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OP, living below your means is one of the best things you can do to ensure that both your financial integrity, current lifestyle and future are bright. It is said 41 percent of people in the United States will run out of money during retirement, as well as many don't have enough for a 500.00 emergency now. Living below your means distinguishing between wants and needs will not only get you out of those categories but put you on the road to wealth.
You know your bills, budget, what you can cut, as well as needs vs wants in relation to your lifestyle just do what it takes. Everyone’s budget, percent, and needs will be different. Your desire to even discuss it shows you are willing to be one of the few on the track to making a better life then just surviving.
Last edited by AngelWingDesigns; 02-09-2016 at 07:03 PM..
I was wondering if there is a % based on income that is considered living below your means? Or if the actual number is more important. A couple making $150k who spends 60% of their monthly income on expenses still has more left over each month than someone who makes $75k and only spends 30% of their income on expenses.. Just the same I'd ideally like to get to a point where 25-30% of my income covers all my expenses, I think that would allow for a rather stress free lifestyle.
Pitt Chick linked you to a good thread.
The direct answer to your question works like this:
Spending 100% of your income = living at your means
Spending more than 100% of your income = living above your means
Spending less than 100% of your income = living below your means
Now I think that's not the question you intended to ask. You're wondering what a target percentage should be. There isn't one that applies universally to us all.
What it boils down to is personal preference. What I like is to do this: Keep cutting spending and increasing savings each month until it gets too "painful". Then dial it back a notch, and that's about the perfect level of savings. You're saving as much as you feel comfortable saving. Every 6 months or so, try increasing savings again. Too painful right away? Your budget is on point. Or if you're still comfortable even with that new reduced spending, congratulations! That means you've gotten used to the new lifestyle, and you have opportunities to cut back even more.
Living "below" one's means sounds more draconian than "Living within one's means", which means the same thing: Spending less than one earns... (ie; paying one's monthly bills with an accrual towards annual expenses, with sufficient savings to cover an emergency... and not using credit cards to artificially supplement one's income/"means.")
I am still waiting for the first person on one of those TV "home finder " programs who walks in to a 2800 sq ft house and says ..............Its too dam big.
It amazes me when I see a couple ( married but no kids ) who say they " need " a four bedroom, three bathroom house. Are they going to run a bed and breakfast business ?
JiM B.
Sometimes, to get in the area you want, you have to buy a bigger house than you technically need.
We've been retired here in the Philippines 18 yrs now and only 50% of my U.S. government pension goes toward our living expenses and the rest of the 50% is just extra cash at the end of the year.
Retirement life is good! No stress what so ever!
To me its not about percentage or amount u spend. Its about which lifestyle u choose. Living one whole step/life style below ur asset.
Ex. There is a set expectation for a person make $75-100K. They live in certain neighborhood, drive certain car...etc there is also a expected lifestyle for someone making 50-75K and there is another type of lifestyle for someone making less than 50k.
Living below once mean, means they choose to pretend $25K or more of their paycheck doesn't exist. They budget like they make 50K, or drive used car like someone making 50K would do. Similarly someone making 150K could choose to live lifestyle of someone making 100k-125K.
We've been retired here in the Philippines 18 yrs now and only 50% of my U.S. government pension goes toward our living expenses and the rest of the 50% is just extra cash at the end of the year.
Retirement life is good! No stress what so ever!
To add, we live in a nice up scale neighbor anyone can be proud to live in! The Philippines does have poverty stricken areas, but we don't live in one!
Here's where we live in the Philippines: picture of Paseo de Sta Rosa - Google Search
To me its not about percentage or amount u spend. Its about which lifestyle u choose. Living one whole step/life style below ur asset.
Ex. There is a set expectation for a person make $75-100K. They live in certain neighborhood, drive certain car...etc there is also a expected lifestyle for someone making 50-75K and there is another type of lifestyle for someone making less than 50k.
Living below once mean, means they choose to pretend $25K or more of their paycheck doesn't exist. They budget like they make 50K, or drive used car like someone making 50K would do. Similarly someone making 150K could choose to live lifestyle of someone making 100k-125K.
The problem with this is that I, who make $25k, would have to live like I make $0 (i.e. die) to qualify. A percentage seems to make more sense since lower savings can do the same trick with lower expenses, at least in terms of how long you could go without work if necessary, etc. I do have enough cash to last a year without work if it comes to that.
That is true, it gets tricky to define "living below your means" when your means is not that high. A percentage always works. But someone living at 90% of their means, giving up 10% would they be considered "living below their means" or average
In the broadest sense of the term it is simply spending less than you make. For me, I try to live on 50% or less of our net income, which means we are saving/investing at least as much as we spend each year.
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