Live Below Your Means
Thursday March 24, 2011

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I recently purchased Suze Orman’s new book The Money Class, and I have to first say I couldn’t agree with her more regarding the focus for the entire book – we must all live in our truth.  We must get real.  We must look honestly at what we will need to live on in the future and get real about how we handle money today in order to attain it.  With that said, she begins in chapter 2 by reminding us to live below our means.

In today’s culture, that may come as a slap in the face, but think about it this way.  When we retire we will live on approximately 75% of what we live on today (if we have been diligent about our retirement savings). Becoming used to living below our means will provide less shock in the future and allow us to save now for a grand future when we do retire.

So how do we do this? How does one live below their means?  Here are a few of her suggestions to consider:

1. If your mortgage payments surpass 35% of your monthly income, consider living in a smaller house.  It was always suggested that a mortgage payment be 33% of your income or less, but with the financial housing crisis, many are paying easily 50%.  If you exceed the 35% try getting creative on how to downsize. It might take some time, but will save income today, so that you can save for tomorrow.

2. Take care of the car you have. Leasing a new car every 2 years simply to keep up with your neighbors will not bring true contentment, but it will strap your monthly budget.  Find contentment within yourself by pursuing a life that is truly fulfilling to you that does not need to be validated by anyone else.  By simply taking your current vehicle in for oil changes and tire rotations every 3 months and overall service, you can have a car that runs efficiently and is paid off so that you save yourself hundreds of dollars each month.

3. Eat out less. There are many benefits to deciding to eat meals at home beginning with your hard earned cash – more of it stays in your pocket!  Not only are you saving money, but you are aware of what you are eating and promoting an environment within your home of strong family relationships.  Saving those special occasions for taking the family out to eat will create a more grateful attitude and possibly produce children and spouses who love to cook in the kitchen with you.

4. Eliminate the excess. Take a moment and look at your monthly expenditures.  Where is your money going? Suze offers a great tool upon purchasing the book that allows you to go online and enter all of your expenses. She goes over your expenses and income numbers (well a computer system does) and reveals where she thinks you can reduce, add more to savings or are doing well.   After walking myself through this, I realized I have extra money which should be going toward my savings cushion (which will increase the amount I am already adding).

With these four suggestions and living more consciously, reminding ourselves that we give money power, ask yourself today, what power am I giving to my money?  At the end of your life, be the person who can say, I took advantage of the power of the money I earned and put it to great use for myself, my family which ultimately created a peace of mind for the present and for our future. Take back your power and purchase peace of mind, not more stuff.

11 thoughts on “Live Below Your Means

  1. Great post! I’m so glad people in the blog world are aware of the importance of understanding personal finance. I’ve tried to write some finance related posts in the past and they’ve been some of my less popular, but I think they’re SO important! I love Suze Orman, and your tips from her book are fantastic. The idea of cutting unnecessary monthly expense is definitely the hardest!

  2. This is a great post and i must share it with my flatmate. I was discussing with her on how she needs to cut down on the things she wants us to buy weekly because i don’t believe in wasting money. But because i have a budget and she doesn’t, she never understands why i’m so keen on saving money and living within what i can afford instead of blowing my parents account

    xoxo Hermine

  3. I’m so glad you shared this. I asked my husband, a financial analyst, how he thought some of the very young couples in our neighborhood manage to have two luxury cars, a home as large as ours, vacations, private schools for the kids, etc…His answer: They are completely leveraged and likely don’t save nearly enough to retire comfortably. If one of them were to lose their job they could very well be wiped out financially.

    Scary, isn’t it?

  4. Shannon, this is one of my favorite posts as of late (although the recipe below has my mouth watering at 9am!). It is very easy to read these ideas and say to yourself sure, I can do that. But to actually follow through with them is what makes the difference down the road. I am so very much in a “less is more” phase right now, hence my recent blog posts.
    I truly appreciate the time and effort you put into sharing your blog with us. So glad we are “friends”. xoxo Carrie

  5. Utterly fantastic post, we need more people reminding us to “Live below our means” for too long it has all been about another kind of life.
    My car is 12 years old – I will only buy a new one when it can no longer go on.

  6. Carrie – you don’t know how happy I am that we are “friends” 🙂

    Tabitha – my car too is 9 years old, purchased used and I try to take care of it so it will last as long as it can. Besides, I don’t enjoy the whole car buying process and my car has never defined me. Good to hear your thoughts. 🙂

  7. This is a great article and I am starting to live below my means and save more money. At first, I thought I was doing well and realized I actually wasnt. Going out to eat has been cut from the budget. I have plenty of food at home. We can have pot lucks at friends houses if we want to hang.

  8. The only thing I find sad or surprising is that anyone, in any country, at any time, needs to be reminded to live within their means. How did we all become so mixed up, that “beyond your means” was ever a good plan?

    Unless I’m mixed up, you’ve also written about a book called “The Savvy Life”. That’s a great read, too.

  9. Thank you for speaking about this. I was just having the mortgage convo with my friend recently. She couldn’t understand why I didn’t want 50% of my salary going towards living expenses.

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