The greatest joy of this life is to live it and to live it to the fullest that you possibly can. It feels good when you are able to get that vacation or that house. And not have to worry about the dent it may potentially leave in your pocket. But unfortunately for some of us, the life we want to live does not necessarily match our pockets.
Here I show some sure signs that you can use to tell if you are living beyond your means. And if you need to reevaluate your lifestyle. This will hopefully enable you to work on your personal finance to enable you to have more financial freedom. Enable you to save more and have some things set out for you earlier than you had imagined. For example investments or a business.
1. You Don’t Save At Least 5% Of Your After-tax Earnings
For you to progress your finances, you need to make sure that you are putting aside some money for your savings. If you are not putting aside any money, in that you need every cent for you to survive then it may be time to reevaluate your lifestyle. You should consider a more frugal lifestyle. Or you should consider cutting back on some things that you may not necessarily need.
Start by saving the 5% before anything else. Then look at what you are left with. Using this amount you can determine what kind of lifestyle you should be adopting. If you do not like what you find you can supplement your income by having a side hustle. You will have either of these options, both of which are meant to help you on your way to financial freedom.
Related: Savings Checklist
2. You Do Not Have A Written Budget
Having a written budget will help you to see where your money is going. And once you are able to see this, you will be shocked at what you are spending your money on. Also, a written budget will help you stay on track with your bills and the essential things you need. Your finances will not be scattered everywhere and you will not be lulled into a false security of spending money that you may not actually have.
Having a written budget will also help you see how much you can actually splurge without having to worry about the consequences at the end of it all. Basically having a written budget will give you clarity. You will make more informed decisions and be more aware of what you can do with your money and what you cannot do.
Related: Monthly Planner & Budget
3. You Do Not Have An Emergency Fund
Having an emergency fund is crucial to you as a person and to your finances. The reason as to why it is an emergency fund is because that is what you would use in the event of an emergency. You never know when this could happen so it needs to be in effect as soon as possible.
Not having an emergency fund may put you in a difficult position if you get an emergency and do not have the funds and family and friends are not in a position to help immediately. An emergency fund should not be confused with your savings. Your savings are meant to be used to help you with your future plans. Whereas emergency fund is for emergencies, in as much as for most people they tend to be the same thing. It is best to have them separate so that you are able to progress financially.
4. You Run Out Of Money Before Your Next Paycheck
This could be very well the biggest warning sign that you are living beyond your means. Your paycheck needs to suffice until your next payment comes through. If this is not the case, you definitely have to reevaluate your lifestyle. You need to put everything in place to make sure that you have enough money to last you through the month.
Your salary determines a lot of your choices. Determines where you live, what you eat, and what you wear. So if you are not able to live through the month on your salary and your money ends before the next payment, you need to check where you live, what you eat and what you are wearing. So that these things match what you earn and you do not strain yourself trying to live a life you clearly cannot afford.
5. You Are Always In Debt
This goes hand in hand with your salary ending before the next one comes in. If your money is over before the next one comes in, what are you left to do? You start taking out loans from friends and family and even lending institutions to make ends meet. There are one or two instances where you can do this and recover. But if this is your lifestyle then you need to sit down and have a serious meeting with yourself and your finances.
It is important for you to check yourself if this is the case because constant debts lead to strained relationships. Especially in the event that you are not able to pay off the debts. And since you are living beyond your means this will be normal and people will start hiding from you. You do not want to have strained relationships just because you want to live beyond your means. Adjust yourself, pay off your debts and stay off the debts unless you absolutely have to.
Related: How To Get Out Of Debt And Save More
6. 30% Or More Of Your Income Goes To Rent
There is more to this life than just a place to lay your head on. If you are taking 30% or more of your salary to your landlord then it’s time you got to know that you are working to put food on your landlord’s table. This should not be the case, you should wake up early to go and make a better future for yourself and your family, not your landlord. So please, if this applies to you, you should seriously consider moving houses.
You shouldn’t live for stature and hurt yourself and your finances in the process. I know it is hard thinking about going elsewhere when you are so used to being in your house, but you will start to see the benefits soon enough when you are left with around 80% or more of your salary after paying rent, and you will start to think outside of the box as to how you can improve your life with the extra money you have at your disposal.
7. You Pay For Services You Can Do Yourself
We all tend to be a little lazy, but you have to kick out the laziness so that you can get things done. Sometimes though you feel like you have earned the laziness. I mean you woke up early the whole week to go to work, so why should you again wake up and do the laundry or cook when it is your time to relax? You get a cleaning lady to clean your house and do your laundry for you. You eat out almost every night because you do not want to cook.
The outcome? Write it all down and you will be surprised at how much you spend on services you can do on your own. It’s not bad to eat out once in a while or to relax but every other time? This could be hurting your finances more than you would know. Once you are able to see the figures, I think something will be kicked into gear for you to do stuff on your own. If it is still something you cannot do on your own, you could buy an appliance to help lighten the load. For example, a washing machine will do all the laundry with no complaint and you don’t have to add a tip.
8. You Take Out Loans To Buy Unessential Things
If you find yourself admiring something and you clearly know you don’t have the money for it, it is beyond your league. But if you decide you must have it anyway and take out a loan so as to get it. You are definitely living beyond your means and you need to check yourself before you do any more damage than you have already done.
Because at the end of the day, you still have to return that money, and that will come out of not getting something essential so that you can repay the money you owe. Then get another loan to buy the essential things, and you are back to the constant debts. Get yourself out of the cycle, stick to your lane and get your financial freedom back.
9. You Get The Bare Essentials For Your Home
Since most of your money is going to rent or other things, you find yourself not having enough money to get enough essentials at home. You buy just enough if not barely enough of everything. This should not be the case. You should be able to buy all that you need for your household without feeling that you have been pressed to the limit.
If you find that you cannot do this comfortably then it shows that you are living beyond your means. And you should consider getting a side hustle to supplement your income. Or change your lifestyle so that you are able to accommodate all you need to live comfortably within your means.
10. You Are Scared Of Being Judged By Your Friends
This could be very well the largest reason why people find themselves living beyond their means. Why? They are scared of being judged by their friends. You can’t really blame them on this because peer pressure is a very big thing and it affects all if not most of us in ways we never knew it could. I mean you do not want people you grew up with or work with or went to school with to see that you are struggling when they are doing okay or doing well.
In as much as they may not really care, that is not what goes through our minds. We want to be seen as successful even though we might not be. This is the moment where your self-image is really put to the test. Will you be true to who you are and live within your means regardless of what people think? Or will you bend to peer pressure and pretend afterwards to be left with the aftermath that you have to deal with, people close to you suffering in the process?
All these signs are meant to show the truth, we may not want to hear it but once you look at your lifestyle keenly and are able to recognize some red flags and you are able to adjust. You will be all the more glad about it. It will not be easy but it will be worth it in the long run. All the best my lovelies.