10 signs that you are living beyond your means

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Reconsider spending before financial disaster.

1. You spend every last penny

Savings are an important part of financial security. Ideally, save 10% of your income monthly. If the earnings are small, at least 5%.

When there is no money left at all, spending does not correspond to income and the situation needs to be changed. Otherwise, any force majeure will lead to a deep financial crisis.

2. Your expenses grow with income

You didn’t save anything because you didn’t earn much. Your income increased in your new job, but there was still no money to save money.

Expenses tend to rise in line with income. If you have free money, you want to buy better things, have fun, and so on. But all these expenses are justified when they do not harm other areas of life. If you put everything down, no matter how much you get paid, you have clear financial discipline problems.

3. People with similar income spend less

While you are barely making ends meet, your colleague has accumulated a down payment on a mortgage, travels and lives quite happily. It is possible that he scored part-time jobs, successfully married the daughter of an oligarch and, in general, the son of his mother's friend.

But there is a possibility that he simply spends money more wisely. For example, I did not change the penultimate iPhone model for the latest, but bought tickets for a tour of Europe with this money.

4. You pay off credit card debts late

There is nothing wrong with using a credit card. You can even make money with a credit card if you pay with it while interest is charged on the balance on the debit card.

But if you do not pay on time and are faced with the need to pay interest and interest, this suggests that you are wasting money.

Having a credit card doesn't mean you can spend more than you earn. It only makes it possible to spend the money earned a little earlier than you actually receive it.

5. You are afraid of running a budget

You write off your unwillingness to budget for laziness, low income, and come up with millions of excuses. But if you look deeper, there is only one reason: you are afraid to face the truth about your spending.

Deep down, you understand that not all your expenses are justified and you could handle your money more wisely. Keeping a budget will force you to rethink your attitude to finance, but doing nothing is always easier than taking action.

6. You buy status items designed for wealthier people

Sounds a little snobbish, but these are the harsh realities. Saving up for an apartment in a trendy neighborhood or a car worth several million is half the battle. Subsequently, you will have to maintain this property. And while your neighbors can easily pay the equivalent of half your salary every month for concierge services, you will have to work day and night to match the standard of living you have chosen.

Status things do not change a person as much as you expect, but at the same time they beat on the budget. And it's not just about houses and cars. Sometimes an expensive smartphone or bag is enough to punch a hole in your pocket.

7. You don't think about saving at all

For any income, saving is pleasant and useful. Perhaps, if you are rolling in millions, there is no more need to track buckwheat for the stock. But you will be pleased with a discount on the latest model car.

If you are "above saving", then in any case, you are spending more than you could. So, you live beyond your means.

8. You have a lot of loans at high interest rates

A loan is an excellent tool to get things right now that raise the standard of living and are generally necessary.

But if loans eat up a significant part of income, and they are taken for goods that you can do without, this is a signal that you have financial problems.

9. You are afraid to admit you are over budget

When your friends call you to the bar, you never admit that you have almost no money left. Better to go out and have fun, or even pay for the whole company, and then wait for your salary on a diet of rice and pasta.

It's easy for a salesperson in a store to cheat you on a purchase. It is enough to hide the price to the last: at the checkout you will no longer refuse, since it is inconvenient to admit that you do not have that kind of money.

In fact, there is nothing to be ashamed about keeping track of the budget balance. It is better to work out this complex with a psychologist and make your life easier than to end up in a difficult financial situation over and over again for fear of being branded as a rogue.

10. You don't have long-term goals

You often say “we live once” or think that you have to break away while the young / no children / the schedule allows / summer. And you end up spending most of your money on entertainment. This is a really important part of life. But when you spend too much on it, it jeopardizes your future.

Even if you save 10% of your income monthly because it’s right, there’s nothing wrong with saving more. The best motivation for this is a long-term financial goal.

Indeed, it is not very clear why to transfer part of the salary, if you can please yourself with this money. When you clearly know why you are doing this, the attitude towards finance changes.