7 Reasons Why Living Below Your Means is Essential

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7 Reasons Why Living Below Your Means is Essential

“Living below your means” is the favorite and most used piece of advice given by financials experts. And it makes sense. In order to have long-term financial security, you can’t be spending more than you earn. You can find article after article online explaining the many ways to live below your means, but those resources often skip right over the many whys you should be frugal with your money. Here are the best seven benefits of living below your means that will help set you up for future financial success.

Less stress. If you are constantly trying to make ends meet because your spending habits are out of control, it adds an incredible amount of stress to your life. By living below your means, you will create a little wiggle room. You will be able to face financial emergencies when they come up and do so with much less stress than if you are strapped for cash.

Retire earlier. A 2014 study by Ernst & Young found that nearly 3 out of 5 middle-class Americans will outlive their retirement savings if they maintain their pre-retirement standard of living.[1] If that isn’t reason enough to live below your means and up your retirement savings, did you know that in 1991, the average retirement age was 57 years old? That average rose to right around 60 and stayed there for more than a decade, from 2002 to 2012, and in just two years, from 2012 to 2014, the average retiree age has jumped up to 62?[2] Retirees are getting older and older simply because their lifestyle makes it impossible to stop working.

Chase dreams. There’s nothing worse than having big dreams and forgoing them because you can’t afford it. While it might seem counterintuitive, this will be incredibly valuable, especially later in life. It kind of goes hand-in-hand with retirement. Wouldn’t it be a much more enjoyable time if, after a lifetime of living below your means, you could retire early, buy a yacht, and sail across the world instead of having to put that dream to bed because you can’t finance it?

Creates other streams of income. When you live below your means and diligently save, you will be able to utilize that money you’ve saved more wisely. You could pursue that painting passion of yours, or open up that high-end Poodle Mohawk styling boutique. Living below your means makes that saved cash work harder for you.

Gain a pride in ownership. Living below your means requires getting your hands dirty and learning how to do things. For your household, it could mean sewing missing buttons on yourself, making meatloaf from scratch instead of dining out, or weeding your very own flowerbed. You will gain a sense of pride and accomplishment the more you learn to do for yourself, and save some serious cash in doing so. That’s something you can’t put a price tag on.

Increases generosity. When you are constantly living above your means, you never have any funds available for giving. Giving and generosity are integral parts of the human experience. It not only helps the recipient, it also improves the happiness and wellbeing of the giver.

Practice contentment. Have you ever wanted something, immediately went out and purchased it, only to find two weeks later it was sitting unused, collecting dust in the back of your closet? This is an example of the complete opposite of being content. When you live below your means and deny yourself feelings of instant gratification, you begin to hone your own personal craft known as being content. Over time and with practice, it will spill into other areas of your life as well.

One final note: living below your means does not simply mean reducing your spending. It can also mean increasing your income and having multiple streams of cash coming into your home, but not spending every increased penny you earn.

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[1] PR Newswire (2014). Ernst & Young study finds most middle class retirees will outlive retirement savings. Retrieved from http://www.prnewswire.com/news-releases/ernst–young-study-finds-most-middle-class-retirees-will-outlive-retirement-savings-61363167.html

[2] Riffkin, R. (2014). Average U.S. retirement age rises to 62. Retrieved from http://www.gallup.com/poll/168707/average-retirement-age-rises.aspx

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