Living Below Your Means Can Build Wealth

As JL Collins would say, “spend less than you earn.” There are two ways to make more wealth. First, you can make more money and play offense with your finances, and secondly, you need to cut costs and play defense. That is where living below you means comes into play.

What is Living Below Your Means?

Living below your means is when you spend less than you earn. So if you make about $3000 per month and pay only $2000, you live below your means.

Lifestyle creep is when you start to spend at the level of your income. When we increase our incomes, sometimes we begin to grow our spendings and stop living within our means. 

What is Lifestyle Creep?

Living below your means can provide excellent value to your life. Not only can it help you build wealth, but it can offer other great benefits to your life as well. You are able to make long-term goals like saving for retirement or even being able to manage your money every month.

Why is Living Below Your Means Important?

Less Stress

If you live a frugal life and live below your means, you will have a financial plan and a cushion in times of trouble. The sudden loss of a job will not create unneeded stress. You will then be able to save money instead of spending money

Create Greater Bonds with People

Living below your means can help to strengthen your relationships. These can be relationships with your partner, family, and friends. We can be more generous with our money as well. 

As we live below our means, we can hit our financial goals quicker. The difference of saving an extra 5-10% of your income can be a difference of years to hit our financial goals. A reasonable savings rate can go a long way. 

Hitting Our Financial Goals

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