13 Signs That You're Living beyond Your Means ...

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Can you recognize signs that you're living beyond your means?

Living within your means makes good financial sense.

Nowadays, more and more people are interested in ways to improve their personal finances.

For some, this means cutting out unnecessary expenses, whereas others look for ways to increase their income.

If you need to take control of your money, consider thirteen signs that you're living beyond your means.

1. Zero Savings Account

One of the biggest signs that you're living beyond your means - lack of a financial cushion.

Money in the bank can sustain you after a job loss, an illness or another emergency.

Unfortunately, many who live beyond their means spend all their cash and don't think about saving their money.

Break this habit and youโ€™ll free up cash for a financial cushion.

This calls for drastic measures, such as eating out less, shopping less and vacationing less.2

2. Housing Expense

Housing ratio refers to the percentage of your income spent on your rent or mortgage.

In a perfect world, your housing ratio should be less than 28% of your income.

To compute your ratio, divide your monthly housing payment by your monthly income.

If the ratio is higher than 28%, you're living beyond your means.

3. Can't Pay Your Bills on Time

True, lateness can be attributed to forgetfulness.

But if you have good intentions, but not enough money in the bank to pay bills on time, perhaps you're overextended.

Examining and adjusting your spending habits can solve this problem.2

A review may reveal that youโ€™re unable to afford weekly salon visits or regular massages.

4. Bad Credit

Late payments are not the only cause of bad credit.

Too much consumer debt can also lower your credit score.

If you pay your bills on time each month, yet your credit score never increases, consider paying down your debt.

People who live beyond their means typically rely on credit cards, which can cause high credit card debt.

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