Is Living Below Your Means Keeping You Poor?

“Live below your means” – I’m sure you’ve heard that over-used financial refrain before but beware – that sneaky phrase could very well keep you locked in a poverty cycle. It’s time we did some myth busting by unpacking the false assumptions embedded within it. Assumptions which are just plain wrong and worse could be shutting down your wealth flow to a measly trickle if you don’t question them.

Myth 1 – There is limited inflow.

The only way to achieve your financial freedom target is to save some of that little trickle you have coming in by cutting your expenses and stashing away the extra. WRONG.

Truth – There is an unlimited potential inflow. It’s up to you to open the tap wider and get more from what you choose to let flow out.

Myth 2 – You must save for your retirement by spending less.

If you look at the gap between your current wealth feast net worth and your target financial freedom net worth target and feel queazy, wondering how you’re ever going to save that amount of money, then you’re falling for this myth too. This comes from not understanding the power of assets to make that money for you. There is no way most of us could save our way to financial freedom and thank heavens we don’t have to.

Truth – Your assets create your financial freedom not you, so instead of scrimping and saving, direct your money to creating assets that make money for you.

Myth 3 – We are all a bit dim and have no control over our money!

I know a lot of people “live above their means” falling into the instant gratification “oh have it now, after all you will be able to pay for it later” trap, and live a life of desperate financial denial hoping that the next salary increase, the lottery win or the next business deal will be the financial knight in shining armour coming to rescue them. I believe the problem isn’t stupidity just lack of financial knowledge, knowing how money really works and the skill to direct money to the things that create sustainable wealth.

Truth – Money doesn’t solve money problems, financial literacy does.**

Aren’t you relieved? Whew – you don’t have to scrimp and save to ensure you can stop working one day.

Instead of living beneath your means, choose the lifestyle that works for your wealth and direct a good chunk of your money, time, creativity and energy to creating assets that expands in value and increases the flow coming in.

When there are things you want, don’t say, “I can’t afford it.” or worse, “I’ll just get it and worry about the money later.” Instead say, “How can I afford what I truly want?” It’s a different mindset and an important one.

For 10 years, Dave and I, chose to live in small, ugly houses, refurbishing them, increasing their value and then moving on to the next. We bought these homes to increase our means, focusing on our wealth goals and not what others thought of us. We drove secondhand cars (and still do) and always ensured a percentage of our income flowed into our equity investments too. Most of our friends were upgrading to fancier homes with bigger mortgages, driving the newest Audi, Mercedes, or BMW (on bigger car loans); and taking expensive holidays around the world – no doubt feeling very sorry for us as we moved to another “not so cool” home.

We were not suffering. On the contrary, we felt awesome watching our asset pots expand. It was definitely a case of delayed gratification with a mindset of empowerment and choice knowing we were in fact saying a huge, big YES to our dreams. We continued until our asset pots were big enough to provide us with the means to live the lifestyle we choose. Now, while those friends still have to work to pay for their lifestyle, we have the ultimate freedom. Freedom to choose whether to work actively for income or not.

Trying to live below your means and save your way to freedom is a very damaging mindset that kills the spirit, shrinks your potential and creates a small mean life.

It’s time to grow bigger, get financially savvy and expand your means.

Which of these 3 Money Myths have held you back in the past? Hit reply to this mail and share with us which Money Myth has held you back the most!