Signs you are living beyond your means
You should set aside anything from 10% to 15% or even 20% of your salary as savings
A good rule of thumb is to save at least 5% of your gross income and have enough savings to cover at least six months of expenses in case of an emergency. Pay off your credit cards on time each month to avoid accruing interest, which can quickly drain your bank account. If you’re constantly short on funds, it’s time to make some adjustments. Let’s look at below few signs that indicate that you are living over your means:
Not saving at least 5% of income
You should set aside anything from 10% to 15% or even 20% of your salary as savings. Saving less than 5% of your income suggests you’re probably living beyond your means.
Not fully paying credit card bills
Swiping that plastic without thinking about how quickly the balance is growing is a simple matter of habit. The balance will continue to rise even if you only make small purchases. Then, when the bill comes, you’ll be paying interest on the money you’ve already spent because you charged more than you could afford to pay. You’re putting stuff on your credit card that you can’t afford.
No emergency savings
Living beyond your means implies you must make sacrifices and start an emergency fund if you can’t save enough money to cover your living expenses for at least six months in the event of a job loss.
Holiday on credit
After you return from your vacation, you’ll have several months to pay off the balance on your credit card. You’re living over your means if you can’t afford to pay for it all at once.
You run out of money before your next pay cycle
You rely too much on your credit card. You should start adjusting your way of life to match your income or take steps to ensure that your income matches your way of life.
Lack of retirement funds
On the other hand, planning for retirement should be at the top of your priority list if you don’t intend to continue working for the rest of your life. When times are tough, it’s all too easy to let your retirement savings slip through your fingers. Creating a budget is one way to get your life back on track. Budgeting does not imply giving up everything you want, but rather, it means figuring out how to spend your money more wisely while still allowing you to achieve your financial goals.