The idea of living well on a budget might seem counterintuitive or even impossible. After all, if you’re consciously trying to spend less, how could that possibly equate to a higher quality of life? Living within the dreaded “B” word doesn’t have to be extreme or austere.
In fact, it can be exciting to figure out how to live well while keeping expenses at a minimum. With the flexibility and resourcefulness needed to make this frugal lifestyle enjoyable, you’ll have plenty of chances to work at creative problem solving, which can be both fun and challenging.
If you’re not sure that you can live well while spending less, here are some tips that can get you started on the journey.
Create a Budget
To live well on a budget, you have to actually have a budget! Remember, a budget is not so much restriction as it is direction for your money. If you know you’d like to take that epic vacation you’ve always wanted, think about how you can trim expenses in other areas so you can save money towards your goal.
A budget is a list of common household expenses usually tracked every month. An effective budget places an upper limit on expenses so you can use the extra money for other priorities. If you set your grocery budget at $250 per month, you’ll want to stick with that so you can have money for things you really enjoy, such as travel or recreation.
Again, this part tends to scare people, but it doesn’t have to. You can pare your expenses down to a level that you are comfortable with. Perhaps you are not ready to cut down your grocery bill because you enjoy cooking gourmet-type food dishes.
It also doesn’t hurt to look at “boring” bills like insurance or utilities. With just a few minutes of your time, you can shop around for lower rates and find discounts you may not have known about before. Ask about discounts for such professions as teacher or policeman and other such titles as veteran or senior.
Other options include appealing your property taxes or refinancing your home or other loan obligations. There are many ways to bring your expenses down so you can live happily even on a budget. The internet has a plethora of information on cutting costs and reducing household expenses. A quick “cut costs” search will yield hundreds of ideas.
If, alas, you’ve cut back on your expenses as much as possible, another option is to add extra income to your bottom line. You can participate in the gig economy, get a part-time job, or explore some small business pursuits. You might have some hobbies, skills, or experience that you can monetize. With sites like Fiverr.com and Upwork.com, you can create a talent profile and begin attracting clients in little to no time.
With the extra income each month, you’d have more options without cutting expenses drastically or taking on additional work you may not be able to handle.
Another consideration is to supplement your income with a reverse mortgage. A reverse mortgage or home equity conversion mortgage (HECM) could convert your home’s equity to consistent monthly payments made directly to you. With this loan, you can also free up cash flow each month by eliminating your monthly mortgage payment. Keep in mind, you will still need to pay your homeowners insurance, property taxes, and home maintenance costs.
When it comes to budgeting and making any financial decision, we recommend speaking to a financial advisor.
Aja McClanahan is a freelance writer and owner of www.principlesofincrease.com/.