A Reminder to Live Beneath Your Means

A reminder that living beneath your means is great for long-term wealth building. Seven practical steps for frugal living.

An AI-generated image of a man standing in front of a house in the style of Grant Wood.
An fellow standing by his house and clearly living beneath his means.

In the world of wealth creation and entrepreneurship, there's a popular saying: "It's not about how much money you make, but how much you keep."

This principle, while simple, is often overlooked in the modern pursuit of wealth. Indeed, as suggested by Proverbs 12:9, "Better to be lowly and have a servant than to play the great man and lack bread." (ESV)

Living beneath your means is an excellent way to safeguard your financial security and build wealth over time.

Although it might seem counter-intuitive or restrictive to some, it's an approach that champions frugality, disciplined saving, and strategic investment to foster long-term wealth and financial freedom. Even if you're already frugal, there are likely additional steps you can take to enhance your financial security and increase your wealth.

Step 1: Understand Your Current Spending Habits

The first step in living beneath your means is understanding where your money is going right now. Start by tracking your income and expenses over a few months.

Examine every expense category, from groceries and utilities to dining out and entertainment. Are there any areas where you're spending more than you thought? Any surprise costs you didn't realize were eating into your budget?

Step 2: Create a Lean Budget

Once you clearly understand your spending habits, create a lean budget that prioritizes essential needs and minimizes discretionary spending.

This lean budget doesn't mean you can't have fun or indulge occasionally, but these should not dominate your budget. Instead, focus on saving and investing, setting aside at least 20 percent of your income towards these goals.

Step 3: Set Financial Goals

With clear financial goals, it can be easier to maintain the discipline necessary to live beneath your means.

Your goals might include saving for a house, retiring early, starting a business, or funding your children's education. Remember, these goals should align with your values and personal dreams, ensuring that your financial journey is as fulfilling as it is profitable.

Step 4: Embrace Minimalism

Minimalism is not about living without; it's about living with intention. It means choosing quality over quantity, needs over wants, and long-term satisfaction over short-term gratification.

Consider decluttering, buying fewer but higher-quality items, and reducing your digital footprint. By embracing a minimalist lifestyle, you can cut costs while enhancing the quality of your life.

Step 5: Invest Wisely

As a frugal individual, you're already attuned to saving money. However, true wealth building goes beyond just saving - it requires investing. By strategically investing your savings in a diversified portfolio, you can tap into the power of compound interest and grow your wealth exponentially over time.

Step 6: Maintain the Balance

While living beneath your means is crucial, remember that life is meant to be enjoyed. Don't become so obsessed with saving that you forget to live. Find a balance that allows you to enjoy the present while planning for a prosperous future.

In conclusion, living beneath your means is a powerful wealth-building strategy. It is a commitment to financial discipline, strategic spending, and wise investing. While it might demand sacrifices and some lifestyle changes, the benefits—financial security, freedom, and peace of mind—are invaluable.

Just remember, it's not a race to the bottom, but a journey towards sustainable and fulfilling wealth creation. Remember Proverbs 12:9, aspire to be the individual who may seem lowly, but has a servant, rather than one who pretends to be great and lacks bread.