In our consumer and debt-heavy society, living beyond your means is all-too-common. And unfortunately for us, it can put us in tricky financial situations and consumer debt.
Considering how easy it is to impulse buy online and use credit cards, we end up spending more than we make. This process has become so normalized, that we overlook the financial dangers, neglect long term goals, and live a lifestyle that can be too expensive for our own good.
While it may seem okay because so many are living beyond their means, it shouldn’t mean you need to endanger your own financial priorities. Here are a few warning signs you should watch to ensure you are not living beyond your means.
1. You Notice You are Living Paycheck to Paycheck
78% of full-time workers said they live paycheck to paycheck (CNBC). Now, this might not signal right away that you are living beyond your means. You might be underpaid, living in an expensive area, or have some other financial circumstances putting you in this situation.
However, a lot of times you may be upgrading your lifestyle or just overspending, which causes you to barely squeak by every pay period. Take a step back, look at your paycheck and track your expenses to see where your money is going every week. You may discover that there are areas where you can spend less.
2. You Have Little Saved or No Emergency Fund
We all should know it’s important to have one and we all do typically want to save money. Yet, as much as I did not want to include this here, it needs to be added. You might be living beyond your means if your emergency fund cannot cover at least 3 months of expenses or You are not putting aside any money consistently each paycheck for your emergency fund.
3. You’re Carrying a Balance Each Month on Credit Cards
Credit cards are great for building credit, getting some rewards points, and can help you out in an emergency. But, too often we use it to buy things that are beyond our means and impact our financial success. Now you end up carrying a balance month to month. This signals that you’re certainly spending more than you can afford.
While you may be making monthly payments, you probably continue to use that card to rack up more of a balance, and you get hit with high interest rates. Start making double, triple, or extra payments each month to get caught up and put your credit card away to avoid use until you have a debt management plan and get your spending under control.
4. You Aren’t Saving For Retirement (Or Can’t)
Not everyone is able to save for retirement at certain points of their lives. Many also struggle to provide for their families and put food on the table. So the thought of putting money aside for retirement is usually an afterthought.
But for those taking expensive vacations, always getting the latest tech, or upgrading to a luxury vehicle, but have not saved for retirement , you are living beyond your means.
5. You Worry About Paying Bills Constantly
If you find yourself constantly stressed out about bills or how you are going to pay them, you might be living beyond your means. I say “might” because again, everyone’s situation that is reading this might be different.
Many might be living below their means, yet are still worried about money. I hope to provide more insight and content about those situations as well in the near future. But, if you always have the most expensive items and are struggling to pay recurring monthly bills or get out of debt, it’s a pretty clear sign you are living beyond your means.
6. You’re Paying Too Much for Your Mortgage or Rent
For housing, just because a bank gives you a loan or says you can afford this much more, doesn’t mean you should do it. You need to be proactive and do some math yourself. I’ve seen various numbers for a 30-year mortgage, but generally, you should not spend more than 30-35% of your monthly gross income. Obviously, the lower the percentage the better.
7. You’re Trying to Keep Up With The Joneses
You’ve probably heard the phrase, “Keeping up with the Joneses” before. If not, it simply means what you are try to match or surpass what your friends, family, colleagues, or neighbors have. It could be just the fear of missing out too.
This phrase has been around a long time, but with social media, we have quicker access to everyone’s possessions, homes, traveling, cars, or apartments. Many people buy things to then post and seek validation. Thus, causing others to feel the need to keep up with what their friends are doing and buying.