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

"Living within your means" refers to the practice of managing your finances in such a way that your expenditures do not exceed your income. This means that you ensure your spending habits align with the amount of money you earn, allowing you to avoid debt and maintain a healthy financial situation.

When individuals live within their means, they typically budget their expenses to ensure they can cover essential costs such as housing, food, and transportation while leaving room for savings and discretionary spending. This approach promotes financial stability and security, reducing the risk of financial hardship or reliance on credit.

The other choices relate to financial activities but do not capture the fundamental concept of living within your means. For example, investing all your income may not allow for living expenses, borrowing to invest involves taking on debt, and saving more than you earn suggests a level of income that is not possible if one is spending more than they actually have. The essence of living within your means is fundamentally about maintaining a balance between income and expenses.