If you read a book like The Millionaire Next Door, you hopefully get the message of the importance of being future oriented.  You give up a little today for the prospect of having more in the future.

I generally advise that people live below their means.  This is important for many reasons.  It is a way to save for retirement.  It is responsible, as it prepares you for an unexpected expense down the road.  It can give you more options in life.  And if you experience a reduction in income, it will make for an easier adjustment.

However, it isn’t a hard and fast rule.  Like many things in life, there are exceptions.

I can think up many scenarios where it is not necessarily advisable to live below your means.

For one example, imagine someone who is 50 years old and has already saved up one million dollars, not including primary residence equity.  This person can keep his one million dollars working and growing for him and spend all of the money from his regular job.  That certainly wouldn’t seem irresponsible at that point.

For a second example, imagine someone who is 22 years old and living with his parents.  He has a relatively low income at this stage, but has managed to save a little money.  He has the opportunity to work overseas for a year, but his income will barely cover his expenses.  Given that he will likely start a family in the future and will get a more permanent job with a higher income, this is probably his one chance, at least for the next few decades, to do something like this.  I wouldn’t fault him for wanting this experience.

For a third example, imagine a family that has saved up some money.  The wife/ mother wants to be home with her kids while they are really young.  If the wife/ mother quits her job, they will not be saving any additional money at that point. It would be hard to blame the family for deciding on taking a few years of no saving while the kids stay home with their mother.

Intentionality

In these examples, maybe it would be ideal if these people continued to live below their means and save money.  But who am I to judge? It really is a personal decision. It is about prioritizing.

The key here is intentionality.  I have come to believe that this is really the most important factor in the financial independence movement.

I have seen examples where, say, someone buys a new car and talks about it in a financial independence group.  I will see comments such as, “That is not very FI (financial independence) of you.”

But seeking financial independence isn’t necessarily about depriving yourself and only buying the essentials.  It is about thinking through your choices.  There is nothing wrong with buying a luxury item as long as you have thought it through.

The trouble with our society today is that many people buy junk that they don’t really need and really isn’t that high on their priority list.  They say they want it, and I am sure they do.  But is the instant gratification really worth not saving the money?

There is a large percentage of the population who don’t have much intentionality when it comes to their finances.  They get their paycheck (usually a direct deposit), they pay their bills, and they feel free to spend what is left.  This is not intentionality, or it is very bad intentionality in most cases.

If you have thought it through and decide that you really would value the latest new gadget to such a high degree that it is not worth saving that amount of money, then there is nothing wrong with that.  It would be even better to forego something that you usually have in order to obtain that gadget.  You could say that you aren’t going to eat out at all over the next two weeks and buy cheap dinners.  That will pay for the new gadget.

And so it is with the decision not to live below your means for a certain period of time.  I gave three examples above where someone or a family might decide that it is worth it to not save any money over a certain timeframe.  But it isn’t necessarily a permanent situation, and it is one that is thought through.

If you can be intentional about your choices with money, then you are a step ahead of most other people.