Important Financial Lesson: Live Within Your Means

Important Financial Lesson: Live Within Your Means

By Jim Shellenberger, CFA, CFP®

If I could only teach one financial lesson, it would be to live within your means. The truth is, many people struggle to manage their finances. But living within your means is a significant step toward profitable financial management. 

In this article, I want to talk about embracing the art of living within your means to break the cycle of debt, build a solid financial future, and finally feel in control over your money. These are the advantages I’ve seen most often from this important financial lesson.

Stress-Free Finances

Living within your means helps rid you of ongoing financial hardship. You’re less likely to experience the stress of debt piling up, paying late penalties, or having to take out high-interest loans when your expenses are within reasonable limits of your income. You can breathe easier knowing you don’t have to stress about chasing your next paycheck.

I want to mention here that folks who have accumulated significant net worth can experience false financial safety. While important, net worth can be a deceiving indicator of financial health. This is because net worth reflects previous, collective financial decisions. 

A more accurate indicator of your current financial health is how your financial situation is trending. If you’re building habits to live within your means now and making smart financial choices, you’ll have the opportunity to experience the confidence and stress-free living that comes with being in control of your finances.

Increased Savings 

Spending your money wisely helps eliminate the biggest barrier to saving: unnecessary spending. Reducing unnecessary spending allows you to increase the amount of money going into your savings accounts. Your savings increase is fueled by the steady accumulation of every dollar you do not spend. Think of it like a snowball moving downhill; as it accumulates, it grows larger and quicker.

Increased savings allows you to experience the power of compound interest. By saving consistently, you earn interest on the money you save. Over time, the interest itself starts earning interest, accelerating your savings growth.

Debt Prevention

Living within your means safeguards you against taking on debt. You can avoid having to take out loans to pay for unforeseen or regular expenses when you spend less than you make. This translates to avoiding credit card debt, which can harm your credit score and come with devastating monthly payments and excessive interest rates.  

Additionally, you can pay down debt more effectively. The extra money you have every month can be used to pay off credit card and loan bills more quickly. This financial discipline sets you up for a future free from the burden of debt repayment.

Enhanced Credit Score

Being smart about your finances can result in a healthy credit score. Lenders can determine whether you are creditworthy if you consistently make on-time payments and avoid holding a large credit card balance. Better interest rates on loans and credit cards in the future can be obtained by doing this, which, in turn, raises credit scores. Ultimately, spending wisely allows you to use credit as a tool for growth rather than as a barrier to your accomplishments.

Freedom to Pursue Your Goals

Budgeting is only one aspect of living within your means—another is opening the door to your financial dreams. You can free up resources to pursue your goals by prioritizing saving and eliminating needless expenses. Because of your financial stability, you can travel the world, try a different job path, or even launch your own company without worrying about running out of money. You’ll be able to say “yes” to the experiences and opportunities that really count.

Planning for the Future

The final value of living within your means that I want to mention is that it better prepares you for future financial challenges. Not spending your money irresponsibly means you can build an emergency fund, save for retirement, and plan for major life events without the constant worry of not having enough money.

We’re Here to Help

We know our clients and the people of Wyoming live their lives with purpose and pride, and our mission is to help them reach the dreams they’ve worked so hard for and leave a lasting legacy worth more than money itself.

When you’re ready to work with a professional wealth advisor to help you make sound financial planning decisions, you can schedule an introductory meeting by reaching out to us at jshellenberger@frontierasset.com or 307.673.5675. 

About Jim

Jim Shellenberger, CFA, CFP® is a financial advisor at Elevate Wealth Management, an independent, fee-only wealth management firm serving young professionals, pre-retirees, and retirees in Sheridan, Wyoming, and surrounding areas. With the mission of serving and educating, Jim is dedicated to providing comprehensive, top-notch services that not only help his clients reach their goals, but also empower them to make the best financial decisions for their lives and walk toward their future with confidence. Jim is known for going the extra mile, not only offering valuable knowledge in investment management as a former investment analyst, but building long-lasting relationships so he can give honest, customized advice and strategies that make an impact on their lives.

Jim has a bachelor’s degree in business administration with a minor in finance from the University of Wyoming. He is proud to be a Wyoming native and loves exploring the outdoors with his family—hiking, fishing, hunting, and backpacking. Faith is an integral part of Jim’s life, and he always looks forward to attending church on Sundays, Bible study on Fridays, and being part of his church community. He’s also an avid sports fan! Fun fact: Jim owns shares in the Green Bay Packers. To learn more about Jim, connect with him on LinkedIn.

The views expressed represent the opinion of Frontier Asset Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Frontier Asset Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. The use of such sources does not constitute an endorsement. Frontier does not have an affiliation with any author, company or security noted within. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the Frontier Asset Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. Past performance is not indicative of future results.

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