Living a financially viable life can be a real challenge, especially in a consumer-driven world.
But there comes a time when those who have over-reached themselves come crashing down as they realise they are living well beyond their means.
So, how you can figure out if you’re living beyond your means? Well, the behaviour of people living beyond their means is remarkably similar the world over, and it looks a little like this.
1. You’re Living Pay To Pay
Living pay to pay is the surest sign that you’re living beyond your means.
A hand to mouth existence might have been challenging and even worth bragging about when you were living the life of a ‘poor student’. But as an adult there’s nothing cool about living hand to mouth, and there’s nothing noble about it either. If you have absolutely nothing left over between one paycheque and the next, there’s something wrong with your financial strategy.
2. You Buy To ‘Keep Up’
People buy things for all kinds of reasons, and in a world where we’re constantly being told to consume, buy new and upgrade, it can be hard to keep the balance. One of the most common habits of people living beyond their means is their tendency to buy things to ‘keep up’ with those around them.
If all of your friends buy designer, live in certain areas, shop brands for their kids and so on, you might also want to do that. But the fact is if you can’t afford it, stretching yourself just to keep up with the Joneses isn’t sustainable. In fact, it’s a sure indicator that you’re living above your means.
3. You Aren’t Saving Anything
We get it, saving is hard. Living costs are high and wages just don’t seem to be keeping up. However, if you’ve living within your means you should find it totally possible to put aside money on a weekly or monthly basis for saving.
Financial advisors suggest that around 10% of your incoming money should be put aside as savings, and that even those living in expensive areas should be able to put aside 5%. If you can’t, it might be time to come to terms with the fact that you’re living above your means.
4. You Have Nothing For An Emergency
Emergencies absolutely happen all the time, and if you aren’t prepared for one they can be devastating. One of the most important aspects of preparing for an emergency is financial preparation, that is having money aside in an emergency slush fund in case something goes wrong.
This something could be anything, from surprise bills and expenses to unexpectedly losing your job. If you don’t have an emergency fund you’re incredibly vulnerable, and if you don’t seen how you’ll find the money to start one it’s likely you’re living above your means.
5. Your Credit Card Balance Carries
We live in a consumer-driven society, and that means that credit is king. There are so many ways that credit card companies encourage you to get a credit card that it’s no surprise so many people have them.
But when you can’t pay off the expenses you incur on those cards things start to get complicated. If you’ve got credit card debt that is carrying from one month to another, it’s pretty likely that you’re living above your means.
6. You’ve Paid Overdraft Fees
Overdraft fees, the money you get charged when your accounts dip into negative numbers, can happen to the best of us. Sometimes we just aren’t paying attention and we haven’t got enough money in our accounts to cover bills and direct debits.
But overdraft fees should not be a regular occurrence. One slip up is not out of the ordinary, but if you’re paying overdraft fees on a regular basis because you really don’t have any money in your accounts, your lifestyle isn’t sustainable.
7. You Don’t Budget
People who hate budgeting or keeping track of their finances are almost always the ones who are living above their means. When you take the time to become properly acquainted with your financial capabilities and responsibilities, you know when you can’t afford to do or buy something.
People that live above their means refuse to acknowledge their financial limitations, constantly spending without any regard to what they can and can’t afford. If this sounds like you, it’s time to make changes.
Do you think you live beyond your means?