Living Below Your Means vs Expanding Your Means – How To Get Rich

Living Below Your Means vs Expanding Your Means

It wasn’t until recently that I heard a podcast host mention that instead of focusing on living below your means, we should instead EXPAND them.  The majority of finance articles focused on financial independence (FI) mentions that living below your means is the first step.richest man in babylon

This principle is even listed as one of the main lessons in the personal finance book, The Richest Man in Babylon.  The book  teaches us to “Control thy expenditures”.

When I first began learning about FI, the experts agreed that it’s next to impossible to achieve it without spending less than you earn.

It made sense as I realized how most doctors follow Parkinson’s Law which was developed by English writer C. Northcote Parkinson which explains why most people retire poor.

The law says that, no matter how much money people earn, they tend to spend the entire amount and then some. Sound familiar?

When doctors start making real money, they’re typically not as careful with their spending. That’s human nature.  We increase our living expenses and spend to maximum capacity.

The more we make, the more we can afford, so the more we spend. 🙂

Unfortunately for some people,  no matter how much they make, there never seems to be enough. They constantly take on MORE debt trying to keep up with the Joneses!

 “Financial independence comes from violating Parkinson’s Law.”

After hearing this advice (expand your means),  you can imagine how this new information piqued my interest as it was the complete opposite of living below our means.

I’ve realized that there’s multiple ways to skin a cat and that we shouldn’t follow everything someone recommends. Instead, choose the parts that resonate with you the best to help you reach your financial goals.

Dave Ramsey


Take Dave Ramsey for example. I’ve been an avid follower for years but don’t agree with everything he teaches. ( I still can’t figure out how he gets a 12% return with mutual funds!)

Dave’s most known for his 7 Baby Steps and focuses on getting people out of debt by budgeting and living below their means (frugal living).

Being frugal is a must,” says Dave “if you want to have a seven-figure net worth.”

But when I started to learn more about real estate investing from other people such as real estate guru Robert Kiyosaki, I began to change some of my thinking.

It turns out that I’d found someone that was teaching the exact opposite of Dave.

Related article:  Dave Ramsey vs Robert Kiyosaki – Who Should You Listen To?

Two of his principles that stood out the most to me were:

  • Use debt wisely – While they both agree that we should avoid consumer debt (credit cars, cars, boats, etc.), Kiyosaki recommends that “good” debt is OK if used wisely. He goes on to say that we should only consider using this “good” debt after we’ve received enough financial education to prove we know what we’re doing.
  • Forget about home ownership – Kiyosaki states that a home is a liability and NOT an asset. If it doesn’t feed you then it’s a liability.  He doesn’t think that having money sitting “dormant” in a home does any good. For instance, if you have $300,000 in home equity paying 3.5% or even worse, a paid for house paying nothing, then deploy that into something that is going to pay you.

During the early stages of learning about something new (passive real estate investing), I realized that I’d been extremely close minded. It was either Dave’s way or nothing else. 

It’s hard going through life and continuing to grow and be successful with a closed mind. I’d actually bet it’s next to impossible. 

So let’s take a deeper dive into whether or not you should continue living below your means to get wealthy or expand them instead….

Living Below Your Means

If you don’t think the term “living below your means” is popular, check out the number of results after making a recent Google search:

living below your means

*This phrase has over 1.7 billion search results.  Fairly popular.

Let’s take a look at the number of results with “expanding your means“:

expanding your means

It seems that this type of thinking isn’t quite as popular coming in at roughly 338 million instead. 

Living Below Your Means – What Does It Mean?

Living below your means can be simply defined as not spending more money than you earn. That’s it. Fairly straightforward and great advice, especially for the new doctor coming out of training with a six-figure student loan bill. 

It doesn’t mean you shouldn’t spend on things you love or make you happy. Nor does it mean to live like a poor person either. It’s a strategy that allows you to enjoy your life while focused on creating a more stable financial future by budgeting and saving extra money. 

emergency fund

One of the first benefits you’ll receive from living below your means is decreasing stress that comes with emergencies.

 Step #1 on Dave Ramsey’s Baby Step list is starting an emergency fund.


Well sooner or later we’re all going to have unplanned financial incidents happen to us. That’s part of life.

Dave’s thinking is that if you don’t have some cash laying around to cover them, then you’ll be more likely to go into debt (credit card) to cover them. 

Speaking of emergencies, who would have thought the U.S. would have shut down for several months due to a pandemic? It never crossed my mind and probably yours either. 

