Living Below Your Means – Illustrated

The number one search hit I get for this site is “how to live below your means”.  I intend to address this directly through a series of future posts, but for now I wanted to illustrate the concept.  The idea is really very simple as Steve Martin explains here on SNL.  The truth though is that it is often easier said than done to actually do.  There are several reasons for this:

  • Living below your means is a lot easier if you have always done it and never gotten in to debt.  Once you have lived beyond your means, the road back is a hard one.  It’s not impossible, it simply requires more sacrifice.
  • We want too much stuff.  We as humans, need very little, but we as Americans have been taught to want a lot.  IMO, want in and of itself is actually a good thing, it is what drives us to greatness.  However fulfilling the want immediately before it has been earned (IE: going into debt) is a simply road into slavery.

More on all of this later.  For now, I present the following three illustrations:

First, we illustrate the simple concept of living below your means.

Second, that the gap between what you earn and what you spend is where this “so called saved money” comes from.  In the long run, saving and investment of capital is the only true path to prosperity.

Finally, this illustration shows that if spend more than you make your are probably doing the “live below your means” thing incorrectly.

That’s it for now.

Cheers,

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