What does it mean to live within your means?

Living within your means refers to managing your financial resources in such a way that your spending does not exceed your income. This means ensuring that your expenses are either equal to or less than the money you earn. This approach fosters financial stability, allowing you to meet your financial obligations without the need for excessive borrowing or reliance on credit, which could lead to debt.

Maintaining a budget and being conscious of how much you spend relative to your income are key elements of living within your means. It helps in making informed decisions regarding discretionary spending, savings, and investments, creating a solid foundation for long-term financial health and security.

The other approaches highlighted—spending without regard for income, borrowing excessively to finance purchases, and investing all income in high-risk stocks—can lead to financial instability and debt. These strategies do not promote the kind of budget-conscious behavior that characterizes living within your means.