What does it mean to "live within your means"?

Living within your means refers to managing your finances in such a way that your spending does not exceed your income. This practice is fundamental to maintaining financial stability and preventing debt accumulation. When you spend less than or equal to your income, you ensure that you can cover your necessary expenses, such as housing, food, and utilities, while also allowing for savings and discretionary spending as appropriate.

Choosing to live within your means promotes responsible financial habits, such as budgeting and prioritizing expenses. By keeping your expenditures aligned with your earnings, you create a more secure financial situation, allowing more room for future goals such as saving for retirement, investing, or purchasing a home. This approach also helps to avoid financial stress that can result from overspending or excessive debt.