Are You Living ‘Within Your Means’ or ‘Below Your Means’?

Recently, there was an article on CNNMoney that tried to define the phrases ‘living within your means’ and ‘living below your means’. I think they are two phrases that are completely different and here are my ‘definitions’ of them.

Living Within Your Means

To me, this phrase is too positive. Living within your means sounds like you are spending everything that you earn. That sounds more like living paycheck to paycheck. Which one sounds more positive to you? If I told someone I was living within my means, they would think that I am getting by just fine. However, since I am spending everything that I earn in order to pay the bills, mortgage, debt, etc., I am in no way saving any money. They wouldn’t think to ask if I am saving money because the phrase kind of implies that I am saving when I am not. However, living within your means also implies that you are taking on no additional debt. Since I am only buying things that I can afford based on my income, I would not be buying things that I cannot pay with cash.

If I told you that I am living paycheck to paycheck, you would probably feel bad for me. Living paycheck to paycheck is more negative and it definately applies that I am saving no money. I am here to tell you that these phrases are the same thing and there is no difference.

Living Below Your Means

When someone says that they are living below their means, I automatically think of clipping coupons and driving a 1993 Nissan Sentra. I don’t know why, but that is just what I picture. However, I feel that living below your means simply means that you are able to sustain your standard of living by spending less than you earn. You may be completely comfortable with the way you live your life financially. You just do not spend all of your income meaning you can save. You can save up for retirement, a car, a house, etc. Living below your means is they way to become The Millionaire Next Door. Living below your means will also help you get Beyond Paycheck to Paycheck.

What are your definitions of these phrases? Are they radically different than mine? Which category do you feel you fit in?

18 thoughts on “Are You Living ‘Within Your Means’ or ‘Below Your Means’?

  1. Yana

    To me, living within your means sounds better, and includes savings. Living below your means doesn’t sound good to me, although that is actually what we do. I’d rather say that we live within our means.

  2. tom

    Living below your means to me say you live a frugal life. which is essential. You learn to manage what you have, so that if you have more, you can handle it.

    Living withing means, I would say it is more along the lines of having all you needed and not really living paycheque to paycheque

  3. .Moreofthesame

    We now live within our means. In a few weeks I will need long term care for my wife and her Parkinson’s disease. This will exceed our current income, savings, and our home.

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  5. Adam Post author

    Well, if living below your means allows you to save then what is the difference between that and living within your means? That is the point I am trying to make here. Living within your means just sounds to me like you have nothing left after paying all of your bills. That would also mean you have nothing to save.

  6. Kate Kashman

    An interesting perspective. I can see what you are saying, and it makes perfectly good sense, but I also see how the word choices can have a negative connotation for some people. I guess that it is one of those things that is going to mean different things for different people.

    Well done!

  7. Funny about Money

    It’s interesting that many people actually DO think that “living within your means” means the same as “living from paycheck to paycheck.” The whole idea of not taking on debt — of not carrying revolving debt on a credit card or anywhere else — has become so alien to most Americans that some people really don’t understand that it’s desirable to do so or even that it’s possible to do so. Consider the person who says, in response to your remarking that you can’t afford to buy this or that service or object, that there’s no problem because you can put it on a credit card. If you refuse to do it — especially if you take the time to explain that you don’t charge more on your card than you have in your bank account at the time — they look at you with pity. They think you’re either crazy or broke.

  8. Hannah

    The real question is, what’s your definition of “living”? I think saving should be an expense like any other. So when I say I’m living within my means, it indicates that I am able to spend what I want to spend AND save what I want to save.

    Living below my means would be even better. To me, that would mean spending what I want to spend, saving what I want to save, AND having some money left over which I could either spend or save, depending on what I desire at the time.

    But technically, I don’t think there’s a difference between living “within” or “below” your means. Think of your income as a circle. If you are living within your means, the amount you spend is a circle within that circle. The difference is just semantics.

    More at

  9. Paul Morales

    I use to think living below your means meant you were cheap. NOW, I think living frugal/cheap just means your being smart about where you spend our profits.

    It’s no longer your money if you spend your money on useless things.

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  11. thomas

    I’m in the middle. I have very little debt (student loan, car, house) and no revolving debt. I save. I could always save more, but I don’t as I am living comfortably.

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  14. Fabulously Broke

    I am definitely within my means. I choose to spend my money on technology and “unnecessary items” just because I want to. I make choices about what I consider important and I focus on what makes me the happiest. 🙂

    Giving up vacations just to save money when you can clearly afford it? What’s the point?

    She who dies with the most cash does NOT win. She loses. The one who does with $0 or a bit above $0 wins.

    Fabulously Broke in the City
    Just a girl trying to find a balance between being a Shopaholic and a Saver.

  15. JMK

    To me saving 15% is as essential as being able to afford food, clothing, shelter etc. If you’ve geared your life to accomplish everything without incurring debt I figure you are living within your means. You have set up your transportation, shelter, food budgets etc to reflect the amount of income available.

    Living below your means either means you make more than what you require to do all of the above or you’ve chosen to make some frugal choices in some areas in order to increase the funds available for a “non-essential”.

    We make a good combined income and could easily cover all the basics, save 15% and have a little fun money. Instead we’ve chosen to skip the things that aren’t important to us so that we can travel and still save about 35% of our income so that we can retire early. We buy used cars with cash, we haven’t had cable in 20yrs, we plan meals around sales, pack our lunches and rarely eat out. On the other hand we spent a month in Europe with the kids in 2008 and are planning another month this year. Yes we could afford to have a giant TVs, new cars, 500 channels, trendy wardrobes, eat out every week and so on, but none of those things are as important to us as travelling and retiring early.
    We’re choosing to live on way less than we can afford so that we can spend freely on travel and more than double the recommended rate of savings. There’s no right or wrong way to allocate the money, it’s more important that you figure out what is important to you. Most of us can’t afford to do everything at once. If we followed the recommended percent allocations for our housing, transportation, savings, food etc we’d live very comfortably within our means and retire at 65 and then start travelling. We’ve just chosen to travel now, retire at 55 and skip what’s not important to us in order to make it happen.

  16. Kelly

    I truly believe that you should have what you want BUT want what you have… Do we even know why we want things? What is our motivation behind wanting stuff anyway? The other thing I embrace is I have nothing in my life that causes me pain…whether it’s a relationship, a thing, a memory…whatever it is/was I got it out of my life. It frees up my heart and mind… and I am able to care for the things in my life that I want…

  17. Matthew

    Boy are you wrong. Living within your means means you pay all your Bills on time . This is not a Poor Mans Term – we would say It’s a middle class income tax payer term. So keep it Clean

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