Living within your means isn't nasty

By Philip Brewer on 26 November 2007 26 comments
Photo: Philip Brewer

How bad could things get? The New York Times asked that question about the economic situation. It's a good question, but they gave a really bad answer.

Here's what the New York Times had to say:

How bad could things get? Pretty bad, say many economists. Not so bad that your grandfather’s prescriptions for enduring the Great Depression need dusting off, but nasty enough to force many Americans to get reacquainted with living within their means. That could make life uncomfortable.

Okay, the title of this post is unfair. Peter S. Goodman (the author of the piece) didn't say that living within your means was nasty, he said that about the economy. He said living within your means was "uncomfortable," but that's still completely wrong: living within your means is the only comfortable way to live.

Over time, living within your means eliminates all your financial worries--no worries about debts, no worries about making ends meet, no worries about retirement.

I have no idea what Goodman's grandfather had to say about surviving the Great Depression, but my relatives of that generation had plenty of good, sound, timeless advice. In fact, "dusting it off" and sharing it with people is a good bit of what this blog is about.

Most of this country's economic problems stem from two sources--people's desire to get something for nothing and people's desire to live beyond their means. The first leads to small foolish actions, like buying lottery tickets and day trading. The second leads to larger foolish actions, like borrowing money to take a "well-earned" vacation. Put both together, though, and you can get some really big foolish actions, like buying houses you can't afford, hoping to flip them at a profit.

We'll know things are getting better when "living within your means" is once again viewed as common sense, and not as the sort of old-hat notion that might be dusted off and considered when things get nasty.

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Guest's picture

But how can you live beyond your means? It's the least sustainable lifestyle ever. At some point you're going to have to pay for it all, so you may as well do it now, when it's cheapest.

Guest's picture

It's easy to live beyond your means...just put it all on credit. When it gets to be too much, just file for bankruptcy. As for as "at some point you're going to have to pay for it all", I think you meant "at some point WE ALL ARE going to have to pay for it all". That defaulted debt winds up being paid by the rest of us.

Philip Brewer's picture

That's the way I see it as well.

Guest's picture

Living within your means is not the hardest part. What's difficult is living within your means while watching others live beyond their means and rub it in your face. Many people can't deal with that and that's partly why they fall into debt.


I would also note that the article isn't really that pessimistic. It says that a severe recession will only make for an unpleasant year or two. Really? How about an unpleasant decade or two as all the excesses in our financial system get wrung out?

Guest's picture

Once again, I completely agree with you.

Guest's picture
Jon A

The underlying assumption is that living within (or beneath) your means is for squares, losers, and Abe Simpson.

Silly, really.

Living within their means isn't going to make 'life uncomfortable'; it's going to make *people* uncomfortable. Their lives will be fine--their brains, though, are going to go through some pretty heavy-duty withdrawal symptoms when they can't buy every $40 Abercrombie and Fitch T-shirt they see. Their bodies will be just as warm in the $7.50 from the discount retailer.

It's too bad that a recession is most likely going to do the most damage to people on the bottom of the economic ladder--the ones who already know what belt tightening is about. I really wouldn't be all that upset seeing some H2-driving, over-priced suburb-living, $30K-credit-card maxed folks learning a lesson about self-discipline. (Petty, I know.)

Philip Brewer's picture

Even bankruptcy doesn't let you live beyond your means forever; it merely lets you escape some of the consequences of having done so for a time. The same can be said for the other alternative to eventually living within your means--dying young.

It has, of late, been possible to take the path of the serially bankrupt, living beyond your means a second, third, even fourth time. I think that will be harder going forward than it has been of late.

I don't say any of this to denigrate bankruptcy as an institution. It is entirely possible to undertake obligations in good faith and then be unable to pay them in full. Illness, superseding obligations (such as to a family member or to your country), and simple bad luck are just a few of the circumstances that can make bankruptcy the best choice.

But even bankruptcy doesn't mean you can live beyond your means forever.

Philip Brewer's picture


What's difficult is living within your means while watching others live beyond their means and rub it in your face.

As it happens, I just wrote about what to do when poor folks have better crap than you.

Guest's picture
Cindy M

Seems so much smarter to me to try consistently to live slightly below my means. It is so great not having a lot of debt, slowing down and living a simpler daily lifestyle, period. And it's good to reach a place where I could care less what friends or family have to say about my not wanting to be part of the big ugly rat race. I feel sorry for people who never even think about the subject. There are just so many things that can be enjoyed in one's daily life in this country for free or almost free for the individual willing to slow down a bit and think it all through.

Guest's picture

It was a hard lesson for me, I was making twice what I'm making now and was still spending more than I made. Today thats behind me. I spend less of my time feeding the economy and I am much happier enjoying the simple things in life. 

Guest's picture

I wonder sometimes if it's me or if the Haves and Have Not So Muchs are farther apart down here in the deep South. For the life of me, I can't figure out how the Haves do it. I'm yankee born, and I can say that class/race/social lines are much clearer in many areas than they are up north...but still, huge houses in gated communities w/all that football/cheerleading stuff the kids do and the private schools (god forbid public). I am honest to god mystified. Our daycare costs would be more than my teaching salary, so I'm home, but so are the Have Moms. You all have said it all, I just have to say thanks for letting me know I'm not crazy in this particular area.

Have you priced kids' toys this year? Have Mercy.


Guest's picture

i know what you mean about daycare costs. when i go back to work i will have to work nights and weekend nights while my family watches my kids so i can be home during days to avoid daycare costs!

and i know what you mean about all the stuff kids get. i think some of the kids are gonna go thru more shock than the adults!

