Living a frugal life and learning how to save more money is great in the short-term. You have a nice emergency fund, you don’t feel the pressure of keeping up with the neighbors, and, in this day and age, everyone is envious of your money saving abilities.
Also turns out, living a frugal life and saving more of your money is a great way to help you live out your dreams.
In a great article entitled “5 Dreams You Won’t Achieve Unless You Live Below Your Means” published on WiseBread.com, David Ning points out that living below your means – i.e. spending a lot less than you take in, being frugal, making smart purchases, etc. – is probably the single best way to set yourself up to live out the life you want to have:
Living below your means is probably a personal finance tip that you already know about. In fact, spending less than you earn has been talked about so often that it doesn’t even feel like advice anymore — many people’s reaction is, “Isn’t this obvious?”
However, not everyone who knows what to do actually practices what they know. If you are one of those people, you probably won’t be able to achieve the following dreams unless you start living within your means.
Obviously, I think you should check out the article and read it in its entirety, but if you’re just looking for the Cliff’s Notes version, here are the five things living below your means can help you achieve:
- Having more time and working less
- Retiring early
- Finding a job you love
- Getting better raises
- Buying when you want
Of the five, I thought “getting better raises” was the most interesting point, and certainly one that I hadn’t thought of before:
Unless you’ve been living in a cave (or have so much money that you have your assistant carry your wallet and pay for everything), you know that prices of just about everything have gone up. Fortunately, not all is bad in regards to inflation. People who spend less than they earn are have an easier time adjusting to the new prices because even though their companies’ raises might be smaller than the inflation rate of goods, these people are more likely to have the increases to their cost of living fully covered by their raises.
Here’s an example. Let say you make $50,000 dollars and get a 2% inflation adjustment this year, giving you a $1,000 raise. If you only spend $20,000 a year, and a 2% increase on $50,000 is $1,000, it’s like you have a 5% increase on what you can spend.
It’s kind of convoluted, but once you get what Ning is saying, it’s a great point.
Now, here’s an interesting video talking about the importance of living below your means!
What are your thoughts on living below your means? Leave your comments below and, as always, please share this post using the social sharing buttons below, especially Facebook and Twitter.