Living Below Your Means

Living below your means is one of the best things you can do to ensure that both your financial present and future are bright. But what does living below your means really mean?

Often, the common perception is that it equates to a life of denial so that “someday” when we’re old and gray we’ll be well off and able to let loose a little. But that isn’t the case at all.

I live way below my means, and I still drive a fun car, live in a comfortable house, travel a lot with my family, and have a pretty expensive hobby.

Now if you’re trying to make up for a past that was filled with living above your means, living below your means will probably involve some temporary denial, but even that is not necessarily the case.

Living below your means can be summed up very simply: spend less than you earn.

It doesn’t have anything to do with what you spend your money on — just how much of it you spend compared with how much of it you bring home and sock away.

The easiest way to get in the habit of living below your means is to do two things:

  1. Have some of your money automatically sent to retirement and savings with each check.
  2. Only spend money that you already have sitting in your bank account right now.

That last bit is where it’s easy to get caught out. You see, it’s tempting to see something you want (or need) and think, “Oh I can afford that, I’ll should have $300 left after I get paid on Friday. I’ll go ahead and get it now.”

But until you actually have that extra $300 sitting in your account, there’s no guarantee that you ever will.

Just ask someone who didn’t get the check they were expecting after all. Or someone who did get the check, but who ended up needing to pay a $500 deductible for a car accident instead. Or someone who signed up for an expensive car payment and then lost their job the next week.

You can’t count on things going as planned.

Spending money before you get it is a slippery slope. The only way to stay off it is to wait until you really do have the money.

You have to count on what you already have. Then when things do go wrong, you’re prepared. And when they go right, you’re ready to take advantage.

Living below your means takes a little bit of getting used to if you’re used to living above it, but it’s so worth it. Once you make the change to thinking about things differently, you start to feel really good about your financial situation. And before you know it, you’re enjoying living below your means — and reaping the benefits both now and later.


  • This is a good point. I used to do this all the time, think “I’ll have the money next week, so I’ll go purchase item A.” But when it came next week, I didn’t really have it since it went to paying bills. Now I plan on saving portions of income instead of spending it. That way something ends up in savings even if the amount wasn’t what was planned. Oh the joys of living on an erratic income. ;)

  • living below the means in probably the most important way to build up nest egg. I like the ideas

  • Excellent message, Jackie. People seem to think it’s all about denial when actually it’s just about being sensible. I live wayyyyy below my means and as miserable as that sounds, I really enjoy the fact that I’m taking control over my life and can see a noticeable difference in my net wealth every month. I do think a good defence is a good offence though…if we can generate extra ways of creating cash, this can have two benefits; we can spend more on having a good time, and you’ll be too busy to spend anything on doing anything anyway! :)

    • I’m all about making extra income from multiple sources, but I don’t think living way below your means sounds miserable — so long as your expenses are low.

  • Very true. We leave enough of a cushion in our checking account that we could pay every bill for at least a month without even missing a beat. That account gets no interest, but the peace of mind versus the paltry buck or two a month we might make is well worth it.

  • what a great post! living below your means has such a negative connotation that it’s sometimes difficult to get on board with the concept. i know it was for me. but now that i do live below my means, i find that i’m living better because i’m not stressed on how i’m going to pay at least the minimum on 5 credit cards every month.

  • Totally agree! We live below our means as well and have been saving the money in the process. Of course, from time to time, we love to reward ourselves so a little splurge should not hurt