If you’re getting to the end of each month and are worried about your finances, it may be because you’re living beyond your means. If this is the case, it may be time to reevaluate your spending habits and finances. With the ease of contactless and instant mobile payments, we’re all guilty of spending more than we can afford from time to time. However, if it’s starting to become a problem, it’s time to take action.
Living within your means can be incredibly challenging, especially in today’s economic climate. Social media, in particular, has played a huge role in influencing people to live above their means. With celebrities and influencers posting about their extravagant lifestyles, we all feel the pressure to follow suit for fear of missing out.
The pressure to keep up can be overwhelming, and it’s easy to feel like you’re falling behind.
However, if you’re spending more than you earn, struggling with bills and have little to no funds in your savings, you may need to take a step back and re-evaluate your financial situation.
In this article, we’ll examine some warning signs to help you identify if you’re living beyond your means. Once you start to recognise these signs, you’ll be better equipped to make the changes needed to spend more efficiently.
1) Living Paycheck to Paycheck
A large part of being financially healthy involves setting aside some money each month for your savings goals, while still having a cushion to fall back on for unexpected expenses. Alternatively, this money could go to paying off any debt.
When you’re living paycheck to paycheck, you may find that your money runs out or barely sustains you till your next payday. If you’re finding yourself stretched too thin between paychecks, it’s a clear sign that you’re living beyond your means.
In some circumstances, living paycheck to paycheck may be unavoidable. However, if your current lifestyle has become a habit, it may need more attention to fix. In this scenario, take a step back and closely examine where your money is going each month. By doing so, you’ll likely be able to find places you can cut back on spending.
You can start to improve your financial habits with small lifestyle changes, such as cooking instead of ordering takeout or quitting the gym and working out at home. The most important thing is to be patient and remember that change takes time.
2) You Exceed Your Budget
A budget allows you to effectively track how much money you’re earning and spending every month. When you budget, you become more intentional about spending money and can focus more on your financial goals.
If you find yourself exceeding your budget and spending more than what’s coming in, it’s likely you’re living beyond your means.
One of the reasons this happens is that we’re often guilty of underestimating our spending habits and creating an unrealistic budget. When creating your budget, you need to understand your finances accurately to set up a realistic budget that you can stick to.
It’s challenging and will take time, but by persevering and remaining disciplined, you’ll find that your finances will thank you for it in the long term.
3) A Significant Drop in Your Credit Score
If you’re accumulating expenses on your credit card, missing repayments, or have defaulted on a loan, you may see your credit score take a hit.
If you notice your credit score starting to decline, it’s a sign that you’re living beyond your means and that there are issues you need to address.
Your credit score is an essential part of your finances and is often used to determine the interest rates you pay on a loan and new credit cards.
Looking over your credit report can help you understand exactly why your credit score has dropped. You can then plan the next steps, such as paying down credit card balances or setting up automatic payments, to start to improve it.
4) No Savings or Emergency Fund
Life is unpredictable, and whilst it’s easy to act as if nothing can go wrong, getting hit with unexpected expenses could lead to a financial emergency.
For those times when you need access to extra cash, it’s incredibly useful to have an emergency fund. Whilst it takes time to build up, if you’re struggling to build an emergency fund, it could be a sign you’re overspending.
If you have short term financial difficulties, it can be difficult to consider long-term financial planning. However, building an emergency fund with three to six months' worth of expenses becomes a lifeline during tough times.
Setting up savings or an emergency fund for yourself is a proactive step that will help soften the blow when life throws unexpected events your way.
5) You’re Struggling to Keep on Top of Debt
Having debt isn’t always a bad thing—for example, borrowing for a mortgage on a property or opting to finance your car can be incredibly useful and sometimes essential. However, if you’re frequently using credit cards for day to day purchases, you may struggle to repay your debt.
If you find yourself overwhelmed by debt and it feels impossible to get out of, it’s a sign that you need to stop living beyond your means.
Whilst it may feel overwhelming, it’s important to take a moment and realise there are actions you can take. You must start to create a plan and take action, so you can start working towards a healthier financial future.
Choose Salad Money for Fair and Affordable Personal Loans
Living beyond your means and making choices that strain your finances today can have a huge impact on your future. Although change is never easy, it’s important to take action and start focusing on your long-term financial well-being for a more secure financial future.
At Salad Money, we understand that life is never simple, and everyone needs financial support once in a while. That’s why Salad Money offers fair and affordable personal loans to support you through unexpected financial challenges.
As a leading online UK lender, we offer the support you need when you need it the most. With our ‘More Than Your Score’ loans, you can borrow the money you need irrespective of your credit score.
Our open banking-based system utilises a unique approach to borrowing, gauging your loan’s affordability based on your current situation and not your financial history. We are an FCA-regulated organisation, so you can rest assured that your financial data will remain safe and secure.
To learn more about our personal loans, click here, and to read more blogs like this one, visit our blog page now!
