You’d be surprised at just how easy it can be to live beyond your means. You might think that you deserve a better lifestyle than you have, and you might end up spending a lot more money on products than you can afford. Thanks to how easy it is to borrow money and acquire credit cards, it’s surprisingly hard to live within your means. There are always discounts and deals going on that try to push money into our hands and make us spend it, so it’s understandable if you’ve adopted some rather wasteful spending habits.
But that doesn’t mean you need to stick with them. Whether you’re facing debt or looking to save more money for something like a home deposit, we’ve got a few tips to help you identify when you’re living beyond your means and how you can cut down on your spending.
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You don’t have any savings
What would you do if you suddenly had a medical emergency? What if your car suddenly broke down or your laptop needed replacement parts? These kinds of emergencies are expensive and will halt your work or lifestyle, so it’s important to have savings that can help pay for them.
You have an imbalance approach to spending money
One of the big telltale signs that you’re living beyond your means is when you have an imbalance in how you spend your money. For example, you might hesitate to buy something essential such as groceries, but you won’t hesitate to spend lots of money at a club or bar when you’re with friends. You should always look at your spending and get your priorities straight to avoid living beyond your means.
You have no idea how much you’re paying in credit card bills
It’s a good idea to use calculators on websites such as Pigly.Com to help you get an idea of how much you need to be paying back each month on credit card bills. If you don’t actually know how much you’re paying or are constantly making late payments, then you need to wrestle back control of your finances.
You’ve never budgeted before
Budgeting involves comparing your incoming money to your outgoing money. For example, you’ll look at your salary to see just how much you make, then you compare it to your monthly or weekly expenses depending on the timeframe. You should always end up with more money at the end of the month. This can then be used for savings or for personal purchases. However, if your monthly expenses exceed your income, then you need to start cutting down on certain things.
Living beyond your means can be a dangerous thing for your personal finances. You need to be truthful about your spending and realize when you’re spending too much on things that you don’t need. It’s not normal to be constantly behind with your finances. It’s much better to save money so that you have a fund ready for emergencies, or so you can make larger and more helpful purchases that will enrich your life.