What It Truly Means To Live Within Your Means

Updated: Aug 3

It sounds so easy, but arriving to that financial zen is much harder than people make it out to be.


Let’s face it: many of us are overspenders. When we talk about our money and UK’s current inflationary economic environment, spending too much doesn’t make things particularly easier for us.


We’ve heard the complaints over and over again: “petrol prices are crazy!”, or “I’m paying way too much rent right now”, or “why am I paying almost an entire pound for just one apple?”. In some instances, people offer some decent-sounding advice while others are more deaf to inflation and say “well, I guess I’d save money this year by not buying the next iPhone”.


Regardless of people’s ways to stay in control of their finances, there’s one simple budgeting-related phrase everyone should know:


“Live within your means”


The virtue is slightly puzzling – dare I say, a paradox: it’s so simple and simultaneously difficult. The phrase is nothing new, but barely anyone lives this way. Our theory at Otto Finance is that you, like most people, struggle to practically live within your means because you don’t know how to achieve it; Otto users, like (hopefully) yourself, however, aren’t like most people 😉.


So, why is living within your means so hard?

  • Payment systems’ ease of use: anyone can apply for loans, mortgages, car financing, etc. to create this falsely lavish lifestyle. Nowadays, almost anyone can live their dream. Only problem is that it’s unsustainable in the long term.

  • “Tap tap – cha-ching cha-ching”: contactless payments made it easier than ever to spend money and not even know how much you spent. Reflect on this: did you really look at how much that round of vodka redbulls cost last Saturday before you tapped your card to pay for it?

  • Too many accounts: there’s a myriad of payment options out there. It was just 20 years ago when people had to stress just about their checking and saving accounts. These days, the most ordinary people have five or more accounts that move money around. Remember that obscure challenger bank card you signed up for but barely use? Yeah. There’s excessive clutter.

How do you actually live within your means? Here’s the four-step process:

  1. Admit you’re spending more money than you’d like to and that you’re struggling to live within your means.

  2. Figure out what your monthly income is – all of it.

  3. Calculate where you are spending money and categorise it (by using the Otto dashboard, if you’re feeling extra savvy).

  4. Reinforce keeping an eye on expenses by tracking them. If you’re not bothered to make a budget, set a weekly spending target in your head. For example, allow yourself just £50 on lunch takeout per week.

We know what you’re thinking: “Living below your means is obvious” We here you. It is. Nonetheless, how to execute this well-known advice in practice is hidden in the darkness. The phrase, “living below your means”, underlines the tone deafness we hear in financial wellness. This deafness is especially relevant today – a time when everything is more expensive. Ultimately, we know that changing spending habits is easier said than done. That’s why Otto is here after all!