It is one thing to be able to make money and another to be financially intelligent. The latter does not come cheaply. It requires discipline and good decisions. Some people are careless with their money so end up broke after they have spent all they have. They resort to begging or taking loans to meet their needs afterwards. If you are living above your means, it means you spend more than you earn. You would always end up in debt trying to live a lifestyle you can’t afford.
Here are indicators that prove you are living beyond your means:
- You are saving less than 5% of your income. If you save less than this, you are likely living above your means. A saving rate below 5% can not meet emergencies.You are likely unable to stay afloat.
- If your current income cannot support your lifestyle and you find yourself borrowing from friends and family members, you are living beyond your means.
- If you don’t set financial goals but spend impulsively, you are certainly living beyond means. Having a written budget is one of the most important steps to financial freedom. This way you take honest account of your income, spending, and savings goals.
- You try to keep up with the Jonesses. If you are under constant pressure to impress people with a extravagant lifestyle, chances are you are living way above your means. It is advisable to cut your coat according to your size.
- You get broke before month’s ends. If you live on salary to salary, it would be difficult to save money or spend less because your lifestyle has become a habit. A typically way to cut back is by buying only what you need as opposes to what you want.
- If your bills are above your income, try slicing your monthly income into different pieces to pay for only necessary bills. Go through them one after the other and pay for the important ones.
- If before buying something, you know you shouldn’t but still go ahead then you are living way beyond your means. You should know your priorities and go for what matters most.