Last Updated on 17th January 2021 by Emma
How to live on a budget and actually enjoy it?
Some people say living on a tight budget sucks. I say you’re not doing it properly then.
I don’t mean that to be harsh but as a frugalista I get fed up of people belittling budgets and saving money.
Of course you can have a fabulous life on a budget, you just need a little help.
Let’s start by being clear what living on a budget actually means. Your budget is basically your plan to spend the money you have, and no more.
If you have a low income then your budget is less than someone who earns more.
When you go into debt, you are spending your future earnings because that is what you will have to use to pay your debt back.
If that is you, then you know you need to change. You cannot keep spending future money, you need to learn how to live on a budget.
I want to help you know how to live a fabulous life on a budget! Who wants to just live, when you can live fabulously?
Create a strict budget to live on
First things first, the purpose of a budget is so you know your bills are being paid and how much money you have to spend on things like groceries and fuel.
Creating a strict budget is exactly the same as creating a flush one. You need to allocate the money you have to your spending categories.
If the math doesn’t add up then you need to tweak until it does. The more extreme your budget the more tweaking you’ll likely need to do.
Allocate money to all your regular bills first, make sure irregular bills are covered by allocating money into separate sinking funds for them.
The last part of your budget is to set spending limits for your flexible spending categories. These include groceries, fuel, entertainment, fun, beauty treatments and the inevitable misc spending.
For more detailed help in creating your budget please read this post:
(This post contains affiliate links. If you click on a link and make a purchase, I may make a small commission at no extra cost to you. As an Amazon Associate I earn from qualifying purchases.You can read more here)
Fabulous Budget Living
The number one thing that can change your budget and your life is you.
Your mindset – how you view your money and your ability to budget your money.
Having the right mindset about your money, how you spend it, how far it goes and what you achieve with it makes for a great experience.
Focus on what you do have, not what others have got. When you look around you I know you will see others with more and you’re going to want that too.
But you are not them.
I want does not get
(This is a saying parents often repeat to their children – so annoying to hear as a child, so easy to say as a parent!)
When I was younger I desperately wanted to be thin.
All around me were pictures of models and famous people who looked fabulous because they were thin.
Did I become thin because of seeing everyone else’s thinness? Nope! I comfort ate, yo-yo dieted and never got to be a size zero.
Hankering after what you think others have – thinness or the unlimited ability to spend – doesn’t help you actually achieve them.
Follow your own money path.
Learn the art of saying no. Practice it daily.
Focusing on the positives within your life will change your mindset. Changing your mindset is hard, you don’t just click your fingers and BOOM! you’re there.
You will need to work at it.
You might like to read this: 11 Simple Things That Rich People Do (And So Can You)
Now we’ve got you working on getting your mindset in the right place, what practical steps can you take to start living on a budget and truly enjoying it?
25 Practical Steps For Living On A Budget
1. Create Life Goals
I am a great believer in goals. Short term goals, financial goals, life goals.
Your goals are what you want to achieve now, next year or further down the line. Maybe you want to be debt free, to give up your job, to have an exotic holiday?
One of my first big goals was to be mortgage free. It took us 10 years so not a short term goal.
But knowing that every penny I saved meant being mortgage free that much sooner was very motivating. It kept me focused.
Having real, tangible goals helps you focus your spending and saving. Keep them real and at the forefront of your mind.
When you’ve got your goals mapped out, reducing your budget and making the small daily changes to live on less is easier.
Your goals are your reason for your budget.
2. Prioritize Your Spending
If you are going to both learn how to live on a budget and save money (that’s two things) then understanding your spending and making good money decisions is key.
You need to know what you are spending your hard earned money on and prioritize where it goes.
No point spending $500 on groceries because you love food if that equates to 30% of your entire income.
To understand what you are spending your money on you need to track your spending. Writing down everything you spend is an eye opener. It can also be laborious I know.
3. Save before you spend
Achieving your savings goals is much easier when you move your money as soon as you are paid.
It’s way too tempting to check your balance and think you have more money than you really do so you loosen the grip on your spending a little and suddenly you’ve spent your savings for the month.
Set up an automated payment to leave your main account the day after you’re paid (always the day after as very, very occasionally employers pay late).
