Friday, April 30, 2010

Good Money Habits That Work: Living Below Your Means

As any seasoned entrepreneur can tell you: There is no single formula or recipe to become rich. Most successful musicians will tell you the same story: It takes a lot of hard work to arrive at a point where you are financially on a sound footing. There is however one way to increase your financial net worth over time by simply living below your means. Spend less than you earn and you will increase your wealth over time.

To meet some role models for the notion of living well within your means, please consider this insightful article: Five Billionaires Who Live Below Their Means.

Topping the list is Warren Buffett, one of the wealthiest self-made billionaires and also one of the most successful investors of our time.  Mr. Buffett is the most un-assuming, low profile person you could ever meet.  As legend goes, he still lives in the same house he bought decades ago for only $31,500.  How is that for an example of dealing with real-estate bubbles. 

Mr. Buffet may be the epitome of the "living below your means" school of thought and he may have taken things to an extreme.  But the lesson is clear: Spending less than you earn could be the single most important habit ensuring a sound financial future.

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