In today’s society, it’s quite common to find people living beyond what they can afford. Many often grumble about not being able to pay their mortgage or save for retirement, even though they own the latest gadgets, have substantial phone bills, drive middle-level sedans, and don the best designer clothes. Our financial priorities, unfortunately, tend to be misplaced. Here are six signals you’re living extravagant lifestyles that exceed your financial capacities:
1. You Have an Expensive Home with a Tight Budget: If everyone in your home has a separate room in a grand house, it can sometimes be a red flag for living beyond your capacity. Paying more for unneeded space can strain your budget – a five-room, 2200 square feet home might not be necessary for a family of four. If you’re struggling with mortgage or rent, perhaps its time to reassess your housing needs.
2. You’re Not Keeping Track of Your Spending: If you find yourself puzzled over where your money went at the end of the week or month, then it’s time to seriously review your budget.
3. You Cut Back on Necessities: A classic sign of living beyond one’s means is constantly trying to save on essential items like food, toiletries, or clothing. If you are spending extravagantly on your house or car and struggling to buy necessities for your family, it’s a cue that you’re focusing on the wrong things.
4. You Excessively Rely on Credit: Do you frequently use credit to make purchases? Just because you can afford the installment plan doesn’t mean it’s suitable for your budget. If you can’t afford it in cash, you probably shouldn’t be buying it at all. Constant struggles to pay off credit card bills indicate you can’t sustain your current lifestyle.
5. You Spend Expected Income: It’s tempting to splurge when you’re awaiting a raise or bonus – this is what fuels cash advance businesses. However, spending the paycheck before its banked is a dangerous habit.
6. You Regularly Use Your Savings: dipping into savings or worse, your retirement account, to foot bills or major expenses signifies looming financial peril.
Living beyond your means is, unfortunately, all too common. Many of us often fall into overspending habits. Stay tuned for a follow-up article on how to revert to a lifestyle that aligns with your means.
