I want to leave this post up to readers to post their answers on what it means living within/below/above your means.
Also, what are these “means” for you that you have or strive for?
My view…
I think in general our society has gone from meeting the basic needs for survival such as shelter, food, water, clothing to turn it into luxury and status symbols. There isn’t anything wrong with that but have we crossed the line and now are striving primarily for our “wants” before our “needs”?
Example
Do we buy a car to get us from A to B or do we get a car because its got this and that feature?
Personal story…
For years I have been living or at least dreaming about living a life full of riches. By riches I mean what Donald Trump lives with the jets, expensive restaurants, big houses, boats, and sports cars.
It has all started crashing down on me and giving me a reality check that before wanting that, I need to have the basics. Furthermore, wanting all these luxuries requires cost to buy plus cost to maintain. And this is the biggest reality check I got in recent months.
Here are the things I used to do:
- Buy a used car and started modifying yet
- Went out often to eat
- Bought a car on credit
- Bought into get rich quick schemes
These things and others were things I would classify nice to have and the problem with that was I did not really understand the true cost of it all.
Now that I look back on it, I have completely changed my mindset and lifestyle and I live it as simple as I can.
- I sold my car and drive my parents car
- I donated all my books that I read and didn’t take any action on
- I donated some of my clothing I never wore
- I gave up going out to eat, instead I stay in and cook
- I gave up going out and instead go biking, a walk, to the park or hiking
- I gave up dressing nice and wear what is comfortable
Now I can fully understand and appreciate that being frugal is such a wonderful feeling because you actually feel there is value in what you have instead of buying stuff to just fill the void. Of course, one thing I want to mention is buying stuff sometimes works great for you because it motivates you to keep progressing towards your goals and working hard.
Back to my question, do you live below/within/above your means? And how do you define these means?
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Andrew
{ 6 comments… read them below or add one }
I remember listening to some guy call into a show — perhaps Dave Ramsey — and ask what it meant to “live below your means”. He and his significant other had different ideas about what that meant. She said that it meant being able to pay the bills, including minimums on credit cards. He said that it meant not having to get into debt in the first place.
You can probably guess who’s side I’m on! And personally, I think her attitude is what got so many people into such messes — thinking that they were o.k. since they were paying the bills, when really they were a paycheck away from disaster!
To me, living below your means being able to avoid going into debt — something that I admit I haven’t done in the past, though I continue to pay for those mistakes, quite literally. And it’s not just living without debt but paycheck to paycheck. If your car dies on you and you have to go into debt to fix it then you are no longer living within your means. If you retire into debt, you’re not living into your means. Therefore, you must live WELL BELOW what many would consider “your means” so that you can save for emergencies and retirement as well as take out insurance against devastating expenses that are often unavoidable or at least unplannable (e.g. cancer will easily wipe out most emergency funds, so you had better have health insurance!).
Meg from FruWiki’s last blog post..Experimentation
Meg, thanks for your comment.
That’s funny how people can think that living below your means is paying minimum on your credit card. It’s like hello, you have debt, how is that below your means?
I just think many of us have gone way up into the clouds.
Yes, insurance, health, savings and retirement should be considered very important priorities.
“Living within your means” is just another way to say “spending less than you earn.” Your “means” is your means for making money. Don’t live a life you can’t afford. According to that advice, it would be acceptable to get a loan to start a business or go to college, because it will increase your means of making money, via getting you a higher-paying job. That’s a bet on your future means, I should say. Sometimes it’s worth it. The gist of it is that you shouldn’t pretend you can live a rich man’s lifestyle when you are not a rich man.
I would enjoy a post about the get-rich-quick schemes you bought into.
Kris’s last blog post..Why You’re Not Productive
Tom,
I once heard the expression ‘living within one’s means’ described as living on eighty per cent of one’s family income, with the rest being donated or invested.
That definition seems good enough for me, and so it’s the one which I will go on for now.
For me personally, living costs in Korea are really cheap, even without being too frugal and enjoying a reasonable degree of comfort, so I am able to live below my means for now without sacrificing too much in terms of lifestyle.
But that will change quick smart when my current employment contract expires in August, after which time I anticipate that my expenses may exceed my income for awhile.
So for now, I am really trying to save as much as I can in prepration for the anticipated lean times ahead.
Andrew’s last blog post..Gekko is back – but is greed really good?
Kris, thanks for your comment.
It may be acceptable to get a business loan but do you really know how to manage that money and grow the business?
Or student loan, how long will it take you to repay that loan? Imagine yourself with 50K of debt when you graduate. Even if you get a job say making 100K, you still need to live on something.
I appreciate your suggestion on the get rich quick schemes, I will start drafting articles on that this week.
Andrew, thanks for your comment.
81% percent seems kind of high, at least for me but I guess everyone has a different view.
Personally, right now I live on 50% of my income and save the rest.
Are you heading back to the USA when you are done in Korea?