30 Subtle Signs You’re Living Beyond Your Means
Hint: If you don't have a budget, you probably are.
Everyone loves the finer things in life. But dropping your card down like you’re merely drawing money from a make-believe entity is a recipe for fiduciary disaster. To make smarter financial decisions, says Lucas Casarez, CFP and founder of Level Up Financial Planning, it’s imperative to learn “how to maximize your money to live your best life now without risking the future.”
One of the most crucial aspects of doing so, he says, is making sure you spend less than you currently make. While this sounds easy, however, it’s not always so simple to remember in the heat of the moment, when, for example, your budget is on shoestrings but you’re sick of eating Top Ramen.
Fortunately, he says, there are “a few areas in which people can easily identify [whether or not] they are living beyond their means.” While it can be frightening to face your entire financial past, present, and future all at once, keeping an eye out for these subtle signs can help you stay on track by indicating the guardrails of financial insecurity. Just make sure that once you see them, you slow down—or risk going over a cliff.
You Don’t Pay Off Your Credit Card Balance In Full
“One sign that you’re living beyond your means,” says Brian Davis, co-founder of personal finance blog SparkRental.com and a frequent contributor to Fox News and MSN, “is that you don’t always pay off your credit card balance in full before the end of the month.” If you begin carrying interest over into the next month, he says, “it’s a huge red flag.”
You Don’t Have A Clear Budget
“Without a written budget” says Davis, “it’s likely you’re spending more than you’d like.” If that behavior continues for long, he says, you will begin spending beyond your means. In addition to setting a budget, he also recommends “regular check-ins to whether your spending aligns with that budget.” A script, after all, is no good if isn’t followed.
Your Savings Rate Is Below 5 Percent
“You should be trying to save at least 10 to 15 percent [of your take-home income],” says Todd Kunsman, founder of personal finance website Invested Wallet. “But if you find yourself not being able to beat 5 percent,” he warns, “you may be living beyond your means.”
You’re Surprised By Your Credit Card Bill
“On a regular basis,” admits Jon Dulin, a blogger at MoneySmartGuides and a 15-year veteran in the financial services industry, “when I would open my credit card statements my jaw would hit the floor.” This, he says, “was a clear sign I living beyond my means.” With some discipline, however, he’s “become more disciplined with my spending and [as a result] never am surprised by the balance due on my credit card statement.”
You Spend Your Paycheck Immediately
“When you get your paycheck and the first thing you do is spend on material things or upgrades,” says Kunsman, “it might be time to re-evaluate.” The fact is, she says, this is “a quick way to stay broke and unhappy.”
You Have No Emergency Fund
“Besides paying off debt,” says Dustyn Ferguson, founder of personal finance website Dime Will Tell, “having an emergency fund is the most important thing to have a secure financial future.” If you don’t have one amounting to at least a month’s worth of living expenses—though ideally you’d want three to six—you likely “have no money from your paycheck left over.” This, he says, is a dangerous position to be in, as just one minor difficulty (such as job loss) “can set your financial progress back big time.”
You’re Paying Credit Card Interest
“Carrying a balance on your credit card is costly,” says Ferguson, “and it’s really only done by those who can’t afford to pay their bills on time.” If you are paying interest, he says, “this is a clear indicator you are spending beyond your financial capabilities.” Even worse, it’s “costing you big time.”
You’re Paying The Minimums on Debt
“Paying the minimum payment on debt,” says Ferguson, “is another big sign you’re in above your head.” Not only that, “it’s not making you much progress on your debt and is costing you more in interest.”
You Have Multiple Accounts Without Multiple Income Streams
“If you have multiple streams of income,” says Russell D. Knight, a divorce lawyer at The Law Office of Russell D. Knight, “then maybe you need multiple accounts for the income to be allocated to.” If not, however, and you’re still employing a diverse array of bank accounts, he warns, you’re likely “robbing Peter to pay Paul.”
Waiting For Your Check To Arrive To Make A Purchase
“If you find yourself actively waiting for your paycheck in the mail each week before you make a purchase,” says Stacy Caprio, a financial blogger at Fiscal Nerd, “that is a subtle sign you are living paycheck to paycheck and thereby beyond your means.” The fact is, she says, “you should always have a few months living expenses extra cash in the bank.” If you don’t—and you’re relying on money that hasn’t even arrived yet—your spending is out of hand.
Asking Someone To Hold Onto A Check Until Payday
“Asking someone to hold the check you just gave them until after payday,” says Sharon Marchisello, author of Live Cheaply, Be Happy, Grow Wealthy, is a clear sign you’re living beyond your means. Not only that, it also inconveniences the person whom the check is made out to, as well as making it clear to them that your finances are not in order. This is not the kind of impression you want to make, especially if they are a business partner.
Not Contributing To Your Retirement Plan
“Not contributing to a retirement plan because you need all your income to cover daily living expenses,” says Marchisello, is an indicator you are living beyond your means. It’s also likely to anger your future self to no end.
Digging Into Your 401K
While emergencies do sometimes arise, which require you to dig into your savings, says Marchisello, “raiding your 401K for non-emergency spending” is a huge no-no. Not only does it signal that you are living beyond your present means—and thus unable to contribute to your retirement—but that you’re stealing from your future self just to make current ends meet.
