10 signs you’re living beyond your means

Living beyond your means is an easy trap to fall into. And if you’re not keeping close track of everything that’s coming in and going out of your financial account, you may not even realize you’re doing it.

Over time, living a lifestyle beyond what you can actually afford can lead to mounting debt and also keep you from reaching your financial goals.

You live paycheck to paycheck

If most or all of your paycheck is spent immediately on bills and you don’t have anything left over at the end of the month to put into savings, you are likely living over your means and may need to make some adjustments.

Your credit score has dropped

If you’ve been putting a lot of your expenses on your credit card and/or don’t always pay your bills on time, you may see your credit score take a hit.

You’ve stopped your retirement contributions

If money is feeling a little tight, you may feel that now is not the time to worry about retirement. But you likely won’t be able to work forever, so it can be wise to make saving for retirement a priority and to get started early.

A big portion of your income goes to housing

Keeping your rent or mortgage below 30 percent of your monthly pre-tax income is sometimes recommended because it can leave you with enough income left over to save, invest, and build wealth in general.

Your savings account isn’t growing

Making regular deposits into your savings account in addition to your 401(k) or IRA allows you to work towards your short- and medium-term financial goals, such as putting a downpayment on a home or a car or going on vacation.

You’ve been charged an overdraft fee more than once this year

Mistakes happen, and a one-off overdraft isn’t necessarily an indicator of overspending. But repeat offenses can be a sign that you are living too close to the edge.

You’ve never set a budget

Many people think making and following a budget will be too complicated. But having a budget can actually simplify your spending decisions by letting you know exactly what you can and can’t afford.

You’re leasing a car you can’t afford to buy

Leasing lets you rent a high-end lifestyle, but many people end up with leases they really can’t afford.

You’re only making minimum payments on credit cards

Rather than give over part of your paycheck just to interest each month, you may want to cut back on nonessential spending and divert that money toward paying off your balances.

You don’t have an emergency fund

You may want to build an emergency fund that can cover three to six months worth of living expenses. That way, you’ll be covered should something happen, such as an illness or injury, job loss, housing issue or any other expensive personal matter should come up.

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