WHY SHOULD ONE LIVE BELOW ONCE MEANS?
The idea or concept of living below once means advocates that individuals make sacrifices and work really hard on keeping their spending levels down, in order to free up resources that can be used to create wealth in the future. One is constantly looking for ways to save money through careful prioritising, budgeting, and even having to deprive oneself, if need be.
Living below one’s means is extremely needful when you consider that there are many people who actually live above their means. This is usually characterised by running out of money before the month ends, being heavily in debt, and basically living from pay check to pay check, and wondering where your money went.
On the other hand, living above one’s means is a major problem in our society today. People who did not receive any financial education start earning an income and dissipate it away on many things they do not need, because they spend on their wants. This leads to people having to also do unethical things to get money because they never have enough, and they want to be seen as prosperous and successful.
According to Kraig Matthias in his blog, “Create My Independence” actually posted an astounding one hundred benefits of living below your means. These range from improving one’s health and sanity by cutting expenditures on items that are unhealthy, to having more time, improved self-confidence, cheaper living, a better work-life balance, no more scary bills, increased motivation, less demands, people looking up to you, and so on.
In order to be able to live below your means one needs to imbibe financial discipline by spending on your needs instead of your wants, work with a budget by planning your inflows and outflows, carefully weigh and consider before making purchases that take substantial funds out of your account and curb emotional spending.
Monies freed up by engaging in this process have to be saved and invested to yield more returns and you must set financial goals focused on the direction you want to take with your money. This process will definitely drive one to seek for ways to increase income and earnings, while keeping spending at the same levels. This process allows one to pay off all debt.
There is another school of thought, being driven by Robert Kiyosaki of the Rich Dad Poor Dad book series, who advocates that instead of living below your means people should focus instead on expanding their means. Expanding your means is the key to a prosperous life.
The crux of this argument is premised on the fact that living below your means assumes the solution is to cut your expenses. The solution rather is to increase and expand your income. This approach teaches people not to say that they cannot afford something, rather they should say, “How can I afford it?
Those propagating the live below your means mindset need to understand that this is a permanently poor mindset. But even more damaging than the poor mindset is that this advice kills the spirit. It makes a person less of who they are, not more. It sentences a person to a life of mediocrity. And if you ever thought that you had to spend the rest of your life living below your means, stop! It’s time to grow bigger, get smarter, and expand not only your means, but expand yourself as an individual as well.
This school of thought does not advocate spending above your means, rather one should instead focus on seeking for ways to increase your means so that you can eventually afford what you want. Expanding your means endues one with a hope and confidence that one day a life of debt, stress and poverty will be exchanged for a life of wealth and plenty if you just look beyond the present. All of this is backed by investing in complete and total financial education. Financial education is the driver that enables you to be able to achieve this objective.
According to Kiyosaki, “Most people would rather live within their means rather than expand their means.” Most people would rather live within their means… and they’ll pay for it in the long run. It’s tough to live within your means. With the onslaught of advertising and “keeping up with the Joneses” it’s hard to resist the finer things in life. If you can, kudos. It’s a constant struggle. You have to make that extra effort to create more wealth. Sitting back and “not buying” is not enough. You have to go out, and make more. You need to create wealth, not just avoid spending.
One thing that most people will never try is to increase their “means” past their primary income. It’s hard. If I asked you to generate, tomorrow, extra ten thousand naira cash in hand, could you do it? Even if you make six figures a year, could you figure out a way to generate an extra ten thousand above your normal daily haul? It would be difficult for most of us. Most of us would rather watch TV than attempt it.
Expanding your means will make you wealthier than saving money. If you save ten thousand naira, you’ve saved it once and you’re done. If you come up with a new business model that makes you an extra ten thousand today, and might – might! – make you an extra ten thousand tomorrow you’ve created a new income stream. Making a tiny bit more will change your life far more than saving a bit.
Both approaches are extremely necessary and helpful in one’s walk to financial freedom and I wholeheartedly endorse both. My advice would be to start your journey to financial freedom by living below your means so as to speedily pay off your debts and also learn to be disciplined with money. In that time you need to also invest in a sound financial education. After two or three years of doing this then switch to expanding your means and work towards building wealth. Substantial wealth comes from building systems to bring more money in, and not by living on less than what you currently make.