Read an article by Beryl Jantzi who is a stewardship education director for Mennonite Mutual Aid – an agency that helps individuals with insurance and financial services. In the article he talks about the new normal for living well, which is living below your means.
According to Jantzi, living beyond our means (spending more than we earn) produces four negative results:
- borrows from our future
- it is unsustainable in the long-term
- leads to significant finance charges
- takes a toll on our emotional, spiritual, and financial resources
Living within our means, which is what a lot of us were taught growing up, is a little better, but has risks also:
- no real immediate debt
- is sustainable in the short-term
- leads to no long-term financial goals
- is a time-bomb waiting to go off (emergencies, etc.)
Living on the edge, living paycheck to paycheck, is just one paycheck away from disaster.
However, if we can live below our means, there are four benefits:
- Eliminates unnecessary debt
- builds up savings
- allows for flexibility for the present and future
- creates space for generosity to others
I like how he broke this down into three categories instead of the usual two (living above or below). I know for me, there was a period of time I thought I was doing well because I was living within my means, but that is not the best financial plan.
How are you living right now? Above, within, or below your means? What step can you begin to take today to move from one category to the next best one?
