In another place and time, I had a friend who was at the bottom of the pay scale in his place of employment. He used to say, “Living well is the best revenge.”

What he meant was that if he could get more for his money than his better-paid counterparts, he could live as well or better than them on his lower salary and confound them regarding how he did it!

“A fool and his money are soon parted,” goes the proverb attributed to Dr. John Bridges in 1587. Wikipedia elaborates with the “Greater Fool Theory,” which states that the price of an object is determined not by its intrinsic value, but rather by … irrational beliefs and expectations that another party is willing to pay an even higher price. In other words, you might pay a price that seems “foolishly” high, because you have the expectation that the item can be resold to a “greater fool” now or later.

Price vs. value

Legendary investor Warren Buffet makes the distinction between “price and value,” two different concepts often confused as being the same. According to Buffett, “Price is what you pay. Value is what you get.” The central idea of value investing is to pay a low price and get a high value.

Sam Walton, among others, was known for accumulating wealth by “living beneath his means.” I would like to add to that adage that you should also live “above your expenditures.” Stating both more simply, “Don’t spend all the money you have, and get more bang for the buck on the money you do spend.”

Spending wisely requires resisting what others, society and the commercial world are asking, suggesting, strongly persuading, even demanding that you spend. You have to be disciplined to be financially sound.

How do you live better on less?

How do you make a smaller wage or salary than those around you, spend even less than that small amount and at the same time find good deals that give you more bang for your buck? Well, it’s not that difficult, but it won’t happen overnight.

First you have to determine how much money you have at your disposal. Then you have to come up with a budget that provides for your current needs using only 90% or less of your money. Then you have to let that 10% you are saving regularly accumulate through safe investing while looking and waiting for good deals of high value regarding whatever you need or would like to have — like a better house, for example. (Suggested reading: “The Richest Man in Babylon” by George S. Clason, 1926, 144 pages.)

So, here are some principles to consider for living well despite your meager means:

Patience — One has to commit to delaying gratification. You can’t have everything you want immediately. Luxuries certainly have to wait.

Effort — One must put in the work of shopping around for the best deals via internet searches, sales, asking others and checking between similar stores for the same product. Seeking out discounts, clipping coupons, etc., is inconvenient, but it might produce that 10% you want to save.

Negotiating — Never buy anything at full price. Consider that the list price (be it in a store or from an individual seller, for a car or for real estate) is the top dollar the seller would like to have. It is not the dollar amount that they might be willing to accept. You want to get closer to that lower number.

Selectivity — Don’t spend on things you don’t really even want. Sometimes you have money in your pocket and you just feel compelled to spend it, even on things you weren’t even thinking about and could easily live without. Save your money for what you really want and for when a really good deal comes along.

No debt — Debt, especially credit card debt, should be avoided like the plague. Car debt is a loser, too. Ideally, one should have no other debt than a mortgage. Don’t go into a lot of debt for school, either. Work hard for the many available scholarships, get work-study grants, wait until you have saved up and then tell the college how hard you worked for what you have and that this is all you have to give them. I bet they will find some kind of grant or scholarship to make up the difference.

Charity and generosity — Be generous, but not overly generous. You have a responsibility to pay for your own space on the planet before nobly attending to others. Indeed, give to your church, local agencies you know are reputable, individuals you know of who are in need. But also take into account how much of your taxes are already going into entitlement programs to take care of the less fortunate. Therefore, be appropriately generous, but don’t feel compelled to give away that much extra. Your first obligation is to take care of yourself and your family so you don’t end up on the dole yourself.

Big spenders — Some people might call them big shots — the ones who order the most expensive thing on the menu, tip far more than what is customary, drive cars and live in houses they can’t afford. Don’t be one of them. I mean, enjoy yourself, but spend within your means in a disciplined fashion. You will sleep much better at night with a good savings account rather than a big spender image.

Winston Churchill once quipped: “I am easily satisfied with the very best.” Buffett probably would agree with Churchill but would also caution: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” The Oracle of Omaha wants value at a good price — the very best, yes, but only when it includes the biggest bang for his buck.

Dr. Tom Dorsel is a professor emeritus of psychology at Francis Marion University now living on Hilton Head Island where he is in the sport psychology and music businesses. He can be found at and on Facebook under “Sport Psychology of Hilton Head” and “Music of Hilton Head.” His latest book is “GOLF: The Mental Game.”

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