Applying For New Credit Cards Because The Old Ones Are Maxed Out
“[If you’re] applying for another credit card because all your others are maxed out,” says Marchisello, you are living far beyond your means. There’s a reason, after all, that credit cards have limits.
You Worry About Small Purchases
“It’s okay to be thrifty” says Alayna Pehrson, financial blog manager for BestCompany.com, “but if you constantly worry about small expenses, that may mean that you are living beyond your means.” It’s important then, to find out which purchases are taking up too much of the bulk of your spending. “You have to have life necessities,” she says, “but if you worry about buying something like soap each month, then you may want to reevaluate your finances.”
You Use Your Credit Card For Purchases You Can’t Afford
“Your credit card is supposed to be a helpful tool that will get you closer to good credit card opportunities,” says Pehrson. “However,” she continues, “if you are using it for purchases you can’t afford or for things you know you don’t really need, then you should try setting boundaries for yourself.”
You Constantly Check Your Account Balances
A good sign you are living beyond your means, says Beverly Miller, a financial coach at MoneyCoachBev, is that “you worry about your checking account balance and constantly check on it.” While almost everyone experiences money worries to a certain extent, it’s gone too far when it becomes a minute-to-minute compulsion.
A Sudden, Emergency Payment Causes Anxiety
“[If] a car repair, insurance bill, tire purchase or medical bill causes you to lose sleep,” says Miller, you’re likely living beyond your means. The fact is, you should always have enough money put away to cover these unforeseen—yet crucially important—purchases. And for some warnings on how to avoid these kinds emergencies at home, check out The 50 Deadliest Items in Your Home.
Your Credit Score Is Low
If you credit score is below 600, says Steven Millstein, CFP, and editor of CreditRepairExpert, you’re likely living beyond your means. There’s simply no other reason to be falling behind on payments—besides gross negligence.
You’re In Debt Denial
“Debt denial,” says Chelsea Hudson, Personal Finance Expert at TopCashback.com, “is when you avoid small financial tasks such as opening bills and checking your credit score.” Besides indicating that you are outspending yourself, debt denial can also “lead to bigger issues such as delinquent payments, collection agencies, lawsuits, and more.”
You Borrow Money From Family Or Friends, Or Rely On Payday Loans
“[If] you’re having to borrow money from friends or family, or use payday loans,” says Millstein, you’re likely living beyond your means. While it’s good to have family you can count on, you never want to be in their debt. Payday loans, meanwhile, often charge exorbitant interest rates, and are only to be used in desperate times.
You Apply For A Refund As Soon As You File Your Taxes
“Applying for a Rapid Refund loan…as soon as you receive your W-2,” says Marchisello, is a good sign you’re living beyond your means. While everyone loves a good tax refund, no one should be relying upon it to cover their daily expenses.
You Are Juggling Bills
“Juggling bills because you don’t have the funds to pay them all,” says Marchisello, indicates you’re living beyond your means. The fact is, you should be able to pay off any debt you accrue within the proper period, so once you start missing payments—even if other bills are being taken care of—warning lights should begin to blink.
You Have Little To No Extra Money At The End Of The Month
“If you reach the end of the month and you don’t have that much money left over from your last paycheck,” says Pehrson, “then odds are, you are most likely living beyond your means.” Instead, she says, “you should create a budget to follow that will allow you to have some extra money at the end of each month.”
Using A Credit Card For Groceries Or Other Necessities Because You Don’t Have The Cash
“If you are using credit cards to purchase groceries or pay other bills because you don’t have money in the bank to take care of it,” says Karen Ford, a financial coach, public speaker, and entrepreneur, then you are spending too much on other, non-essential items. No matter what your budget looks like overall, groceries and other necessities should always be budgeted in, not left to be taken care of with debt or other short-term financial remedies.
You Can’t Say No To Yourself When Shopping
“Another way [to tell you’re living beyond your means],” says Ford, is when you can’t say no to yourself when you shopping.” The fact is, most people need to be able to say no occasionally—or avoiding shopping altogether—in order to stay in the black. If not, you’re probably overspending.
You Check The Calendar Before You Make Payments
“[If] you have to check the calendar…before you pay the bills,” says Miller, you’re living beyond your means. While getting a paycheck in the mail is important, it shouldn’t determine when exactly you can actually get around to paying off what you owe.
Missing Due Dates On Premiums
“Missing due dates for insurance premiums, being late on paying a premium, or having had a policy lapse due to non-payment,” says Sam Price, owner of Assurance Financial Solutions, “are all common signs that someone is living beyond their means.” The fact is, she says, “most premiums these days are paid electronically and automatically come out of a checking account each month.” That leaves no room for excuses when it comes to non-payment, besides living the rest of your life beyond your means.
Upgrading Your Lifestyle Faster Than Your Income
“If you are upgrading your lifestyle faster than your pay increases,” says Casarez, you are living beyond your means. “Pre-spending pay raises, bonuses, and tax refunds before you know much they will be,” he warns, “is pretty risky.”
Frequently Being Overdrafted
“Frequently being overdrafted in a checking account,” says Price, “can also be a good warning sign that someone is living above their means.” “Having a number of overdrafts,” he continues, “is a sign that someone isn’t monitoring their spending or is juggling paying debts they can’t afford.”
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