This is a term that is often used when making reference to people making money and becoming wealthy. They live below their means, in other words they’re spending less money than they potentially could. Until I started reading all the personal finance blogs this term made sense to me but I really didn’t understand it. What does living below your means actually mean?
For me living below your means really translates to spending less money than I have in my youth. Living below your means is driving the same car for years, till it dies or you really need to replace it. It means cooking dinner at home and only pulling out your wallet when you really need to spend money on something instead of every time you simply want something. It also means doing all of the little things to save some money like going to the library, renting movies rather than going to the theater to see them.
I guess the big question is do I live below my means? I think the answer is finally starting to be yes. When I stared making money I started spending it as fast as possible, including credit cards. I know what it meant to live beyond your means; my debt increased and in the end I really had nothing to show for it. I’ve stopped hemorrhaging money, figured out where I’m spending all of it and brought all of that under some control. I am starting to live below my means and I finally understand what that means. It’s a very hard process to go from living beyond your means to controlling your spending to the point where you’re actually living on less than you make.
[tags]personal finance, living below your means, money, spending, debt[/tags]