Many people live in poverty because they can’t afford to buy food, water and shelter. Poverty is also a result of living below your means. Living below your means is when you spend less than what you make.
Some of the unexpected benefits of living below your means are better work ethic, lower stress, improved health, and more quality time with your family.
Why is it important to live below your means?
You may achieve financial independence by living within your means. Being debt-free allows you to save more money for unanticipated expenditures or incidents like a job loss. It’s critical to start acting on your finances today by saving money, eliminating debt, and having some tranquility of mind. People that are living below their means have an opportunity for upward mobility.
This article will detail some of the unexpected benefits of living below your means.
Is Living Below Your Means Worth It?
It’s important to know living below your means is extremely beneficial. Living within your means allows you to get financial independence. Being debt-free allows you to save more money for unanticipated expenditures or occurrences such as a job loss. More than half of all Americans have less than 3 months of savings on hand as stated by a Bankrate survey.
There will be times living below your means is difficult, but it can improve your life. Improving your life is worth living below your means.
Frugality Can Improve Your Life
There’s one thing that’s guaranteed in life, living and dying. If you spend more money than you make, eventually you will run out of money. Living well below your means is a good way to ensure living for as long as possible. It takes time living below your means but it can work wonders for your happiness and well-being. Often, I don’t want to work anymore and want to stop. If you feel this way, practice frugality.
Top Unexpected Benefits of Living Below Your Means
Frugality and living stingy are key components of living below your means. To live within one’s means implies that your monthly expenses are less than or at least equal to your monthly revenue. It may be difficult for some individuals to understand. Credit cards, loans, savings accounts, and even emergency cash allow you to acquire more items than your earnings would otherwise allow.
There’s a lot of benefits living below your means provide, but here are some of the best benefits living below your means has to offer below.
1. You Will Have Smaller Bills
Living below your means can help you pay off debt, avoid getting in too much debt and reduce your living costs. If you’re already living below your means, then your monthly bills or expenses will be less because that’s a by-product of living frugal. Not only will you get a break on the front end, but you’ll also save in the long run by avoiding interest charges and late fees.
2. You’ll Have a Better Work Ethic
Having a better work ethic stems from living frugal. When you have less money, it makes sense to do everything in your power to make sure that every dollar has a clear purpose. You can use the financial order of operations method to help dictate funding. The best way to ensure that is by making the most of your current income and trying not to spend unless necessary.
As you get accustomed to this behavior, it will seep into other areas of your life. You’ll notice yourself doing everything possible to avoid wasting time or money on things that don’t matter as much or aren’t worth the price tag for the time/money invested.
You’ll find yourself being more productive at work and using your breaks wisely instead of hanging out with coworkers all day long just because everyone else does so too.
3. You Won’t Be as Stressed Out Everyday
Being stressed out all of the time has a negative effect on your health. It can lead to depression, heart problems and other issues. Some small business owners turn to personal credit to run their businesses. Living below your means can drastically reduce stress levels because you won’t be as worried about finances or lifestyle inflation if you’re managing them properly. You’ll learn to spend responsibly and not just for instant gratification or short-lived enjoyment benefits.
4. You Will Be More Self Confident
The confidence that comes from living with less will be apparent in every aspect of life. If you have less debt, you’ve effectively cleared away some noise that might otherwise have distracted you from who you are as an individual who’s pursuing their dreams. You can become more authentic instead of bogged down by pressures of paying off debt or bills (if those things exist).
5. You Won’t Get Jealous of Others’ Financial Status
When you have to struggle financially, it can be easy to envy other people who seemingly have more money, are living a keeping up with the Joneses lifestyle, or just have more resources than you. Frugality can help you get over this because living below your means is living within your means. You won’t have to live up to anyone else’s expectations and will be free of external motivations in order to achieve happiness from making financial progress.
6. It Puts Life into Perspective
You’ll find that living below your means almost makes some things trivial, like material goods or other things that aren’t worth the price tag attached to them. This helps build a mindset where you’re seeing more value in things like helping others or learning new skills for a possible career change rather than spending money on frivolous junk that doesn’t really matter in the grand scheme of things. It shows how small a lot of problems are compared to living frugal or living below a certain standard.