4. Make it a game
If you want to live fabulously on a budget you need to enjoy everything that your money does and does not do for you.
When my husband and I were living on one low income, we had very, very little spare money. And we lived like that for a long time.
Turning all our everyday money decisions into a game helped us not only live on a budget but enjoy it for however long it was going to take.
Cutting my grocery bill was a challenge I relished, switching off lights (constantly) didn’t annoy me, it made me happy because I knew by doing so I was saving money.
Of course I got annoyed with hubby/kids who left them on in the first place!
How to make it a game
- Challenge yourself to find new ways to cut your grocery spending
- See how wearing an extra layer can help with having your heating on less
- Change your heating controls so it’s on for 20 minutes less each day
- Make a point of trying to find ways to save a penny or two
- See how far you can go without breaking a dollar/pound note
- Start focusing on no spend days and see how many you can achieve each week
- Challenge yourself to have a homemade Christmas – all gifts to be made by you, nothing bought
- Find new ways to do things for free or very, very cheap
5. Get rid of debt
Debt costs you money every month in interest payments and lost saving opportunities. When you are looking at how to live on a budget, paying out for debt repayments is not helpful.
You want every penny of your paycheck to be working towards your goals, your savings and be available for your spending. $300 in debt payments is a big hole in your budget.
Your short term goals need to be to pay off debt as fast as possible, otherwise you’ll be living on an even tighter budget than your paycheck says.
6. Save Money By Re-skilling
Don’t outsource skills or jobs that you could do yourself.
With a bit of time and research you can take on all those jobs your grandparents used to, and more:
- Cut your own hair (YouTube different styles)
- Car oil change (use YouTube for tutorials)
- Window cleaning
For more inspiration on why learning some of your grandparents skills will help you save money, have a read of this post:
7. Stop Impulsive Purchases
These are never in your budget, yet very easy to do.
Buying impulsively when you are out and about because you’ve seen something that suddenly you must have is how you spend too much.
Moving away from impulse buying could be as simple as just not buying when you see something nice. Realistically though, you will need to change other things to reduce this spending.
Don’t go shopping as a form of leisure. Be strict with yourself and invoke a 72 hour pause or the 30 day rule.
If you see something you really like that wasn’t already a planned purchase, wait a minimum of 72 hours or 30 days.
Remember your goals – does this new thing fit with your goals or stop you from achieving them this month?
If it is still a want, and you have the money within your budget, then go buy it.
Be conscious of your spending decisions.
8. Have fun money
I believe everyone needs a little fun money in their lives. Even if it’s only $20. Fun money is your money to do with what you will, no guilt tripping.
Without fun money you are much more likely to resent living on a tight budget and end up having a spending splurge.
9. Reduce Utility Bills
Paying for gas and electricity are musts, but you don’t need to pay over the odds.
Dependent on where you live you may be able to switch to a cheaper supplier or haggle with your existing one.
Until recently this meant using comparison sites to find the best deal and organizing the switching yourself.
In the UK there is a fantastic new service called Look After My Bills that will automatically switch you to a new provider as your existing one becomes more expensive.
Not only is LAMB free to join, they keep checking the market and switch you again as your existing deal ends. So you know you will always be on the best deal.
More than switching suppliers though is your ability and your power to reduce those bills.
Not to zero, granted, but you could shave $10 a month or more by focusing on using less energy every day. You can:
- switch lights off
- turn your thermostat down
- take a shorter shower
- have a cold shower (I love them!)
- use your crockpot more, your main oven less
- unplug gadgets not in use
- wear an extra layer or two
These may not seem like big money savers. On their own they aren’t, but collectively they could save you $120 a year and they are also eco friendly.
These are productive steps you can take to reduce your bills and do your bit for the environment.
By doing so you are also building your new mindset. The mindset that will help you learn how to budget and save money every day.
For more help on reducing your utility bills and being more eco friendly check out these posts:
10. Cut streaming services
I’m going to go against the grain here and say I like cable and even when we were living on an extreme budget we still paid for cable.
However, it was the basic package on a deal I negotiated hard to get and it was our ONLY source of entertainment all month.
It’s not just cable that costs you money to watch TV, there are numerous streaming services now, all offering different films and box sets.
It might be nice to have the choice but cutting down to the bare minimum will save you money.
