First off, no matter how much you make, it’s ALWAYS wise to live BELOW your means.

NOT within.

BELOW.

Because if you live within your means, you’re just treading water. It doesn’t take that much to get you to drown financially.

You never know what might happen.

We see all the time of those who thought they were financially invisible get humbled real quick.

Also, there’s a certain joy in living below your means as you learn self discipline in the process, gain peace of mind, gain immunity against Parkinson’s law (as income increases, so do expenses in proportion), get less stressed, etc.

This might put some people off and they might say something like – “Why not expand your means and then you can fully enjoy life?”

But that kind of thinking lands you into the “when, then” trap.

“WHEN I ______________, THEN I’ll ______________________.”

You can enjoy life NOW, while living below your means and without feeling deprived in the process. But before I show you how to do that, here’s a SURE FIRE WAY to feel deprived.

Use your money JUST to pay the bills and then put the rest away in savings/investment.

Some people are really, really, REALLY meticulous in that respect.

And it’s a shame. We all know about the importance of balance. Spending too much is obviously the wrong way to go as is the other end of the spectrum.

Making money shouldn’t be just about paying the bills you have now and the ones you stockpile against in the future.

It should be about using it to ENJOY your hard work and to live life NOW without feeling deprived.

So how do you do that by living below your means?

It’s very simple.

Make “fun” money a bill.

Treat it as a MUST.

How much?

I’d say 10% (after tax).

But what if you can’t do 10%? What if there’s no money left over?

That’s the beauty.

It FORCES you to MAKE 10%.

You’re going to have to cut something. The cable bill, a lower insurance bill, maybe lower your cell phone bill – do something to account for that 10%.

And I’m assuming you’re setting aside a certain % to save and invest on top of all this as well.

Now this fun money – you don’t have to feel guilty for spending it at all. It shouldn’t even hurt you when you spend it. Don’t blink an eye. It’s supposed to be spent.

Now what do you spend it on?

That’s the other half of the equation.

To answer that, here’s what you truly must understand.

The principle of ACCLIMATION.

You all know it, but you REALLY HAVE TO KNOW IT.

That brand new car – it’s nice the first week, but the monthly payments get REALLY OLD. It sucks having to write that check month after month after month, long after the newness of the car has worn off and you finally got your first scratch. Not only that, a year passes, and it looks old compared to the new models out there.

Any object/experience you consistently spend time with, the satisfaction level you have of it drops over time.

Your favorite restaurant?

Try eating there 7 nights a week.

Gets old real quick.

That TV you bought? Feels good the weekend you invite your friends over. A month later, no biggie anymore. Yet, you’re stuck with the monthly payments.

Given that we know this, how can we take advantage of this?

Simple.

By spending our money on DIVERSE EXPERIENCES that we’ll enjoy with others.

You can do a whole bunch of things that probably a lot of people don’t get to do.

And it’s always best to do it with others because the happiest moments in your life were probably when you were doing something with another person, not sitting alone in your room admiring your Rolex.

Give yourself permission to spend. Set aside your own fun money. Spend it on DIVERSE EXPERIENCES.

Let me paint you a picture.

John Doe buys a brand new car, all the bells and whistles, gets stuck with a huge monthly payment along with insurance, huge repair and maintenance costs, spends 60 hours a week working so he can make the payments.

Jane Doe (no affiliation) buys a nice used car, cuts the cable, gets a lower cell phone plan, buys food in bulk, etc., so she can make the 10% fun allocation amount.

Over a year, she gets to scuba dive, parasail, swim with the dolphins, take short road trips to places she’s never been, take a meditation class, goes to different fairs, festivals, carnivals, takes a music class, a dancing class, a sculpting class, stars as an extra on set of a famous movie, eats at all the small mom and pop shops of different cuisines around the world to satisfy her palate and curiosity, goes fishing, attends various workshops and seminars of interest, etc.

Now, can John Doe do all that?

Sure.

But not really.

One, he doesn’t have the time. Two, even if he did, he’d be too tired to do it. Three, even if he did, it would make his financial situation even tighter. He would be too worried to live in the moment to enjoy all that.

Let’s see.

Over the course of ONE year, what does John Doe have?

A one year old car that doesn’t look so new anymore that he also doesn’t really enjoy as much when he first bought it, weighed down with 4 more years of monthly payments, insurance payments high maintenance and repair costs to go along with 60 hour workweeks just to be on par financially.

What does Jane Doe have?

Countless stories and experiences with friends and family, pictures, memories she can reflect on as she grows older, lessons learned, knowledge gained, life lived.

Who’s enjoying life more?

Who’s feeling more deprived?

Now it’s important to note that John Doe COULD do all that Jane Doe did IF buying that new car was in sync with him living BELOW his means and that would also mean him not spending so much time working to pay for it.

This is important because I’m NOT saying you can’t have mansions and nice cars. If you make $10 million a year and you’re only spending $1 million a year, that’s living below your means. That’s 10% of your annual income.

How many people you know who can live on 10% of their annual income?

This is not an article attacking material possessions.

It’s an article geared toward everybody, regardless of their annual income, on how to live below their means, and still enjoy life without feeling deprived in the process.

You need to set the certain percentage to fund your fun money because without it, you can’t spend it guilt or stress free. You need to cap it. You need to put a ceiling on it to feel comfortable spending it.

You need to spend it on DIVERSE EXPERIENCES with others to take full advantage of the acclimation principle.

By doing both, you can join the ranks of those who experience the true luxury of enjoying life with great peace of mind in the process.