7. It Shows You How to Live More on Your Own Terms
Living below your means is a great way to show you how to live on your own terms. By living frugal, you’re making massive progress toward achieving goals. Those are important for building wealth and being happy, which most people don’t realize when they spend as much money as possible in order to achieve short-term happiness (which isn’t worth it because it fades away). Living on the cheap is a great way how to deal with lifestyle inflation in your lifestyle.
8. You Can Take Care of Yourself Better
If there’s ever an emergency or life situation where you need help from someone else, then you’ll be better able to take care of yourself if you’ve lived frugally. Should something go wrong in the future, like losing a job or getting injured, you’ll have a more positive outlook on life because of the benefits you’ve seen from living below your means. You won’t complain or live in stress as much about what went wrong because you know that things will work out (even if it takes time).
9. It Helps You Find Peace with Yourself
Living a frugal lifestyle has many unexpected benefits, including peace and happiness since there are fewer distractions or other factors to worry about when managing finances responsibly. Money worries are a cause for divorce for many young families. The less stress and anxiety you feel in life, the better off you will be long-term from a physical health standpoint.
10. You’ll Be More Likely to Make Family Memories
Family memories can be created without living on a massive budget, but living below your means helps because it puts less stress and anxiety into family life. You’ll be more likely to save for retirement if you want to retire early and won’t have as much financial pressure in order to do so.
11. Start Investing and Watch it Grow
If you’re living and budgeting paycheck-to-paycheck or are still paying off debt from credit cards or other sources of high interest rates, living below your means is the only way out of this trap that will keep you financially weak. It’s not an overnight fix by any stretch of the imagination, but living frugal can help make your debts go away over time since there aren’t any additional expenses that will require more money in order to afford.
Additionally, if you have a 401k, you can contribute to it. While there are 401k advantages and disadvantages for employees, having a retirement portfolio is important.
12. You Can Be More Generous with Others
One unexpected benefit of living frugal is how you can be more generous to others in order to make a positive difference in life. This could mean donating money to help those less fortunate or living in a modest home where there’s room for extra people who might need temporary shelter.
Being generous makes the world a better place, which is one of the most underrated benefits of living below your means and living debt-free! You’ll have more financial flexibility to lend help when it’s needed by others. If you use a basic college grocery list you can spend your savings elsewhere.
13. It Helps You Build Self-Discipline
Living frugal shows you that discipline comes from within. It doesn’t come as an award at the end when you’ve worked hard for something else in life such as a trophy or large paycheck. Disciplining your living expenses shows that financial living is a skill that you have developed over time, which can lead to more valuable traits living below your means.
How to Live Well Below Your Means
Knowing how to live well below your means may take some time to develop, but living in this way is rewarding. Living on less money and still achieving your goals shows you how to make the most out of life and reduces stress and anxiety. Sometimes, this isn’t possible because of certain circumstances, but it’s the goal everyone should work towards.
Below, there are a few steps necessary to live well below your means.
Keep Big Purchases to a Minimum
Keeping big purchases minimal means not buying anything that you don’t need to survive (including clothes, food and electronic equipment). If you can live without it, then avoid buying it. It’s better to save up for the things you want in life than to have a credit card with high interest rates or believe in living paycheck-to-paycheck.
Big Purchase Items to Avoid Purchasing:
- Cars: Cars are expensive to maintain and the older they get, the more you have to spend on repairs. If possible, save up for a cheaper model. Or rent a car through a rental company if you don’t travel a lot.
- Clothes: While it may be necessary to buy clothing from time-to-time, it’s going to cost you a lot more money if you buy only the best brands. Avoid purchasing name-brand clothing if possible and save up for quality staples instead.
- Food: Wondering is eating out a waste of money? Eating out every day isn’t a smart idea because your living expenses will go through the roof within a month or two. Instead, learn how to cook your own meals at home and you’ll be able to save more money for important things in life, such as paying down debt, saving or investing.
- Electronics: Technology is always improving and the newest model will almost always be more expensive than those that came out a year or two ago. Consider whether or not it’s worth purchasing something as soon as it’s released.
