Yes, It Is Possible to Stop Living Above Your Means (Find Out How!)

Are you living above your means? It’s probably not something you intended to do.

It’s stressful to realize your spending habits aren’t allowing you to save up any extra money, or worse, slowly burying you in debt.

Awareness is the first step towards meeting your financial goals, so let’s talk more about living above your means and your financial habits. 

Why Should You Care if You’re Living Above Your Means?

For some people, living above their means isn’t even something on their radar. It can be particularly easy to overspend when people cash-flow their lifestyles relying solely on credit cards. Without repayment strategies for paying those cards off, they will be sure to land in credit card debt. Early on, it can seem like it’s no big deal. But, over time, it can snowball into a big problem.

As time progresses, many people who live above their means find themselves in endless cycles of whack-a-mole. They might keep up with bills that are owed but cannot afford unexpected expenses that come up, such as a major car repair.

Spending more money than you earn is also bad news for your long-term retirement plans. Ideally, you have enough money to save some each year. How much depends on many factors, and no one can tell you what your exact personal finance goals should be, but the goal is to save something. 

Eventually, once you have an emergency fund, you want that money earning compound interest, so it works for you. Saving like this is how you have spending power if and when it’s time to stop work (we’re talking a retirement savings plan here, we all know we want to retire someday).

When you’re living beyond your means, usually, high interest is working against you, often in the form of major credit card debt.

Instead of your bank account growing, even slowly, if you can only save a little, you’re helping those credit card companies get rich.  Wouldn’t you rather be building your wealth than theirs?

Living Above Your Means and Your Long Term Goals

Here’s another reason; many people don’t get to choose when they retire. For any number of reasons, people are forced to exit the labor force sooner than planned. The financial future that you are planning for yourself may be out of your hands!

Sometimes, you’re forced to exit the workforce due to health or long-term disability. Sometimes a family member’s health, such as a child or parent, requires you to adjust your professional plans. 

If you’ve been spending more than you earn and planning to deal with it later, you need to know that sometimes “later is now.”  Don’t let yourself get underwater when life happens.

What Living Above Your Means Looks Like

You might not even realize you’re living above your means. Many people who live above their means use a budget each month. They might even do an outstanding job of managing that monthly budget for all the necessities.  

Even though they are budgeting, they still always feel behind. An unexpected expense can set off a sequence of events that can take months or years to recover from. If you have a tight budget but have to borrow for emergencies, it’s a good sign you might be living above your means. A few small unexpected expenses might only take a short time to recover from, but you can take this as a warning sign that it might be time to cut back and work to save money.

Sometimes this is truly unavoidable, such as needing to survive while you’re unemployed. But, for most people, even those with less money, more focus on savings habits and learning to cut impulse spending, even small items, can be a first step to curbing overspending. 

As personal finance is … well… personal, do keep in mind, each experience is unique, and we’re all doing the best we can at the time.  

Money-Management Isn’t a Skill We’re Born With

People act like living beyond your means is something that only “poor” people do. The truth is, it affects people from all walks of life and levels of income.

A $100,000 a year salary or more doesn’t mean that people aren’t living paycheck-to-paycheck. Often, people who earn a lot of money simply spend a LOT of money. Though they may take home thousands of dollars every month, it doesn’t mean their financial life is any better than anyone else.

Is it Possible to Stop Living Above Your Means?

Most people can set an intention to begin living within their means, but intention is nothing without action, and it might seem hard to get started. 

Here are some of the building blocks to spend less, save more, and get your finances in order:

Create a Budget

The first step to saving money is to get your monthly expenses in order. There is no way that you will know if you have extra cash to plan to set aside for savings accounts, discretionary spending, or emergency savings if you don’t know how much you’ll have leftover at end-of-the-month. 

Build an Emergency Fund

To stay out of debt, you’ve got to be able to afford some of the unexpected expenses that come up. Once you have all of your basic living expenses covered per month, you should have a plan in place for the things that will come up that are out of your standard budget. That is your emergency fund.

Once you know your most essential expenses are covered, you should budget savings towards this fund. It’s your lifeline. Most estimates will say that you should have at least three to six months budgeted to your e-fund. 

Good Money Habits

Once you have a budget in order and have determined to build an emergency fund, it’s time to start thinking of ways to save money.  Live your life with intention! 

Especially while you’re in the early stages of your money-saving journey, you’ll want to spend less. That might mean cutting taking a deep dive, and looking at (and cutting) subscriptions you pay for (seriously, they can quickly add up). You should probably think about cutting down on dining out. 

You’re saving for your whole life here; how much do you really need to go out to eat? And, your clothes buying and other discretionary purchases should probably go minimal or take a pause.

Track Your Spending

Perhaps even more important than a budget, a good money habit is to learn to track your spending. A budget is great, but if you aren’t keeping track of the non-budget items you spend on, you have no idea where your money is going or why you are spending it.

There are various tools available, most for free, that can help you do this, such as Mint or Personal Capital, which have both desktop and mobile apps.

If you pay for YNAB (You Need a Budget), they offer these tools as well.

Congratulations For Taking the First Step to Manage Your Money!

Maybe you’ll be so excited by the amount of money you find that you can save when you know where it’s going and exactly why you’re choosing to spend it that you’ll become a frugal convert who loves to save more than you love to spend!  

While the goal is financial security, for many, once they see that it is quite possible for most of us to live within our means and save, you’ll set your sights on financial independence.

We all start somewhere! 

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Regina of That Frugal Pharmacist

Regina is a PharmD, mother to a son with cancer, breadwinning wife, personal finance enthusiast, artist, writer, entrepreneur, and co-founder of She encourages mindful spending, awareness of the non-monetary costs of choices, and aligning personal values with money habits. Regina sees a frugal lifestyle and mindset as an important part of environmental stewardship.

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