4 Steps to Start Living Within Your Means

Wondering how you’ll ever get to a point where you make enough money to feel a sense of financial freedom? If you’re currently living beyond your means, the truth is, you may never get to that point, regardless of your salary.

Although the pursuit of financial freedom can feel daunting—especially when you’re in debt—your problem isn’t so much about a lack of salary—but rather, an overabundance of lifestyle choices that your income can’t handle.

Think you’re not guilty? Check out 7 Signs You Are Living Beyond Your Means.

Then, start taking the steps to turn that ship around!

See what you’re really worth.

As anyone who has quickly shed 20 pounds on a fad diet only to gain it back later can attest, there are two ways to solve an undesirable situation: The first is the  “band aid approach.” Though it may yield quick results, it doesn’t “stick” when the going gets tough.

Common “band aid” money behaviors might include vowing never to go out to dinner again, or downloading coupon and savings apps with gusto one Sunday morning in a renewed commitment to budgeting—only to forget all about them while racking up a $30 happy hour bill later that week.

The other approach, produces less dramatic progress upfront, but digs deeper into changing your perceptions or attitudes, and in turn, lasting behavior when it comes to money.  To get started, swallow the hard pill of your reality.

Kathleen Burns Kingsbury, wealth psychology expert and author of How to Give Financial Advice to Women: Attracting and Retaining High-Net Worth Female Clients (to be released in September), says many people have to have a negative consequence, whether it’s unease, increased debt, or collection notices, in order to even begin considering real change.

Conducting a net worth analysis provides a sobering view of your own financial status—before disaster strikes.

To arrive at your net worth, add everything you own outright, including money in savings and retirement accounts, and equity (not the value of), your home. Next, total everything you owe, including car and mortgage payments, taxes, credit card bills, and student loans.

Subtract assets from debts to arrive at your net worth. If you’re living beyond your means, it’s a negative number. Regardless of your income, it means that essentially, you own nothing.

When you start living within your means, there’s nowhere to go, but up.

Remove the enablers.

When you live beyond your means you typically have no idea what living within (or beneath) them actually entails. Hold yourself to living on cash alone, for one month.

Not only will it help to instill habitual behavior (which takes about 21 days to do), you’ll experience the challenge of making your real income last throughout an entire billing cycle, without “crutches” like credit and debit cards.

Remember, any debts that you owe must be accounted for before you can consider any of your income expendable. Though you may feel frustrated with the limitations that cash-only living brings, you are forced to be more thoughtful in determining where your money goes.

Suddenly, impulse buys, lunches out, and even costs you may not actively consider, like fuel and mileage, take on a whole new meaning if spending carelessly means being stuck at the grocery checkout line without enough money.

Need trumps wants when you’ve got debt.

According to a Nielsen study, more than two out of three 25 to 34 year olds have a smartphone.

Interestingly, a Pew Research Center study conducted in the same time period indicates that 61% of adults in that age group have friends or family members who have moved back in with their parents over the past few years because of economic conditions.

Though skipping slick technology to stick with your non touch-screen computer or old-fashioned flip phone might not be what you want, it’s what you need when you are spending beyond your means.

Likewise, even the greatest clearance price isn’t saving you money when you don’t have the means to buy the item in the first place.

If your closet contains items you haven’t worn in over a year, old technology, books, or sporting goods, you’ve already got more than you need.

Focus your energy on clearing out the clutter, and possibly, selling it to a local vintage store, or on Craigslist, eBay, Amazon, or at a garage sale. If they’re not worth much, simply donate the items to charity and take the tax benefit.

Redefine your image of success.

The balance in your bank account or on your credit card statements isn’t exposed to the masses, but the car you drive, clothes you wear, and house in which you live are all blatant indicators (albeit false) of how “well” you’re doing; they make you vulnerable, and fully exposed for the world to judge.

If your own need to keep an image that is deemed acceptable by the world you know drives your spending, find a better role model.

According to the 2010 United States Census, one in three Americans owns their homes outright. By contrast, one in four Americans is raiding their retirement savings right now to pay monthly bills, according to a recent HelloWallet study.

Which group would you rather be a part of?

Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of Wellness On Less, she also writes on small business, consumer interest, wellness, career and personal finance topics.