5 Signs you are living above your means

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The worst thing about not living within your means is that it could be a guarantee of a life time of poverty. Wealth creation requires some level of discipline and money management skills that we should all be working towards.

 Life would be easier if we were all accepting of our current financial position and stopped spending on things we cannot afford as we patiently wait and work towards better days. The greatest success of all times is not just making money but also being able to properly manage it and live within or below your means.

You are obviously living above your means if you are in these 5 categories.

Your rent is more than 30% your income

Under whatever circumstances or justifications your rent should not exceed 30% of your net income. The idea of living in a great neighborhood is fancy but don’t let it be the reason you are always broke and working towards poverty.

Take it from me please its not worth it. You will be surprised of how much you can actually get a reasonably cheaper house for less if only you were looking especially with the current supply and competition amongst tenants.

All those people you could be trying to impress should be more accepting and supportive if not understanding if at all they matter to you.

You are constantly in debt

Nothing says you are living beyond your means more that constant debt. This applies especially if you are always borrowing to pay your expenses. You are definitely funding a lifestyle you cannot afford.

If you are currently that friend who is always asking for soft loans from friends, family and any available credit lending institutions you might need to make an urgent turn when it comes to your finances.

The other trap to unnecessary debt is always depending on credit cards.

You have no savings

Despite working for many years, you still have no savings at all. This is a very sad reality. According to experts we should all at least save or invest 20% of our monthly income.  

Saving is achieved by Foregoing your short term wants so that you can achieve your longtime financial goals. This can be easier when you identify your daily expenses and classify them into needs and wants and that way you can eliminate some of the things you might enjoy spending money one but don’t necessarily need. At the end of the day there is no success achieved without sacrifice.

You don’t have a retirement plan

As much as we would want to overlook this, a retirement plan is very essential. Some people are lucky to have jobs that give one but some are not so it’s up to you to come up with one.

 This is money saved to ensure you will have some level of income to cater for your needs once you retire. It will save you the hustle of waiting to be given and make you less dependent on your kids or charity & that if you ask me is how you retire with dignity. It will also make your later days easier which I would want to believe is every one’s dream.

You drive a car you cannot afford

If there is trap you can fall into so easily is buying a car you absolutely can’t afford. First of all, a car is a depreciating asset and only reduces its value every day that goes by. Secondly a car is an expense it will always take from you but will not add you any much value.

You will also note with the right amount of patience you will get there. So, stop trying to fake success to impress people who don’t even care.

A car is not a measure of wealth it can actually make you poor so stop buying cars you cannot afford!

 Your emergency fund is non-existent

Tell me am wrong but you will find people who live in nice apartments, drive a good car but don’t have an emergency fund. An emergency fund is a place to fall back on incase of any arising unexpected expenses. It happens all the time so having some money set aside of unexpected occurrences such as loss of a job is super wise!

It’s recommended that you have at least 3 months of your expenses saved up just in case something unexpected happens to your current source of income.

The Bottom Line

  • Keep tubs with how much you make
  • Always spend less than you earn
  • Slowly build your emergency fund
  • Instead of buying on credit always save up for purchases
  • Stop depending on credit cards

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