If you can watch TV for free (or don’t watch TV) then get rid of them all, if not then choose one package, negotiate with the provider to get a better deal and dump the rest.
11. use money saving apps
When you buy something you want to know you’ve got it for the best price. Money saving apps can help you know you’ve got the best price and earned some cash back at the same time.
And of course, always check to see if there is a discount code or coupon you can use, online or in store.
12. Don’t Start Out With Coupons
I’m not a big advocate of couponing when you are trying to lower your grocery budget.
Once you’ve achieved a reduction then by all means add couponing in (I have done).
But when starting out you want your focus to be on buying the right foods for the right meals for you. Coupons can easily send you off on a tangent of spending more to save more.
13. Save Big On Groceries
There is too much choice in the grocery stores now which actually makes it difficult to only spend a small amount on food.
You need to focus on specific areas in order to have a tight grocery budget. With so much choice it can be difficult to choose wisely and stick to your spending plan.
Focus on whole foods, not processed. Healthy foods can be cheap.
Whole grains, beans and pulses are healthy and cheap. Seasonal vegetables and fruit can all be part of your food plan.
This post will give you an excellent basis for your grocery budget:
14. Budget Meals
The price of homemade meals can vary enormously, just as restaurant food can.
Plan your meals based on ingredient cost and set at bar for the maximum you will pay for one meal.
When I was feeding a family of 4 my bar was set at £1 for the protein/meat element of a single meal.
For the 2 of us now my bar is £1.50-£2 but I do like to sneak in a few £1 protein meals to reduce our overall food cost.
Be creative with your meals, pad your meat out with extra veg, beans or pulses to reduce the cost.
Don’t be a slave to recipe amounts, especially on meat. If a recipe says 200g of protein per person, I always reduce it by half.
For great cheap and easy budget recipes check these posts:
15. Meal Planning
Meal planning is the best way to reduce your grocery bill and ensure you don’t waste any food. The. Best.
Some people aren’t keen on meal planning on the basis that they don’t always ‘feel’ like eating the planned meal.
You can deal with those thoughts 2 ways.
- Focus on the premise that food is fuel, ignore what you feel like having and have the planned meal or
- Stick to the weekly meal plan but switch up the days and have a meal planned for another day.
If meal planning is something you have never done or it feels a little overwhelming right now then the $5 meal plan is your savior.
For just $5 a month you not only get a weekly meal plan, you get a grocery list of all the ingredients you will need to make those meals, plus the recipe instructions.
That’s less than $1.20 a week to know you never need to grab a takeaway on your way home or visit the grocery store because you don’t know what to make for dinner.
No stress about planning meals and you save money by not wasting food and not eating out multiple times a week.
16. Don’t Waste Food
According to statistics, we waste up to 30% of the food we buy. Right there is your potential to cut 30% from your grocery budget immediately.
Don’t waste food!
Is that easier said than done? Maybe, but keeping that 30% in your mind will help you reduce waste for sure. Meal planning and sticking to it is a great start.
I’ve written in detail how you can reduce food waste in this post. I’ve created a free food waste audit that you can download.
I encourage you to complete it for 2 weeks. You could find it quite eye opening!
17. go generic
Don’t buy premium brands just because. Generic and value brands cost much less than premium and taste just fine in their own right.
I know that sometimes they taste different, but as I always said to my kids, different doesn’t mean bad, it just means different. And often that difference is better.
Have you seen how many times generic and value brands beat the premium versions in a blind taste test?
Premium brands cost more partly because the manufacturer needs to recoup all the advertising money they have spent trying to tell us their product is best!
Generic medicines are the same. In the UK generic paracetamol can be as little as 0.03p per tablet, whereas the branded version is 0.11p per tablet, That’s almost 400% more in price!
18. Reduce Your Clothing Budget
Clothes are a prime area for reducing spend on to help you in your quest to learn how to live on a budget successfully.
I bet right now you have enough clothes in your wardrobe to not have to buy another item for at least 2 years.
Cut your monthly expenditure on clothes right down and save that money instead.
I’m not saying don’t buy any clothes for 2 years but if you did, think of the money you would save in that time.
Makes you think doesn’t it?
19. Pinch a Penny
If you can pinch a penny and squeeze an extra dime out of every dollar then it all adds up.
