4 Reasons Living Below Your Means Might Not Be the Right Choice for Your Money
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
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There is so much financial advice out there — and everyone talks about living below their means. But how can that affect your money in the long run?
“I’ve spent years advising people on the fine balance between living below their means and still moving forward in life,” explained Andrew Gosselin, CPA, personal finance expert and senior contributor at Coupon Mister. “I’ve seen how rigid frugality can sometimes make perfect sense, but there are moments when being too strict about spending can limit growth.”
He explained that in some cases, living below your means is a necessity. “Some people don’t have a choice — they need every dollar for essentials like rent or health expenses, and there’s no space to cut back,” he said.
However, he explained that others can afford to live conservatively but might benefit from investing in themselves or their future. “That might mean taking that course, buying a piece of equipment, or seizing a business opportunity that could yield far more returns than socking away every extra cent,” he said.
Below are some top reasons living below your means might not be the right choice for your money.
You Neglect Your Health
Gosselin said he’s met clients whose entire focus on pinching pennies overshadowed important expenses, like health costs.
“If a person skips regular checkups or treatments, the bills and consequences can grow more severe over time,” he said.
Kevin Shahnazari, founder and CEO of FinlyWealth, noted the same.
“Many people living below their means are actually losing money by skipping essential health maintenance and preventive care,” he said. “My experience with thousands of clients reveals that inadequate health spending often triggers catastrophic expenses — those who invest appropriately in their health avoid an average of $15,000 in emergency medical costs annually.”
You Miss Out on Enriching Experiences and Networking Opportunities
“I’ve run into students who tried to save aggressively but missed out on the chance to join a workshop or study abroad that could’ve boosted their careers,” Gosselin said. “Sometimes, you have to spend strategically — choosing experiences or investments that will strengthen your earning power or expand your horizons.”
Shahnazari also pointed out that networking events and professional conferences that seem like luxury expenses often generate deals and opportunities worth 10x the cost.
“From my experience hosting financial workshops, I’ve documented how a $2,000 investment in strategic networking regularly yields $20,000-plus in new business opportunities or career advancements,” he said.
You End Up Dealing With Higher Costs Later
According to Gosselin, it’s tempting to follow the classic advice of never spending more than you need to, but that doesn’t always lead to the best outcome.
“I’ve seen individuals refuse to hire a professional when a legal or financial concern popped up, only to watch them deal with higher costs later,” he said. “Sometimes, paying for specialized help or better tools is the difference between long-term success and a mountain of regrets.”
You Create a Scarcity Mindset
“Living too far below your means can create a scarcity mindset that limits career growth and wealth building,” Shahnazari said.
Having advised countless entrepreneurs, he’s observed that moderate lifestyle inflation aligned with income growth helps maintain the confidence and social capital needed for continued professional advancement.
“Many successful wealth builders focus on expanding their income rather than restricting their spending,” he said. “When tracking long-term client outcomes, I consistently see that those who invest in income-generating opportunities build wealth 5x faster than those focused purely on cutting expenses.”
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