Here are signs that indicate you are living beyond your means:
1. ZERO SAVINGS ACCOUNT
One of the biggest signs that you’re living beyond your means – lack of a financial cushion. Money in the bank can sustain you after a job loss, an illness or another emergency. Unfortunately, many who live beyond their means spend all their cash and don’t think about saving their money. Break this habit and you’ll free up cash for a financial cushion. This calls for drastic measures, such as eating out less, shopping less and vacationing less.
2. HOUSING EXPENSE
Housing ratio refers to the percentage of your income spent on your rent or mortgage. In a perfect world, your housing ratio should be less than 28% of your income. To compute your ratio, divide your monthly housing payment by your monthly income. If the ratio is higher than 28%, you’re living beyond your means.
3. CAN’T PAY YOUR BILLS ON TIME
True, lateness can be attributed to forgetfulness. But if you have good intentions, but not enough money in the bank to pay bills on time, perhaps you’re overextended. Examining and adjusting your spending habits can solve this problem. A review may reveal that you’re unable to afford weekly salon visits or regular massages.
4. TRYING TO KEEP UP WITH YOUR FRIENDS
Do your friends vacation and shop often? Do you try to keep up with their lifestyles? If so, you run the risk of living beyond your means. There’s nothing wrong with a little indulgence and fun, as long as you can afford this fun.
5. CONSTANTLY BORROWING MONEY
Do friends or family members dodge your phone calls and text messages? Maybe it’s because they know you will ask for cash. If your present income cannot support your lifestyle, and you’re always asking mom or dad for a handout, a lifestyle adjustment is in order. “Living within your means” means that you’re able to afford your lifestyle without needing financial help from others.
6. YOU HIDE WHAT YOU BUY
I admit, I’ve been guilty of buying new clothes and hiding them in my trunk so I can sneak them inside without anyone knowing. It might’ve seemed like a good idea then, but it sure isn’t now! If you feel guilty about your spending habits, lie or hide your purchases, you’re probably spending over your limit.
Living within your means is a bit restrictive, but wise. And although a lifestyle adjustment changes the way you spend your money, you can enjoy peace of mind and financial happiness.
