PhotoWe all know what “living above your means” is all about. It's “keeping up with the Jones,” buying a more expensive car, and owning a bigger house than you can really afford. It's a big reason consumers get in financial trouble.

So what is “living below your means” and how does that help?

The concept goes to the heart of lifestyle. The kind of lifestyle you lead will ultimately determine how much money you have left over at the end of the month. Bruce McClary, a vice-president at the National Foundation for Credit Counseling, says a big part of that is determined by how much debt you are willing to take on.

“It's really taking a step beyond most of the advice out there. Because even some of the advice from financial experts suggests it is acceptable to allocate up to 20% of your income toward your unsecured debt payments,” McClary said in an interview. “And maybe you can handle that, but on the other hand, if you keep your debt payments lower than that, then you're ahead of the game.”

Two areas where savings add up

A household that has a mortgage, a car payment, and credit card balances pays a lot of its monthly income toward debt service. But if you are willing to live in a more modest home than you might otherwise be able to afford, or drive a less expensive car, your monthly savings in those two areas alone could be several hundred dollars.

Diane Moogalian, Vice President, Customer Operations at Equifax, says it is also important to examine the little things – what she calls “C&C: coffee and convenience.”

“Visiting your favorite coffee shop every morning adds up quickly,” Moogalin told ConsumerAffairs. “And you may not realize by how much.”

Her advice? Consider making coffee at home and putting the money you would be spending at your favorite coffee shop into your emergency savings or rainy day funds. You could also do the same thing if you tend to eat out every day for lunch.

$2,600 a year for lunch

“If you work Monday through Friday and you’re spending roughly $10 for lunch, that amount adds up to approximately $2,600 a year,” Moogalin said.

Under the convenience category, she suggests looking at the expenses you have that aren’t absolutely mandatory. Do more things yourself instead of hiring someone to do them, for example.

“Sometimes just sitting down and listing out the dollars being spent on the conveniences in your life can help you determine what’s absolutely necessary,” she said.

How do you know if these steps are paying off? You'll know if you are able to maintain, and even increase, your level of monthly savings. Living below your means simply means you will usually have money left over at the end of the month.

Will you ever be able to treat yourself or your family, splurging on a special purchase or a vacation? Of course, because if you are truly living below your means, you'll have the money to pay for it and you won't have to put it on your credit card.

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