Living Below Your Means: The First Step to Wealth
Living Below Your Means: The First Step to Wealth
Written March 4, 2021 by One Frugal Girl
Ask a group of money nerds the best way to get rich, and you’ll likely receive a handful of juicy tips for building your nest egg. While new advice pops up on occasion, most financial gurus stick to a list of tried and true favorites. Living below your means is one such piece of financial advice.
What does it mean to live below your means, and can it really lead to greater wealth?
Living below your means is often defined as paying for all of your bills in full each month. Simply put, you spend less than you earn and never purchase more than you can afford. You can use credit cards to pay for your expenses, but you never need to carry a balance on them.
If you’ve never saved money before, living below your means will point you in the right financial direction. It can help you stop living paycheck-to-paycheck and help you focus on long-term goals.
Living Below Your Means Won’t Generate Significant Wealth.
In theory, this may sound like the ticket to wealth, but unfortunately, it doesn’t always work. If you make a lot of money, living below your means is an easy way to build assets. If you don’t, it could be downright impossible.
When we focus on living below our means, we typically think about decreasing expenses and cutting costs. The trouble is you can only trim so much. If you don’t earn a decent wage, you can’t save a significant portion of it.
Without a sufficient financial support system, many hard-working individuals and families cannot save a considerable portion of their income.
Living below your means often emphasizes a lack of spending, but income is just as important, if not more important than cutting costs. After all, it’s a whole lot easier to earn $100,000 a year and spend less than $75,000 than it is to make $50,000 a year and live off of $30,000.
Living Far Below Your Means
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