- Saved a few cents by buying a dented can of tomatoes? Celebrate.
- Saved a dollar by buying your bread in a different store because it was cheaper? Celebrate.
Celebrate every penny pinched and dime saved, because they are what will help you learn how to live on a budget.
Big bills can be cut once or twice but it’s the sum of all the little things you do every day that will help you win with a tight budget.
And getting a sense of achievement out of every penny saved means you’ll enjoy every day.
20. Find Free Entertainment
You can pay a lot of money for entertainment. Yet look around a little and you’ll also find plenty of fun and free entertainment.
- Walk in the park
- Movie night
- Free events in your community
- Have friends round to dinner
- Fun at the beach
You certainly don’t need to forsake entertainment to live on a budget, just find the free alternatives or create your own.
21. Use Cash To Reduce Spending
I know you can get rewards and cash back if you use your credit cards for all your spending. And I know these rewards can add up quite nicely.
But to help your mindset, to help you learn how to live on a budget and be successful, I would encourage you to use cash for 2 months.
Cash for all those times when you would otherwise use your credit card.
I know from personal experience that I spend more money using credit cards than when I stick to cash.
Using cash makes you think harder about spending it, You have to hand it over to the cashier.
Your credit card isn’t real money in the moment, it’s just a bit of plastic. Only later when you get the bill does it become all too real, all too late.
For more help in getting started on using cash check out these posts:
22. Create Your Survival Budget
A survival budget is the tightest of budgets. It’s the budget you turn to when the sh*t hits the fan.
If you were suddenly faced with living on one income when you are used to two, a new spending budget would be essential.
Creating a survival budget will show you what you could and would give up if you HAD to. When your back is to the wall and the money isn’t there.
Having a survival budget provides reassurance for tough times.
But it also shows you that your normal budget, the one you are living on right now, is not so tight.
Your normal budget does have flexibility and extra in it, unlike your survival budget.
There is money for fun, clothes and entertainment when you plan it right.
This is what our survival and normal budgets looked like a few years ago:
We no longer have a mortgage so our budgets are different
I strongly encourage you to create your own survival budget, have a read of my post on how to do it. There is a free template you can download to help you create your own.
23. Find ways to make extra money
When you are trying to live on a low budget, combining money saving ideas with making more money can make a real difference to your finances.
And because you are all about stretching your money as far as it can go, you don’t need to earn thousands or spend every waking moment working to earn some extra dosh. Earning extra money is perfect for ring fencing it toward one of your financial goals.
For quick and short term ways to make some extra money read my post on how to make 300 dollars fast, I’ve included 30 different, legit, ways to make money.
More Ideas To Earn Extra Money
There are many work from home jobs that pay a good income when you commit to learning a new skill. These posts have some great ideas on money making hobbies and flexible work from home jobs:
24. Buy used
A brand new car loses almost 10% of it’s value as you drive it off the forecourt. It’s the same for tools, clothes and toys.
When you can pick up quality, second-hand items for up to 90% off their new price, why wouldn’t you buy them this way?
Some people might say, they like new things. But the moment you put on a new top, it’s no longer new. Used items are still new to you. And they cost significantly less.
My entire work wardrobe was made up of second-hand suits and blouses, I didn’t want to pay out big money just to go to work. Yet I needed to be suited and booted. So I bought used.
When you are in the market for a new item, do your research to find it used and marvel at the savings you make. Sites like Ebay, Craiglist, and Gumtree are good starting points.
Get to know your local thrift stores/charity shops for new to you quality clothing.
25. Homemade gifts
One of my best tips to love living on a budget is to make your own homemade gifts for Christmas and birthdays.
Christmas gifts can easily send you into an overspending spree yet people always appreciate the effort you put into the gifts you make so much more.
You don’t need to be crafty to crank out gorgeous looking gifts. If you did then I would have a problem because I am probably the least crafty person you will every know!
Gain inspiration from these posts:
How to Live On A Budget
Creating your financial and life goals, prioritizing your spending and really focusing on reducing costs are key to being successful in living a fabulous life on a budget.
Mastering these 25 practical steps will help you love living within your means and help you save money for those fantastic goals of yours.
Come and follow me on Pinterest for more money saving hints and frugal tips!