I am constantly baffled why the common advice “Be sure to live below your means” is so pervasive and enduring. Sadly, it just underscores the scarcity mentality that has infected society. Kids are misled like this when they’re young and impressionable. They learn “Live below your means” from their first financial “teachers” – their parents – and it sticks with the next generation for a lifetime. When parents say this, they’re planting a bad seed inside their children. It tells kids that they should to get used to sacrificing some of the better things in life.
Even some of the best things in life could be sacrificed – whether it’s a better education, a memorable vacation, buying a better home, or even seizing a great investment opportunity. You can control these with cash-flowing assets. In fact, POOR is an acronym for “Passing Over Opportunity Repeatedly.”
Reading Robert Kiyosaki’s Rich Dad, Poor Dad helped replace my scarcity mentality with one of abundance and “Expanding my means” rather than “Living below my means.” When one says “Live below your means,” it usually applies to finances. Well if it made any sense with money, then wouldn’t at least a thread of it apply to life’s other facets? I mean…can you imagine if this deflating mantra were extrapolated elsewhere in life? For example…
“I don’t ever want you to try out for quarterback of the football team. Please don’t even try. You might be good enough to make it; but you should be satisfied being the ballboy. Live below your means.”
“Why try for an ‘A’ in algebra? That seems beyond your means and capabilities. A grade of ‘C’ is sufficient. Live below your means.”
See what I’m saying? “Live below your means” is not prudent advice elsewhere in life. It stifles ambition. It stunts growth. It shouldn’t be applicable to finances either. Why live a life where you only have the bare essentials of what you need, when a life of plenty is so easily within your reach? Once an abundance mindset replaces the scarcity mindset that you learned from a young age, a growth environment is cultivated inside you. There is nothing wrong with exceeding one’s needs.
Truth is, it’s often the unnecessary “wants” that enhance our quality of life. What about that rug that you step on after you get out of the shower – do you really need it? Or is it just nice to not have to put your bare foot on the cold floor tile? Couldn’t you live below your means and do without it? Do you need to have satellite television? Or is it just nice to watch the NFL when you seek some occasional entertainment? Did you need to go to Maui for two weeks last winter? Or did it enhance your quality of life, refresh you, lead to personal fulfillment when you tried surfing, and result in lasting and irreplaceable memories with your family?
If you’re one that lives a scarcity-based life, a life of only what one needs, then you may be living a life below your means. One cannot clip enough coupons, buy enough of the cheaper paper towels, or seek out the less expensive gas station often enough to create lasting wealth. That just doesn’t work.
No one shrinks their way to wealth. So rather than focusing time and energy living below your means, use those same faculties and resources to instead become educated and secure some big investment wins, thereby extending your means. You can only cut out so much to the downside, but there is unlimited growth upside to extending your means.
So consider not telling anyone, “Live below your means”. It builds brick walls around people. It can result in a life of sacrifice, settling for less, and regret. It is the worst sage advice that I have ever heard.
– Keith Weinhold
Contributing Writer | Founder & Host of Get Rich Education
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