living below your means

Living below your means is an essential step in your path to financial freedom. However, spending less than you earn goes against the consumer first culture we live in. Marketers do not profit from our financial well-being, they profit from our spending.  Go against the grain, spend less, earn more and be happy about it. Here’s 5 reasons why:

1. Reduce Stress

According to one study by the American Psychological Association, finances are the leading cause of chronic stress in America.  When you submit yourself to chronic stress your body releases adrenaline and other hormones. If this becomes a regular occurrence, which living outside your means will do, your body adapts and creates a new state of equilibrium.

Unfortunately, your new state of equilibrium has an adverse effect on your memory, heart rate, blood pressure, mood, and immune system.

2. Brighten Your Outlook

Spending less than you earn allows you to start thinking about yourself and what you want to do with your life.  The more you save the more flexibility you have.  This can lead to doing what you love, whether that is starting your own business, retiring early, staying home with your kids, or being authentic at work.  Stop worrying about when your next paycheck will arrive and start taking your future into your own hands. Set yourself up to do what you love.

“Choose a job you love, and you will never have to work a day in your life.” – Confucius

3. Learn Contentment

A critical step in understanding whether you are living below your means is comparing what you spend to what you earn.  While reviewing your spending habits, take the time to separate out your essential needs versus your secondary wants.  Many of us have grown up in developed countries where consumerism is part of our culture.

The commercials and thought process that we have been exposed to since birth teaches us to want what we do not have. If this culture is taken to heart it will breed inner feelings of discontentment. When discovering what you actually need versus what you want, take a second and be thankful for what you already have.

Chasing the Jones’s is a sure way to live a discontent life, and we surely do not want that.  Hebrews 13:5 “Keep your lives free from the love of money and be content with what you have.”

4. Start Owning and Stop Owing

Stop losing your money, time, and hair by means of interest and fees associated with debt.   By definition, living below your means helps eliminate debt and opens the door to become an owner. Ownership can make your money work for you rather than you having to work for it.

If you were an owner of one share in the S&P 500 in 1975, your share would be worth more than $2000 today. Not because you worked your tail off but because you were an owner.  When ownership and the effects of compounding combine, wonderful things happen!  Albert Einstein – “Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.”

5. Give Back

The tangible rewards for giving are amazing. While increasing your possessions beyond your basic needs does not lead to greater happiness, giving your possessions away does.  The research shows, the act of giving, increases your physical health, improves your sense of well-being, and can help lower your stress levels.  Live below your means and set yourself up to be a giver.  Proverbs 22:9 “He who is generous will be blessed, for he who gives some of his food to the poor.”

 

If you appreciated reason 2 on “brighten your outlook” check out the following video on Slomo, the doc who got away.

 

 

 

 

Want another take on “learning contentment” check out D
rew Taddia’s podcast on Chasing Possessions.