For us practicing dentistry in Louisiana, this turned out to be a two month emergency. Even though it was stressful financially, it would have been MUCH more stressful if we didn’t have an emergency fund in place to cover a year and a half of expenses.

Dave recommends 3-6 months but we chose to go out further as the older I get, the less risk I like to take

Being prepared is the key to lowering financial stress and living below your means helps free up money each month to save and invest for the short and long term. 

Again, this was the only way I knew to operate financially before we started real estate investing

Another reason Dave preaches about living below your means is that he wants his audience to not live their entire lives paycheck to paycheck.

Studies show that 78% of U.S. workers living paycheck to paycheck and 69% of Americans have less than $1,000 in savings.

It seems as if this is the norm with the people calling his show each day. You have to realize that his target audience is the lower and middle class American. 

As a doctor, your income is high enough where you have options which we’ll get to shortly. 

5 Ways to Stop Living Paycheck to Paycheck

Here are a few of the most popular ways that we’ve been taught to live below our means in order to prevent living paycheck to paycheck:

#1 Know your income 

If I were to ask you, “what do you make a year?” could you tell me? Many people don’t know what their annual take home pay is yet this is one of the first and most important steps. 

In order to develop a financial game plan, your starting point is knowing what’s coming in to help curb what’s going out. 

#2 Create a budget


Traditional financial teaching tells us that developing a budget can help tell us exactly where our money is going as most don’t have a clue.

Most Americans approach their finances without a budget as they think it’s too difficult. 

But with the different budgeting apps available, there’s no excuse as to why you can’t start one today. 

A budget will show you areas where you can cut back and actually start saving more money each month.  

#3 Avoid debt

Here are a few statistics regarding debt in the U.S.:

National Debt Stats

  • By 2029 National debt is estimated to reach $28.7 trillion
  • The National debt equals $69,140 for every person living in the U.S.
  • The National debt is now bigger than our gross domestic product
  • The National debt equals $178,691 for every household in the U.S

Consumer debt, which is classified as credit cards, mortgages, auto loans, payday loans, and student loans, totals $13.5 trillion

debt snowball

Most doctors and other professionals start their careers with mounds of debt. We did to the tune of $300K which is NOT something that I’m proud of. 

You know yourself better than anyone else so if you don’t think you can control your spending then playing around with debt is a recipe for disaster. It’s hard to get ahead financially when all your money goes to someone else. 

Dave Ramsey recommends paying off debts fast using his debt snowball method. This is where you focus on paying everything you can to the smallest debt first, then after it’s paid off, continue to the next one until you’re debt free.

#4 Decrease meaningless spending

When focusing on getting out of debt trying to avoid living paycheck to paycheck, cutting back unnecessary spending is key.  One of the questions you can ask yourself before making a purchase is, “Do I really need this?”

By doing this, you’ll better understand your priorities and what you really want to spend your money on.

Here’s some common areas to cut back on:

  • eating out 
  • gym memberships
  • TV and entertainment subscriptions
  • clothes (don’t take my Air Jordans though! 🙂 )

#5 Get a side hustle or temporary job

Those trying to avoid living paycheck to paycheck are now starting to make extra income via side gigs.

It’s actually started to gain popularity with doctors for several reasons:

  • Doctors are in debt
  • Can open another retirement account
  • To transition into an “Encore” career which is a vocation finale after one’s primary career has ended.

I love learning about and teaching others about real estate investing and can understand the popularity about having an encore career while still practicing. 

If you’re considering a side hustle, focus on using your talents to make extra money. 

More than likely you’re probably very familiar with these strategies in order to have a good financial life. One other thing I left out was what we’re usually taught to do with the “leftover” money from living below our means.

The financial gurus tell us to “save” our money and invest in traditional retirement accounts. They’re assuming we want to work in the same career for 40 years then retire. 

If you want to live for the future instead of the present then do what you feel is best for your own situation. 

Now let’s shift gears, make a  U-turn and instead of living below our means, let’s EXPAND them. 

Expanding Your Means

Before we get into how we can go about expanding our means, let’s find out why some out there think living below your means is terrible advice. 

Some say it all starts during childhood as parents are typically our first financial teachers. Constantly hearing things such as, “live below your means” or “that costs too much/we can’t afford it” plants a bad seed inside us causing a scarcity mentality

It tells kids that they should get used to sacrificing some of the better things in life such as:

  • higher education (medical/dental school)
  • luxury vacations
  • taking advantage of a great investment opportunity

If you were told by your parents that you should “live below your means” it assumes the solution to your financial problems is to cut your expenses.

