How to Successfully Live Within Your Means

SmartAsset Team   Sat, September 9, 2023

Have you ever wondered why some people seem to effortlessly manage their money despite earning a modest income? The answer probably lies in a financial strategy called “living within your means.” An essential part of personal finance, when mastered, can lead to long-term financial stability. This strategy essentially involves understanding your income, creating a budget and implementing strategic financial practices to spend less than you make. If you're struggling to save for retirement or invest in the right assets, consider working with a financial advisor.

What It Means to Live Within Your Means

Living within your means is a basic financial principle that involves creating a balance between your income and expenses so that you meet your financial responsibilities without resorting to taking on debt. Essentially your "means" is your income and living within that income puts you in the best financial position to handle the unexpected.

An individual’s ability to live within his or her means can be influenced by various factors, including income level, family size, cost of living and personal spending habits. For example, a high-income individual with no dependents living in a low-cost area may find it more comfortable to balance his or her budget than a low-income individual with a large family living in an expensive city.

Reasons You Should Live Within Your Means

Living within your means offers several compelling benefits. First, it can help reduce stress and anxiety. Numerous studies show that the majority of Americans feel stressed about money for at least some of the time. By living within your means, you can alleviate this anxiety, fostering better mental health and overall well-being.

Additionally, such a lifestyle ensures financial security. Many people struggle to deal with even the slightest emergency expense. Living within our means allows savings for emergencies and ultimately leads to freedom from fiscal worries. Having robust financial safeguards in place, like an emergency fund, are vital for unpredictable times.

Overall, living within your means gives the peace of mind and wherewithal to be protected no matter what may come your way.

Signs You Are Living Beyond Your Means

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