Living beneath your means

Living Beneath Your Means Not Obvious

KJ: Learning to live beneath your means sounds like a simple thing to do, right? Well with the Joneses just down the street always having something nicer, bigger, cooler, how do you keep up? The answer is: you don’t! Regardless of your income or savings, there’s always someone who has more or can do more, so learn to live not just within your means, but beneath your means and quit focusing on what everyone else is doing. Why bother? Well, there’s a subtle, dual benefit of living beneath your means:

You reduce your expenses
Sounds obvious, right? Well, reducing your expenses now has a way of preventing you from getting accustomed to a lifestyle that you cannot afford. Also, with a very significant driving factor in your retirement plan being your living expenses, the lower number you have for your expenses, the less you have to actually save to get there.

You increase your savings
Again, pretty obvious, right? By nature of reducing your expenses, you allow for some extra room in your savings budget. So, not only are you reducing the amount you need to have saved (by lowering your expenses), you are simultaneously saving more and accelerating your ability to accomplish those goals.

AJ: This is an extremely important part of our lives. Living below your means ultimately means storing bonuses, raises and lottery winnings as extra savings instead of an extra payday.

Think of this simple example: two families, otherwise very similar, make $100,000. One spends $95,000 per year and saves $5,000 while the other spends $90,000 and saves $10,000. The family saving more not only has the long-term benefit of keeping their expenses lower and needing less of a retirement nest egg, but they also have been able to double what the first family has been able to do. It’s a no brainer that they’ll be much better on track to get to their end goal – whatever that may be.

    Are you living beneath your means?
    What can you do to cut some of your expenses and save more?

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