April 20, 2014
Learning to live below your means is a critical step toward financial freedom. What can stop you? What can help you?
Learning to live below your means is a critical step toward financial freedom. What can stop you? What can help you?
A major reason someone will live above their means if they are trying to act rich, they want to show off to everyone how awesome they think they are, they may buy a new expensive car and buy a new bigger better house that they cant afford, they would likely buy all the new clothes that are brand name that look the same as all other clothes but cost more. If you let go of the need for all of this stuff in your life you will be much happier, you can either act rich or be rich. If you save your money and dont spend more than what you make you will be on your way to being financially free. Credit cards are the main way someone can live above their means, make sure you pay off your credit card bill every month in full.
Living below your means is a critical step toward financial freedom because it means you will be rich instead of appearing rich. Things that can help you live below your means is being comfortable in your own skin and not needing materialistic items. Things that can stop you from financial freedom are things like advertising and how they can suck you in with famous people and sales. Also not tracking your money can affect you. Something that can help you in the 30 day rule if you want something don’t buy it for 30 days and think about if you actually want it. Most likely if it’s not important you will forget about it. Also you don’t need a brand new car to drive around, you should buy a car you can pay for with cash and drive it until it’s wheels fall off. Creating a budget for your “weakness” will allow you to still spend money on that but once you reach your budget your done for that month.
Well said, Garrett and Nicole. You both provided plenty of great information on the topic. Let’s review.
Let’s assume for the sake of argument, that there are two reasons folks live beyond their means. Garrett and Nicole clearly highlighted one. Materialism. If an individual puts a great deal of focus on obtaining the latest and greatest “thing,” they will always be lacking (they are stuck on the hedonic treadmill) and this will cause them to spend every dime they have. They will not be able to save because “they can’t afford it.” You and I know that is not true, but in their mind, it is and that is one reason folks fail to live below their means. They must detach themselves from “stuff” if they hope to find the freedom that escapes them.
Another method is really quite innocent. They are clueless (this applied to me once upon a time). They have never taken the time to understand the world of money and how to make it work for them instead of the other way around.
Here is one example. The person doesn’t understand that just because they make $3,000 a month for example, they cannot spend $3,000 a month. Taxes are ignored and this means they will go into debt without any intent at all. This same person does not understand the idea of paying themselves first, before the spending. They try to pay themselves last after the spending. It doesn’t work. They end up floundering their way through life, little by little, picking up the debt that comes with living above a person’s means. While the mistake is innocent, the results are not. There are answers to these difficult problems.
What can help you? The answers can be found in the words you just read. Start with the belief that you can become a financially educated person. Believe in yourself. Next, educate yourself from the many wise teachers (Eric Tyson, Jane Bryant Quinn, John Bogle), while avoiding the salespeople (investment brokers, financial advisors, life insurance agents) who bring a conflict of interest with them. Finally, take action with what you have learned. Financial freedom will follow like a shadow on a beautiful sunny day. It comes down to a simple sentence. YOU are the answer!