Do you think that advice would limit your thinking? I think so.

If you teach this to your kids, then you’re already setting them up for failure as they begin to THINK they have limitations in life. Unfortunately, this happens too often which causes our younger generation to be held back because they’ll believe it’s true. 

The bottom line is that “Living below your means” is not prudent advice anywhere in life. It stifles ambition and  stunts growth.

Abundance Mindset

“And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work.” – 2 Corinthians 9:8

Expanding your means starts by replacing the scarcity mindset with an abundance mindset.  This places you in a growth environment in which you’ll realize that there’s nothing wrong with exceeding one’s needs.

As a matter of fact, it’s often the unnecessary “wants” that enhance our quality of life.

  • What about that rain head shower you had installed even though you have a regular shower head – do you really need it too?  Couldn’t you live below your means and do without it?
  • Do you really need Netflix or Hulu subscriptions? Or is it nice to watch a movie when you want to relax with your spouse after a hard day at the office?
  • Did you need to travel to Montana for three weeks last summer? Or did it rejuvenate you and increase your quality of life which resulted in lasting and irreplaceable memories with your family?

If you live a life of only what you need (scarcity-based life), then you’ll always live below your means.

No one shrinks their way to wealth.

How to expand your means

For those that would rather play defense vs offense, you can only cut back so much with expenses.

If you choose to be on the offensive side of the ball instead, there’s unlimited growth upside to extending your means.

Here’s what Robert Kiyosaki says about how his family goes about making decisions on buying nice things:

When my wife and I want to splurge on something, we don’t look at where to cut costs. Instead, we acquire an asset to offset the cost of what we want.

So, instead of always looking for what we can cut to afford something, we’re always looking to expand our means to cover the cost of what we want. It’s a completely different mindset, given to me by my rich dad. For instance, some years ago I wanted to get a new Bentley. I could have easily paid cash for the car, but I didn’t want to do that for a liability. Instead, I invested in assets that would provide enough cash flow to cover my new toy. It took a little longer, but six months later my investments created enough cash flow to pay for my car—and some. In the process, I got my fun car and also built my wealth.

Here’s one of the biggest takeaways I’ve learned over the past several years while pursuing wealth: “If you live below your means, you can never add assets to your portfolio. By doing this, you’ll never stop focusing solely on cutting costs and budgeting to afford something. Instead, you’ll be stuck hoping your income will continue to increase at a faster rate of inflation.”

Examples Of Living Below vs Expanding Means

Here’s a few examples of your everyday decisions that shape your wealth potential from my friend Keith Weinhold from Get Rich Education

Based on your choice, you’ll be able to determine whether you’re living a life below your means, or expanding your means:

#1 Spend 5 extra minutes this week…

Below: …detouring to the cheapest gas station.

Expand: …with your family because you arrived home sooner from the nearby gas station.

#2 Spend 30 extra minutes…

Below: …waiting in line for a free Chik-Fil-A sandwich.

Expand: …learning about how credit scores work to get the best mortgage terms.

#3 Spend 1 hour…

Below: …mowing your own yard when the kid down the street would do it for $30. (I’ve been guilty of this!!)

Expand: …in research to find your next income-producing property.

#4 Spend the month…

Below: …watching every season of Game Of Thrones.

Expand: …watching half as much Game Of Thrones and gaining financial education.

#5 Spend the next three years…

Below: …pulling weeds so that you could save money and hope you’ll live better “someday”.

Expand: …on ten memorable family vacations and five seminar trips, paid from your income property.

Which Is Better For You?

My focus on this site it to provide you with education and options so that you can make the BEST decision for you and your family.

Now that we’ve identified two different ways to achieve wealth, living below your means vs expanding them, which do you think you should pursue?

I’ll be honest, we still occasionally find ourselves using the “living below your means” mentality. It’s hard to break deeply ingrained habits. 

The good news is that if you choose to start expanding your means, you can get started as quickly as today. Anyone can shift from a live below your means mindset to an expand your means one.

A simple way to do this (something we do quite often) is begin by asking a question the next time you are thinking of making a purchase.

Instead of telling yourself,  “I can’t afford that” ask yourself, “HOW can I afford that?”.

The game changer for us is that we know to use assets to pay for liabilities.

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