Are You Living Beyond Your Means

Overspending – it happens to the best of us. Regardless of how much you make every month, it’s not hard to fall into a trap of living beyond your means, especially in an era of rising inflation, must-have items, and an abundance of subscription services. If you feel like you’re spending beyond your means each month and living paycheck to paycheck, the key is to get a hold of it before you’ve lost control over your finances and you find yourself with unnecessary credit card debt. 

If you’re worried that you’re overspending, here are a few key signs to look out for:

You don’t pay more than the minimum on your credit card.

When you make a monthly credit card payment, most of the time you’re given the option to pay a minimum amount each month – usually not a large amount. It’s not out of the norm for credit card users to choose this option; however, you risk falling into a cycle of debt while making little progress to pay down what you owe. Ideally, credit cards should be treated like cash, and consumers should only use it for what they can afford to pay off that month.

You struggle to pay your monthly bills.

Rent or mortgage, car payment, credit card balances, utilities – these are all bills that get paid monthly, usually on a fixed date, often for fixed amounts. However, if you find yourself having a difficult time paying these bills monthly, you might want to rethink your non-bill related spending habits. Late payments can negatively affect your credit score, which can lead to a host of financial issues in your future. 

Your savings account has stagnated.

Ideally, you should be saving money each month by transferring funds from your checking account to your savings account – even a small amount a month can make a difference, though financial experts recommend between 5 to 10 percent of your monthly income. However, if you’re saving less and less, or even skipping months, you might risk finding yourself in a vulnerable position. 

Your credit score is slipping.

As mentioned earlier, making late payments can have a negative effect on your credit score, as it can show creditors that you aren’t reliable with paying back what you owe. Your credit score can make or break your financial future – it can affect where you’re able to live, your ability to borrow money, and in some cases, your ability to find a good job. If you’re unsure about your credit score, check out one of the many free credit reporting sites on the web and go from there.