It’s sweet and easy to live a lifestyle above what you can afford especially when you have high-income expectations and social friends to impress. However, most people don’t realise they are living above their means until its too late. Here’s a way to find out if you’re living above your means.
1. YOU’VE NEVER HAD A BUDGET
The first step to financial freedom and living within your means is having a budget, if you’re not worried about how much money you spend each day, there is a good chance that you’re spending more than you think. you need to take an honest inventory of your income, spending, and savings goals. That way you can be able to spend wisely and live within your means.
2. YOU DON’T HAVE ANY MONEY LEFT AT THE END OF THE MONTH
People whose lives solely depend on their monthly salary find it difficult to save because they have nothing left at the end of the month. An easy way to start saving and become more conscious of your spending decisions is to allow yourself to spend money only on the bare necessities for 30 days – rent, toiletries, bills, foodstuffs and cut out everything else. No shopping, no hangouts, no eating out, and especially no date nights.
3. YOU ORDER THINGS YOU CAN’T AFFORD
It is not advisable to order things you can’t afford, it will put you in debt. It is bad that before the next salary comes you have nothing left of it cos you are already indebted. If you can’t afford it twice at the moment don’t bother.
4. YOU CANNOT LIVE 3-6 MONTHS WITHOUT A SALARY.
Because certain things are unpredictable, we advise you to reserve 20% of your income for emergencies. In cases where you lose your job or have serious health issues, you will live comfortably without running into debt.
5. YOUR EXPENSES IS WAY HIGHER THAN YOUR INCOME
Your lifestyle doesn’t match your income, you spend too much and can’t give an account of your expenses when you’ve exhausted your income.
6. YOU AREN’T SAVING AT LEAST 10%
Saving money may seem impossible, but it’s probably a lot more realistic than you think. If you can’t save at least 10% of your income monthly, it could be a sign that you are living above your means.
7. YOU BORROW MONEY TO PAY BILLS
It’s a clear sign you cannot afford your lifestyle so you borrow from friends and relatives to clear your debts. This is a straight road that leads to poverty because you are taking on more debt to pay the debt you already have.
8. YOUR DEBT KEEPS INCREASING
If your debts keep piling up and all you have is just a single stream of income, perhaps you don’t even have a job, you should know you are living way above your budget. If you’re in debts and you keep letting people do things you can do by yourself laundry, car wash, cleaning you will end up financially dependent.
9. YOU LET YOUR FEELINGS DICTATE YOUR SPENDING
If you let the feeling that you only live once (YOLO) get to you, you will end up borrowing because you don’t want to miss out. But don’t let your FOMO (fear of missing out) dictate how you spend money. While you don’t need to give up your entire social life, it is important to take a look at your motives for spending and find affordable ways to spend quality time with yourself and friends.
10. YOU ARE WORRIED ABOUT WHAT PEOPLE THINK
Because you care so much about what friends will say and you don’t want to be judged, you buy things at the expense of impressing friends to show off on social media, even when it’s above your budget. You also spend lavishly to create an impression.
If you discover you’re guilty of one or more of these warning signs, there is a solution, these tips will help you live within your means and improve your finances.
1. Create a budget: The only way to create an effective budget is, to be honest with your spending habits.
2. Get a side hustle: With a side hustle, you can charge great money per client, do all of the work from home, and
3. Always use cash: Using cash is a great way to stick to your budget. Why? You can only spend as much as you have.
4. Don’t let People’s Opinions Influence Your Financial Decisions: Don’t be too concerned about what others think of you, it could lead you to make bad financial decisions.