If we stay focused on the health of our financial future by being disciplined with taking care of what we need (which includes paying off debt and not accumulating more) and being patient with our wants in the here and now, once we reach our goal of financial independence we will have the financial means to not be in need of anything and have what we want! Also, keep in mind that the principle of living below our means doesn’t stop once we achieve our financial goals. Living below our means and the conditions in which we live are relative to one another. So, as our means grow, due to our diligent effort applied over time, so will our living conditions. Even the wealthiest among us live below their means. That’s how most of them have become wealthy and the reason that they stay wealthy. We’ve all heard the expression – money makes money! Well, it’s true, but it has to start somewhere and that somewhere starts by living below our means. It’s about instilling good, small money habits over a long period of time from living below our means through focus, discipline and patience.
Stop Overspending!
One of the biggest financial traps you can easily find yourself in is the trap of keeping up with the Joneses. By trying to keep up with the perceived lifestyle of others, you’ll undoubtedly end up overspending. Living below your means is the basis for financial freedom. Once you learn to live below your means, you can stop getting into debt, begin paying off any debt you currently have and start putting money aside for saving and investing. Not only is living below your means a cornerstone for financial freedom, but by living above your means you of course will have more debt and along with that comes having more stress and more worry.
Whenever you live at or above your means, an unexpected bill or expense becomes an added stress that should and could have been avoided if you were more careful with your spending habits. Life happens and those unexpected expenses will show up. The best way to help you to prepare for them is to get control over your spending. Living below your means will largely eliminate that worry by giving you control over your spending and allowing money to work for you instead of against you. By overspending you may have nice things, but when the nice things fade away, one thing is for sure…you won’t have any money when you need it most. By focusing on your money habits you’ll get yourself on the right track.
“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffet
Let’s face it! Every time you get some extra money, you get the urge to spend it. You get a pay raise, so you go and finance a new car! You get a bonus and you go on that exotic vacation! If you get an extra $5 in your pocket…you always find something you “want” to spend it on. There’s nothing wrong with treating yourself once in a while, but it’s when “once in a while” becomes a constant habit that it can become trouble. It’s common and only natural to satisfy the desire of your wants. It’s fun and it feels good for the moment, but when the moment is gone, you’re still left holding the bag of debts you owe, with the creditors knocking on your door every month.
If you’re going to give yourself a fighting chance at not having to worry about money and ultimately achieving financial freedom, this is where you have to separate your needs from your wants. A close and honest look at what are truly needs, verses what are just wants is crucial. Living below your means obviously doesn’t come without sacrifice and effort, but it is a necessary financial principle. There are also two key factors needed to help you to live below your means. One will be discipline, which is doing something you know you should do even when you don’t want to do it. And the other is patience, by not giving into the feeling of instantaneous gratification when it comes to having some extra spending cash. Developing your discipline and patients will put you on track for living below your means and set you up for financial success.
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