Living below your means and other realities of life

Living below your means is a way of life I love to live by. Most people live above their (financial) means which leave them living daily with the burden of thousands in debt and preventing them from living the life they could be living. How do you live below your means?

This is how I try to do it. And these are the lessons I learned along the way:

Before you can even try to live below your means there’s a few realities in this world that needs to be understood:

1. Living costs money — Unless you’re a trust fund baby, the child of some billionaire or someone that gets everything for free the normal everyday life rules apply to you: In order to live and have an ounce of enjoyment along the way you are going to need money. There are those who would disagree. They are the ones that feel that a life filled with enjoyment and purpose can be lived in the wild with no money. This is not the norm and most of us don’t want to live the life of a hippy. Most of us want a semi decent life in a normal sized house, maybe a car, running water, electricity, security and internet. We wouldn’t mind having a family, seeing our friends, traveling, etc. For these things you need money.
2. To get money you may need to do things you don’t like, people call it work. This is another lesson not everyone understand. In order to live the life you dream of, you need money. In order to get money you need to work for it. Money is not free (unless you are as mentioned above lucky enough to have received/inherited more than enough money). This leaves most of humanity toiling away daily in order to get what they earned so they can try to buy the life they want above. Sounds kinda sad now doesn’t it?

Normally people who struggle to understand the above two points are the ones who tend to pile up the debt and max out their credit cards the quickest. The knowledge and understanding of money of my own as a prerequisite to owning something (buying that piece of the life I want) is not yet attained. Without further a do here’s my tips for living below your financial means:

If you don’t have the money, you can’t buy it. Pretty simply right? Resist the temptation of buying on credit. This is where it all begins to go downhill.

Get rid of your debts. The less money you owe, the more money you have. It seems straight-forward once again. Many people of comfortable paying a monthly payment with added interest towards debt.

Save. A little bit of savings can go a long way, a lot of savings goes a lot further. Strive to save every penny. I am on a constant mission to cut costs , especially on recurring expenses. I play these expenses off against competing companies and make sure I save. This like insurance, cell phone contracts, electricity, food, clothing, etc. Once you start clearing your debts that that money and save it, don’t let is slip into the bottomless pit of unknown expenses.

Know the difference between “want” and “need”. I want a 10Mbps uncapped internet line, but I only need a 10Mbps capped line. I want the latest iPhone but the one I have is just fine. It is our inability to draw this line that starts our fall into debt. We can;t say no to consumerism and we fall victim to clever marketing especially if if is in line with out passions and values. 200GB SSD Drive for R750…oohhh!!!

Start investing. If you manage to accomplish the above two points chances are you will have some extra cash in the bank. The tough question is what do you do with it? Spend it on a vacation! Nope. Buy that new PC graphics card! Nope. Invest it! Yes! Ideally you want to buy the life you want with the cash generated from your investments and not the cash left over after spending is done or your savings. Investing is the next course of action. I chose Bitcoin this year, but there are other very stable options like property or stocks.

Increase your income. You can cut your expenses all you like, but eventually your reach a limit. Your income, on the other hand, is limitless. The more your increase your top line, the less you have to worry about your bottom line. Living within your means is terribly easy when you have lots of means. A word of caution here: I know too many people that refuse to decrease or change their expenses and high lifestyle and always focus on increasing their income. This does not always pan out the pay they planned and they end up borrowing money and adding additional stress to their lives. One of my main focusses this year is additional streams of income.

Do more than the minimum. Do the maximum, and reap the rewards thereof

Originally published at namelessone.co.za on January 20, 2017.