Living below your means may seem like a daunting task to some people – especially to those who love to splurge on shopping, dining out, and other things they don’t really need. But it’s a mindset that can offer numerous benefits that will positively impact your life in many ways. Here are ten reasons why it’s worth it to live below your means:
1. Greater financial stability
Living below your means gives you a sense of financial stability and peace of mind. By spending less than what you earn, you can build a larger buffer of savings. This way, you can avoid any financial emergencies that may come your way without having to rely on debt. Unexpected expenses such as medical bills or car repairs can be easily handled as you have saved enough to handle them.
Greater financial stability can also mean that you can take calculated risks and seize opportunities without fear of losing everything. You can invest in stocks, start a business, go back to school, or move to a new city without worrying about taking on too much debt.
Plus, having financial stability can also reduce stress and anxiety in your life. Without worries of outstanding bills, you can focus more on doing things that make you happy such as travelling or hobbies.
2. A higher savings rate
When you live below your means, you are more likely to have a higher savings rate. You can tuck away more money for your financial goals, whether it’s for an emergency fund or for retirement. Living below your means gives you better control over your money, which can help you prioritize your financial goals and save more money in the long run.
Saving more money can also give you more flexibility and freedom down the road. You may have the option to retire earlier than most people, without including Social Security payments. Saving more than the average person can also lead to a more prosperous life because you have more money to invest, donate, or spend on experiences that matter most to you.
3. More freedom and flexibility
Living below your means can provide you with more options in your life, which can seem impossible when you’re living paycheck-to-paycheck. Because you’re not dependent on your paycheck to cover all of your expenses, you may have the opportunity to change career fields or start a business.
Lower expenses can also give you the freedom to travel or pursue a new passion without worrying about the financial repercussions. It can also free up time to spend with your loved ones, as you may not have to work as many hours anymore to pay off your debts or cover your bills.
4. Reduced stress and anxiety
When you’re living above your means, you’re always worried about ending up in credit card debt or struggling to pay your bills on time. This worry can lead to stress and anxiety that can negatively impact your mental health and overall well-being.
Living below your means can take away that stress and give you more peace of mind about your financial situation. Knowing that you have a buffer of savings and that you’re not living from paycheck-to-paycheck can be incredibly comforting.
You’ll also have less stress about unexpected expenses or emergencies because you’ll have savings to fall back on. Without the fear of financial instability, you can focus on building a fulfilling and happy life.
5. Improved relationships
Money can be a major cause of disagreements and conflicts in a relationship. Financial difficulties can create friction, power imbalances, neglect, and emotional exhaustion. Living below your means can help you avoid many of these issues.
By saving money each month, you can work together with your significant other or family to achieve common financial goals. This cooperation can bring you closer and help you achieve bigger goals than you would on your own.
6. Greater opportunities for giving back
When you’re not worried about making ends meet, you can give back to others more freely. You can donate money to causes you believe in, volunteer your time, help out friends or family, or even invest in businesses that are doing good in the world.
Charitable giving can be incredibly rewarding and fulfilling, and living below your means can help you achieve those selfless acts more easily.
7. A healthier lifestyle
Living below your means can actually lead to a healthier lifestyle. By reducing the amount you’re spending on restaurants, bars, and entertainment, you can avoid unhealthy choices and opt for healthier ones.
You may find yourself cooking at home more often, which can lead to healthier meal options. You may also start cycling, running, or hiking more often instead of expensive gym memberships that you can’t really afford.
Additionally, by reducing financial stress, you can have more energy and motivation to focus on your physical and emotional well-being. Better health can translate to better quality of life.
8. Improved financial literacy
Living below your means requires financial discipline and awareness. It can motivate you to educate yourself about money and investments, and how to make your money work harder for you.
You can learn about various types of investments that can help you grow your wealth such as stocks, mutual funds, and exchange-traded funds. Starting to read personal finance blogs and books can be eye-opening and can help you understand how to manage your finances easily.
By being more informed about money, you can make better financial decisions and avoid costly mistakes. You’ll be amazed by how much you can learn and how much your knowledge will pay off.
9. A more sustainable lifestyle
Living below your means is not only environmentally-friendly but can also improve your life. By consuming less, you can reduce your carbon footprint and contribute to a more sustainable planet. You’ll be using fewer natural resources, which is good for the planet, and you may also find that you have more time to spend in the great outdoors or take part in eco-friendly activities.
Living a simpler life can also lead to less clutter, less waste, and more mindful living. You may find that you’re happier with less material goods, which can be one of the best ways to lead a life filled with purpose and meaning.
10. A sense of accomplishment
Living below your means may be difficult, but it can give you a sense of accomplishment and pride in achieving your goals. Establishing financial goals such as paying off debt or saving for a down payment on a house may seem impossible at first, but gradually achieving them can be incredibly rewarding.
By living frugally, you prove to yourself that you have the discipline and determination to achieve your objectives, which can lead to greater self-esteem and confidence. It’s a feeling that money can’t buy, but can be worth its weight in gold.