provider and the garage that fixes your car, to buying new essentials for school. 

Going secondhand with things such as clothes and shoes as well as toys can make a huge difference to your spending. Check out Vinted and Facebook Marketplace for great bargains. You’ll often find stuff that’s in brilliant condition and hardly used.  

Consider the cost per use when shopping 

Whenever I buy any new item of clothes I consider not just the price but also what value for money it will be giving me by working out the cost per use. 

For example: 

• A new pair of jeans may cost £50. I expect to wear those at least three times per week. Say those will last for at least two years (hopefully beyond), then I’ll wear then 312 times and the cost per wear is 16p. 

• A new going out dress may also cost £50. Based on how often I go out these days I may only wear this once every eight weeks. Then I may only wear it 12 times in two years and the cost per use is £4.16. 

Doing this when you’re looking to buy an outfit for a one-off event can be really useful as it may encourage you to shop secondhand to get a better price, or repurpose something you already own in your wardrobe. 

DIY where possible 

Doing your own tasks around the house can be a huge saving. I’ve found that our average bill for getting someone to the house to fix something is around £100. 

We’ve tried to use YouTube and tutorial sites to fix certain things around the house, saving us hundreds of pounds over the last few years. 

Make hay while the sun shines 

When you get a bonus from work or are having a particularly successful year with your business, it can be tempting to expand your spending on stuff you do not need. 

Try to avoid lifestyle creep and instead try to plough more money into savings in those successful months. 

This is especially important if you are self-employed like me, as you never know when a rainy day may come. 

Avoid impulse purchases

Buying stuff you do not need with money you do not have, or money that would serve you better in savings, is a recipe for disaster.

Putting an end to impulse purchasing can be easier said than done, because everywhere you look there are brands, influencers and ads pushing you to spend. Plus buying new stuff feels great in the moment!

Try these things to end your impulse purchasing habit:

• Make a wishlist. Instead of purchasing something as soon as you see it, add it to a wishlist. This could be a list on links in a note on your phone, saved as a bookmark on your browser or saved as screenshots in a folder on your smartphone. At the end of the month, review your wishlist and consider what you actually truly want and, most importantly, what fits into your budget.
• Add friction to the purchase process. Delete your saved credit or debit card details from your phone so that checking out online is harder to do in a split second.
• Distraction. When you find yourself tempted to spend, find a distraction that takes your attention away from the thing. This could be reading a book, going for a walk, working out, cleaning. Anything that gets your mind off the shopping. Make it a habit that you distract yourself every time there is a temptation.
• Have a treats budget. One of the reasons impulse purchasing can spiral out of control is that you may not have a budget in place. Being clear on what you can afford to spend each month on wants means you are allowed to buy some stuff you want, just not everything. This will encourage you to make careful decisions when picking out treats, so you get stuff you really want and will use.

Final thoughts

I hope this article has given you some ideas for how to adjust your budget and stick to a path that keeps your spending below your means.

You may also like these tips for how to stop spending money on clothes, how to save £10k and how to save money when it’s a struggle.