I always raised my girls frugal cause we never had alot!
but my kids know other kids who get whatever they want. one in particular used to bug me to buy starbucks and i was constantly saying no 24/ kids were horrified/ we had to finally stop inviting this kid out with us on outings cause whenever i or my daughters said no this girl( neighbor kid) would throw a tantrum cause she didnt get her dolce latte or iced mocha! my girls were so horrified by the girls behavior and found it so inapropriate it was one of the many reasons they stopped being friends with the girl.

and the sad thing there are so many kids like that....the parents give them whatever they want thou they cant afford shut them up or makeup for ignoring them! I think if we have a recessions some of those households are gonna have kids experiencing even more withdrawls and meltdowns than the parents!

I think thats so sad!

Guest's picture

It is not a tragedy to live within your means. The tragedy is that no matter how well people do financially in this country, nearly everyone manages to be broke most of the time.

Philip Brewer's picture

Living within your means is the most fundamental principle for financial success. If you do that, it almost doesn't matter what else you do--eventually you'll be comfortably well off. Contrariwise, if you don't do that, it pretty much doesn't matter how much of a financial genius you are--life is going to be difficult until you master it.

Thanks, everyone, for the good comments.

Guest's picture

I couldn't agree more with your post. And, not only is living within your means a happy way to live, living below your means feels even better.

Guest's picture

This country really breathes and lives on debt. I feel like we're pushed towards debt. Interest rates on savings accounts are always extremely low and advertisements everywhere are encouraging "buy buy buy". The so called "American Dream" is to have a mortgage. Guess what a mortgage is.. DEBT! It makes no sense to me.

Linsey Knerl's picture

I love your post... of course, we have a variable income each month (sometimes way more than we need to live, sometimes zero...) so we have learned to live on almost nothing.  As I am doing my morning chores each morning (gathering firewood, collecting eggs, preparing homemade dogfood with our surplus of rice and meats) I thank God that I am healthy enough to live a somewhat self-sustaining lifestyle.  We are prepared to meet the worst with little to no adjustment on our part.  And we like it this way.

Bless you, Philip! 

Guest's picture

I wonder what would happen to the world economy if most Americans decided to live at or below thier means? What do you think Phil? 

Guest's picture

for from phillipines and i dont think so if it wise to live within one's means......

Philip Brewer's picture

The so-called growth of the economy that comes from large fractions of the population living beyond their means is illusory anyway.

If people in droves suddenly started to live within their means, we probably would see a recession, as business that had geared up and staffed up to provide all the stuff people want but can't afford found that nobody was buying it.

Of course, sooner or later we'll have that recession anyway.

As a practical matter, we'll never get enough people to choose to live within their means to make a big difference, so I don't really worry about the macro effects of my advice. At the micro level, each individual person who lives within his or her means will be better off, no matter what other people do.

Guest's picture

I don't think masses of people living within their means is probable, my question was retorical. I think the bottom line for individuals who chose not to use credit is that they end up in the long run paying less for the stuff they buy, in effect getting a better price on a product than a person using credit to buy the same stuff.

Guest's picture
Guest in CA

Reading this in March 2011 (following a link from another post this morning). If only more people had seen this concise description of where we were headed!

Guest's picture

I think what we sometimes fail to take into account is that life becomes more expensive with every waking moment. I'm a 23 yo recent college grad, and living beyond my means translates into living at an appropriate/basic level. I barely make enough to qualify as the working poor. With more financial demands, rising costs and a lackluster job market, "living beyond means," has become a regular part of life.

We can all make budget cuts but when do we say enough is enough? If I took any more substantial budget cuts, I would be living in gov't assisted homes, in a not-so-great part of town. The factors that come along with that scenario (influence of environment, location, safety, etc.) is enough to make me want to continue with this "lifestyle I cant afford." It's unfortunate, yet this is what happens when decisions from the upper status quo affect the Joe Smoes'!

Philip Brewer's picture

What is the minimum for a "decent" standard of living? It's something that's really hard to talk about, because everybody's situation and perspective is so different. I wrote about that here:

You might also be interested in a post a wrote a while back with practical advice on raising your standard of living:

Guest's picture

Life does not become more expensive with every waking moment. People make life more expensive by expecting more and more.

If you have running water, electricity, and some kind of food on your plate, you're living better than most of the world. I'm sorry, you probably didn't mean it this way, but your post sounds like a typical whining American saying "But I DESERVE more!". Understand that the past 10 years of US financial booming is not realistic and what you see around you is not sustainable.

Be happy to have food, shelter, and running water pumped into your house. Learn how to get enjoyment from people, and situations, not "things". Accept that you can't eat steak, or even pork, every night, and find enjoyment in dried beans, and be happy you have the opportunity to eat 3 meals every day, even if they're not gourmet.

Guest's picture

People today are so caught up in instant gratification and unrealistic self images that they have no clue what sacrifice or patience is about. My wife and I have almost always had it hard financially and it taught us to buy intelligently and what is absolutely necessary. I have been affected by this horrible economy and have been out of work three of the last eight years. Even so, we are debt free and have a substantial amount in the bank because we don't live above our means. we live in a very modest home and have two vehicles that are paid for. We drink coffee at home and eat out occasionally but in average venues and with concern for cost. We do take vacations but on a budget. We raised two good kids and one has a masters degree which we helped with but she learned to work for what she wants. Let's get back to basics and stop being such a greedy and selfish society.