Signs That You’re Actually Living Beyond Your Means

Living beyond your means isn’t something that suddenly happens. It’s not a conscious, one-time decision, but the result of many small financial mistakes that you thought were the right money moves. Then one day you’ll notice that you’re having money problems. 

If you are reading this and you have noticed that you spend a lot and have trouble paying back your money lender, it is probably because you have begun feeling the pressure of your financial situation. The first step in getting your finances under control is admitting that you are living beyond your means. The good news is that if you reflect long and hard enough, you’ll be able to spot them and get started on nudging things back into shape before they come completely apart. 

Over Reliance on Credit

Credit cards and personal loans can be helpful when used responsibly, but they’re problematic if you excessively use them for unnecessary purchases. And if it’s gotten to the point where you rely on credit to get by with your expenses, that’s a big warning sign. And if you default on them, you’re in for a financial nightmare because of interest rates penalty fees. 

If you find yourself in this position, it’s time to scrutinize your spending habits. You shouldn’t be living on borrowed money, but rather, employing credit strategically. You may begin by concentrating on paying down your current debts, particularly high-interest balances. After you’ve done that, be sure to limit credit to essential purchases or emergencies, and always pay the bill in full every month.

Living a Lifestyle That You Can’t Afford 

It is normal to want a certain quality of life. But when the lifestyle you’re pursuing begins to take a toll on your finances, it’s time for a reality check. For example, owning a luxury car, living in an expensive district, and spending on high-end goods, all of these can be indicators that material possessions are taking up more than a reasonable share of your income, and that you are living beyond your means.

The key here is balance. Nothing wrong with wanting to attain a certain lifestyle, but it has to match what you can actually afford. Don’t end up house-poor, in an unaffordable car, or living paycheck to paycheck trying to maintain appearances. Instead, turn your attention to what will actually build your long-term financial well-being. Looking to a more sustainable financial future doesn’t mean giving up your dreams, it just means being more deliberate about the things you spend your time and money on.

No Savings or Emergency Fund

When you’re spending more than you have, one of the signs is a lack of savings or an emergency fund. You have no safety net, so you have to depend on credit or loans, which only heaps more stress onto an already fragile economic reality. This is where having an emergency fund comes in. It’s one of the best ways to shelter you from these unexpected financial problems. Ideally, you want to keep three to six months’ worth of living expenses in an easily accessible account. These funds are only to be used in emergencies so you don’t have to go into debt when the unexpected happens. You don’t have to build this fund in one day, start small, and let it grow over time. Even putting aside a little every month can afford you the peace of mind that accompanies being prepared for life’s surprises.

Not Tracking Your Spending

Singapore is a fast-paced environment, and it can be hard to keep tabs on your money. It’s those smaller, everyday expenses (like buying fancy coffee) that can add up fast. If you’re not tracking your spending, then you’re probably spending way more than you realize.

Monitor your spending. Take note of where your money goes every month and look for areas where you may be able to trim back, maybe it’s eating at restaurants less or eliminating impulse purchases. As you gain a better understanding of how you spend, it becomes easier to make better choices with your money. Knowledge is power, and having precise insight about how and where you spend your money allows you to make better decisions that help you avoid financial peril.

Emotional Spending

People often shop or go to restaurants to help relieve stress, anxiety, and other negative feelings. Occasionally treating yourself is okay, but turning to spending as a way to cope can lead to a financial crisis. If you realize that you routinely use shopping or eating out to boost your mood, you could be a victim of emotional spending.

A great first step to stopping emotional spending is identifying the emotional triggers that initiate this behavior. One of the most important things is knowing if you’re shopping to cope with stress or negative feelings. Once you have an understanding of your triggers, you can create healthier ways to manage them. If you struggle to have control over emotional spending, get professional assistance such as a therapist or financial counselor because by taking a more balanced approach to your emotions and finances, you can assume the authority of your spending habits so as not to put your finances in jeopardy.

Being on Survival Mode

One of the clearest indications that you are not living within your means is that you are living paycheck to paycheck. If that is the case with you, get your finances in check. 

Breaking the cycle of living paycheck to paycheck begins with budgeting. Do a review of your earning and spending, and plan your budgets to be able to save a share of your earnings. Even if you don’t have a lot of money, that’s okay; what matters is that you begin saving a little at a time. Having at least a small cushion of savings, over time, will ease the stress of living paycheck to paycheck, and allow you to start living with a goal for the future.

Conclusion

It’s hard to live beyond your means, but it’s not impossible to stop doing so. By identifying the red flags, you can take decisive action to turn your financial journey around. Take baby steps and stay focused on developing better financial habits. Remember that financial security is not built overnight. It takes time to learn about proper budgeting and focusing on high-impact choices.