Money | Signs that you are living beyond your means

It is very easy to live beyond our means, especially as the cost of running a household appears to be increasing annually. But how do you know if you are really living beyond your income?

Here are five indicators that you may be living beyond your means:

You carry a balance on your credit card. The math is simple when it comes to credit cards. If you carry a balance on your card month to month, you are spending more than you can afford. Get yourself back in the black by doubling or tripling your repayments. Carry cash or just use your visa debit card to make purchases.

You are not saving at least 5% of your income. Everyone should save 10 to 15 percent of their total income in each pay packet. If you cannot save at least five percent – even while paying off debt – this could be sign that you are living beyond your means.

You have no emergency fund. Savings are essential for both short and long-term goals, and especially when it comes to emergency expenses. You should have a minimum of €2,000 set aside for such emergencies, such as your car breaking down or if you get ill.

You do not have enough money left at the end of the month. Living pay packet to pay packet each month is not feasible long term. Look at ways in which you can reduce your outgoings, especially for luxury and lifestyle expenses. This includes trips to the cinema, take-aways and rising fuel costs. Use the car less, for example, if you are spending a lot on petrol or diesel.

You are spending money on overdraft fees. Overdraft fees are another sign that you are spending money you do not have. First, sort out your overdraft facility with your bank. It may cost you significantly in one month but the fees will continue to dent your income if you don’t. Budget your income and expenditure to ensure you remain on the right financial track each month.