- Avoid Home Renovations: Big projects like renovating your kitchen or living room will put you in debt. Instead, choose simple home improvements that won’t cost much money to maintain (such as painting the walls).
Questioning whether or not you need to make big purchases or if you can live without them is an excellent way to live below your means.
Follow a Cash-Paying Mindset
If you follow a cash-paying mindset, you’ll be less likely to live on credit cards or ask for loans for large purchases (see what is progressive leasing). This is one of the best habits to get into because it teaches discipline about your finances.
Questions to ask yourself before making purchases:
- How much does it cost?
- Do I need it right now?
- Is there an alternative that doesn’t require payment (i.e. borrowing something or making a home improvement)?
Living in the moment only works when you’re thinking short-term about your finances. But sometimes, living in the moment can put you in a bad position when you’re unable to pay your living expenses or make a credit card payment on time.
What is the Easiest Way to Live Below Your Means?
If living below your means is something you want to do, it’s essential that you look for living expenses that have a high value but a low price. The easiest way to do this is by living in an affordable area.
This allows you to get more out of living below your means because there aren’t as many living expenses distracting you from building wealth or living healthier (low cost of living on groceries, less expensive health insurance).
Use a Living Below Your Means Calculator
An easy tool that is available online to help you figure living well below your means is a living below your means calculator. A simple formula would be:
living expenses / annual income
- living expenses (mortgage, living, groceries, utilities and transportation expenses) divided by your annual income.
- annual income could include side hustles such as a landscaping job or freelance writing on the side in addition to and full-time employment.
The living below your means calculator will help you figure out if living frugal is in your best interest.
Being able to use financial software such as Quicken is great for helping you get a better understanding of where your money is going. There are differences between Quicken vs. Quickbooks for personal finance management.
However, no matter which you choose, there will be less guesswork involved and living below your means can be easier if you’re looking at the cold, hard numbers.
You can also learn how to use Quickbooks for personal finance to make tracking money easy.
The Side Hustle Factor
If you’re going to live on a budget, it’s vital that you start right now., it’s essential that you have a way to bring in extra income if needed. You don’t want to be in a situation where you’re living frugal one month and then end up needing money the next month because you underestimated how much you were spending on necessities each month (eating out too expensive one month, etc).
This is when the side hustle comes into play – living below your means is much more powerful if you have a way to bring in extra income and create passive wealth that helps your living situation.
Living Below Your Means is Possible with Discipline
The biggest benefit of living below your means is that it’s possible to do with discipline around living frugally. You don’t have to use any coupons or other resources outside of what a human being can give themselves from living a healthy lifestyle.
Living this way is a great way how to build wealth from nothing fast. It takes time for money to build up in the bank when living this way, but if you’re patient with yourself, then living below your means will pay off in dividends before long.
Related Questions and FAQs:
What if my rent or mortgage is higher than my living expenses?
If living expenses are greater than your living situation, this could be a sign that you might have to move. Some living situations can be more expensive than others when it comes to living below your means and living cheaply. However, the costs of these living situations should never outweigh the benefits that come with living debt-free or living frugal.
If this is an option for you, look into moving and alternative cheap housing options in order to reduce some of these expenses while still being able to live comfortably within your budget. It’s worth considering if the long term value is greater than any short term problems associated with moving.
What are the cons of living above your means?
Living above your means is a huge problem because it will create large amounts of debt. Debt can cause you to be unhappy, dissatisfied and stressed out – not the emotions that anyone wants to feel. It’s true that money can’t buy happiness, but having no money or being in debt certainly won’t make you happy either.
What discipline is required when living below your means?
Living below your means requires discipline such as frugality and mod-cons. You need to be able to spend less than you earn so that you have savings for the future, as well as for emergencies. It’s a skill that can take some time to get used to but once it becomes habit, it will make life much easier because you won’t have financial problems anymore. There are ways how to improve your budgeting skills which will help with discipline.
Living below your means is the one thing that you can control in life and it can do wonders for your happiness, well-being and even self-confidence. If you’re struggling with debt, this is an excellent topic to explore because living below your means is one way to turn around a negative situation and make it better.