At savingsadvice, a forum I read, I read an interesting article explaining the difference between living below your means and living within your means.  The difference is that people who live within their means are able to meet all their monthly obligations.  But they are not necessarily saving for the future or for any unexpected expenses.  When you lose a job or get sick, they are unable to survive on a reduced income.

People who live below their means are saving for the future and still have fun.  Rather they are able to survive on less because their monthly obligations are minimal and savings is part of the budget.

Is it wrong to live within your means?

My take is it’s better to live within your means than beyond.  Also sometimes, it takes time to stabilize your budget, income, etc, especially when you are first getting started as an adult.  Thus by just living within your means you are ahead of the curve.  You aren’t getting into more debt trying to be like everyone else.  Rather you are waiting to “afford” things with cash, than using debt to finance a lifestyle you can’t afford.

Personally, my DH and I lived within our means for many years.  We weren’t really able to save on our incomes.  Our biggest goal during those early years, was to not acquire debt and just pay all our bills on time and in full.  We were definitely living paycheck to paycheck, sometimes worrying about paying our bills on time and in full.  We didn’t really have any extra for savings and definitely retiring.

I considered it a huge accomplishment that we made it through 5 years without acquiring debt.  That we were able to manage our finances without CC debt or car debt.  We didn’t have much extra, and our lifestyle was very minimalistic and student like, but it was debt free.  We lived in as small an area as possible, I rented a bachelor’s apartment.  That’s an apartment without a full kitchen and less than 300 sq ft studio!  But the location was wonderful and the rent was still expensive at $800/month!  And I was grossing $2k/month in income!  Ouch!

I think that depending on the circumstances, sometimes just living within your means and not accruing debt is an achievement in itself!  While it’s honestly better to be living below your means, and I feel much more relaxed now than before, I think that living within our means gave us the tools to live simply when we made more income.   And thus accomplish our goal of living below our means now.