Take The “Living Below Your Means” Challenge

With three interest rate hikes last year and more expected from the Bank of Canada in 2019, “living within your means” might not be enough to safeguard against the increasingly high cost of borrowing.

Although the impact felt with ‘each’ interest rate increase was underwhelming, households will inevitably feel the financial impact of the collective rate hikes as they start to see their expenses climb. Homeowners need to prepare for possible increased mortgage payments, home buyers may need to save for a larger down payment to meet lender qualifications, and in general, consumers will need to be more aggressive with paying down high-interest debt.

To make sure you’re prepared for any unexpected costs this year, I challenge you to “live below your means” in 2019.


You probably have heard the saying “living within your means”. In simple terms, this means that you shouldn’t spend more money than you have or earn. When it comes to “living below your means”, the challenge is to shift your mindset from “living within your means” to thinking about doing more than just getting by.

Learning to live below your means requires you to focus on spending less than you earn with the goal of saving money and building a cushion of funds that you can rely on when costs increase. If you don’t know how or where to start, check out our helpful suggestions below.


Many people receive pay increases or raises either at the end of the year or at the beginning. If this happens, consider waiting to adjust your monthly budget to reflect this change in income. By not adjusting your budget, you will be living as you did in previous months while putting any extra income into savings. Even if it is only $100 more a month, this amount can still contribute to your financial goal, whether that be paying down debt, saving towards a down payment or retirement, or creating an emergency fund. Once you have established a good starting point for your financial goal, you can then adjust your budget to reflect your new income.

If you receive a bonus at some point throughout the year or received one at the end of last year, instead of spending it right away save your bonus in an emergency or contingency fund. If you accrued a lot of debt over the holidays, consider using your bonus to pay down your high-interest debt (e.g., credit card debt) to avoid potential added costs with an interest rate increase.


Whether you decide to live below your means or not, it’s always a good idea to start off the New Year by reviewing your budget and spending habits. If you keep a working monthly or yearly budget, check back to see if there are any areas where you overspent. Did you run over on your cellphone data? Did you dine out too much? If any overspending in your budget is apparent, challenge yourself to make a conscious effort to do better.

If you don’t have a budget that you follow, look at your credit card and bank statements from the past year. Calculate how much you spent on non-necessity items like entertainment, dining out, brand name clothing and alcohol. If you are surprised by the numbers, make a budget for each category this year and stick to it. You’d be surprised how quickly these expenses can add up and be turned into savings!


Once you have reviewed your spending habits, save money by cutting back on small, frivolous purchases. Trade in daily designer coffees for a travel mug of home-brewed. Limit the number of times you eat out throughout the week. Try meal prepping instead of buying your lunch. Shop the flyers to see which grocery store has the best deals and shop there for the week. Get rid of those cable channels you never watch. There are a lot of little ways to cut back spending without making a large impact on your daily life.

While you are looking at your statements, pay attention to expenses that automatically come off of your credit card or out of your bank account. These payments we often forget about because we aren’t entering our card number at every purchase. Ask yourself if your gym membership is worth the cost. Do you really need multiple TV and movie subscriptions? Did you really need to make that in-app or in-game purchase for your favourite app and video game? If there are any subscription-based payments that you feel you can cancel, try it out to save a little more money each month.


When finance professionals talk about a cash-only diet, they don’t necessarily mean cashing in your paycheque every two weeks and carrying around wads of cash. The cash-only method means only using the money that you have. Hold off on using your credit cards for a little while and only use your debit card and cash to make payments. When you’re only using debit or cash, you instantly see the money come out of your wallet or bank account. When you get rid of the “buy now pay later” mentality, it tends to make you think about your purchase decisions longer, meaning you may forgo more impulsive purchases than if you were using credit.


  • Increase your “means” to pay off debt or save more money by picking up a part-time job or a side gig, like babysitting or dog walking.
  • Reexamine your service providers like your auto insurance, your cell phone plan, and your bank to see if you can get better rates for similar service somewhere else.
  • Find free ways to enjoy the things you love. For example, try getting a library card. Most libraries have more than books, but movies, TV series, audiobooks and more. Many also host free events like movie nights and classes. If you don’t live close to a library, try swapping the above with friends or family members.
  • Buy second hand. If you are in need of new clothing or furniture, check out your local second-hand store before going straight to the mall. If you don’t find what you are looking for there, take it online and try Kijiji and Facebook Market Place.

Living paycheque to paycheque doesn’t have to be a permanent situation. Make 2019 the year you take control of your finances by living below your means. If you are living paycheque to paycheque and are still having difficulty paying your bills or are relying on credit to make ends meet, make 2019 the year you get help with your finances. By booking a free consultation with a Licensed Insolvency Trustee, we will assess your financial situation and discuss all the debt relief options available to you.

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