Moving into your first apartment is big. It’s huge! A life milestone you’ll never forget. Living in your first place can make you feel like a real adult: independent, savvy, and ready to take on the world. The only problem? Wanting to live bigger and better than your Instagram peers can lead you to trouble financially. A lesson I learned early on is to live “beneath your means,” meaning that just because you technically could afford to do something or buy something, doesn’t mean you should.
It’s easy to feel pressured to have the latest and greatest of everything, and advertisers are quick to help you get there. Credit cards that offer rewards (see, you’re making money! …not), commercials featuring peers your age driving sports cars, advertisements of millennials’ perfectly-decorated city apartments… you’re surrounded with the idea that the best-of-the-best should be attainable, no matter what.
Buying in to those ideas is also easy. Splurging on a fancy dinner and drinks with co-workers and booking a cross-country trip to catch up with friends can quickly lead to living “above your means”… meaning you’re living a lifestyle that your paycheck can’t keep up with.
This is not to say that a splurge here and there isn’t allowed. Of course, enjoy the fruits of your 9-5 and side hustles. But, by keeping your habits in check, you can avoid the long-term dangers of damaged credit and mismanaged expectations.
The good news: Living beneath your means isn’t hard.
A couple of quick and thoughtful afternoons in front of an Excel spreadsheet can get you moving in the right direction with a simple budget plan. (You can see my fellow blogger Christa’s actual spreadsheet here.) After calculating your standard bills, take your remaining income and cut it in half. Half should go straight to a savings account or investment account. Your first goal should be to have at least six-months of your bills saved up as a “Just In Case” fund. After that, you’ll start accumulating savings for longer term goals, such as buying your own home.
The other half? That’s your fun money! Go out to lunch, invest in the new laptop to start your blogging business, or take that trip. But, stick to your budget and don’t let yourself spend over the number you pre-determined. By budgeting it out, you can easily start to see where “your means” are and stay beneath them.
Remember, you do this for yourself, nobody else. Your friends may have different salaries than you, different support from family, different sources of income, or different monthly bills. Don’t compare yourself, your timing, your things, to theirs.
Instead of spending and spending, get creative. Host friends-nights in, scour thrift shops for the decorative knick-knack look you saw on your favorite designer’s social media ad, and focus on piling away money like it’s your favorite hobby. And if you get off the track, instead of opening another credit card, take a month or two to monitor your finances. Make focused payments on any outstanding debts, limit spending, and get yourself back on track. It may mean saying “Not now” to friends and family that want to take an expensive trip or night out, but your financial security is much more valuable.
Living beneath your means takes consistent attention. A raise at work should mean more money towards savings. Over-spending one month should mean under-spending the next. Stay focused and build your own financial security…true adulting.