Life is a series of challenges, whether it is about love, career or just how you would be productive on a daily basis. In fact, a lot of people are struggling to get by every single day, but you’re lucky to have everything you need. However, you might be living beyond your means, yet you fail to realize your situation until the situation gets worse.
Let’s look at some warning signs that will help you identify the poor spending habits before you end up hitting that brick wall.
You don’t Budget
When you don’t budget, you cannot make any progress considering that you lack any ambition. Living within a budget enables you to understand your income, then plan for expenses without resorting to loans or credit. Most people are afraid of having a budget plan since they might uncover their bad spending habits. Experts will advise you to find the source of your financial troubles and solve them to experience some real freedom. Always plan for the money before you earn it to identify wasteful expenses and categorize your spending.
When you are in debt, but pay people to handle tasks that you can do on your own
There are routine tasks such as cleaning the house, washing the car or ironing your clothes that you might hate doing, and you are tempted to seek assistance elsewhere. In case you are in debt, you cannot afford these luxuries; you need to calculate your annual expenditure then use the money in repaying debts. Besides, you need to perform the tasks, earn extra money, and take control of your finances.
You save less than 10% after-tax
It is always advisable that you save 10% to 15% of your income, and in case you fail to do so, you are living beyond your means. All manner of savings are included in the figure, be it emergency fund contributions, bank deposits, or investments
You can’t live for 4 months without your income
Some financial emergencies will arise when you least expect, although they would be insignificant if you have an emergency fund. Your emergency fund needs to be at least four months’ worth of income, and it should cushion you through the financial surprise. Creating the emergency fund might be tough when you have little spare money each month. Consider saving a small fraction every month, and the fund will gradually build up. You might be fired at any time; consider saving for that rainy day.
Paying for recreational activities using your credit card
You might justify this action by claiming that you deserve a holiday, given that you worked hard. Always remember that holidays are a luxury that you should pay for using your savings; otherwise, you will delay in repaying the credit. Using your credit card will encourage you to purchase expensive holidays as opposed to the holiday experience you would have had with your hard-earned cash. It would be necessary to clear all debts at the end of every month to minimize carrying over mortgages to the next month.
You Pay bank overdraft in 12 months
In case you realize that you often pay overdraft fees to your bank, then you are living beyond your means. You need to work on a budget to help control your expenditure and prevent paying your hard cash to the bank. Always check your past 12-month bank statement, then add up the amount of money you paid the bank as unnecessary charges.
You fear criticism from friends
You might find yourself purchasing items to please your friends, and this could form a costly habit. It would be helpful if you evaluated what you need before buying it and stop the practice of pleasing friends.
You use credit cards in the supermarket
In case you find yourself purchasing items at the supermarket using your credit card, but fail to clear the balance at the end of the month, you need to be worried. It is easy to use your credit without thinking about the ramifications. Consider leaving that credit card at home when going shopping to enable you to make conscious decisions and reduce impulse buying.
The credit card balance is on the rise
Begin by inspecting your past 12-month credit card bills and see whether the balance is growing or reducing. In case the balance is on the rise, that means that you rely on credit to sustain yourself. You can minimize your credit card expenditure by reducing the outstanding balance and taking control of your finances. It is essential to regularly check your credit report since it will when your financial situation worsens, or there are fraudulent activities in that account.
Living beyond your means will prove to be costly, and the only way to fix the above problems will need a lot of sacrifices. Give up on the short-term fantasies, and you will be successful in the long run. In case you cut back on your expenditure and spend less, you can save more and invest in a better future.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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