We live in a time and day that living above your means is very common. It is not rare to hear people complaining about not being able to pay their mortgage or save for retirement, despite having the latest phone, highest phone plan, mid-class sedan, and higher end fashions. On a whole, our financial priorities are quite skewed. Here are six warning signs to figure out if you are living above your means.
- 1. Every Person in Your Home Has Their Own Room, But You Have a Tight Budget: One common sign of living above your means is that your home is bigger than you really need. You end up paying more for a bigger house, and the truth is that your family may not even need all of that space. For a family of four, it seems to be deemed a necessity for a five room home over 2200 square feet. If you are struggling with your mortgage or rent payments, reconsider if you need to live in that much house.
- You Are Unaware of Your Expenses: Are you scratching your head at the end of the week or month wondering where all of your money went? It happens to the best of us, but it is a serious sign that your budget needs to be reviewed.
- You Skimp on Essentials: Another common sign in those who are living beyond their means is that they are constantly trying to cut out essentials, such as groceries, toiletries, and clothing. If you are spending too much money paying for your home or car payments and are struggling buying all the necessities for your family, then that is warning sign that you are paying for the wrong priorities.
- You Buy Everything on Credit: Are you constantly buying items on credit? Just because you can get an item for 12-18 months without interest does not mean it is right for your budget. If you can’t pay for it in cash, then chances are you shouldn’t be buying it in the first place. Also, if you are always trying to keep up with credit card payments, then that should be a sign to you that you cannot afford your current lifestyle.
- You Spend Your Money Before You Earn It: It can be easy to go out and spend money when you are promised a raise or bonus. In fact, this is why there are so many successful cash advance businesses. People are quick to spend their paycheck before they actually have it in the bank.
- You Dip Into Your Savings Frequently: No one likes to dip into their savings, but sometimes it is a necessity. If you find yourself pulling money out of your savings, or even worse your retirement account, to pay for bills or major expenses, then you are heading for financial trouble.
Are you guilty of living beyond your means? You are not alone. It is quite easy to slip into spending habits that have us spending more than we should. Come back Friday to see six ways to get back to living below your means.