8 Warning SIgns That You’re Living Beyond Your Means

Read these tell-tale signs and stop living paycheck to paycheck!

Are you living beyond your means and struggling paycheck to paycheck? According to CNN Money, 76% of Americans live paycheck to paycheck and of that, 27% of Americans have no savings at all!

When I got my first real job after college, I lived beyond my means because I felt like I earned it. I worked hard in college for 4 years, lived frugally, and depended mostly on my parents. So when I finally graduated, I wanted a nice condo, new clothes, and fancy dinners. If I had extra money each month, I’d spend it on something that I really wanted, usually clothes or Apple products. I now have a closet full of clothes I never wear and finally realized a couple years ago that I was living beyond my means.

PublicDomainPictures / Pixabay

PublicDomainPictures / Pixabay

Here are 8 Warning Signs That You’re Living Beyond Your Means:

1. You don’t have a budget.

If you don’t have a written, monthly budget then you’re basically winging it each month. A budget is essential to living within your means. You’d be surprised how much money you’re actually spending.

2. You spend over 25% of your income on eating out every month.

When I finally sat down and did a budget, I realized that I spent $800 every month on eating breakfast, lunch, and dinner at restaurants. I rationalized that I was busy and didn’t have time to cook, which was usually true. But I’ve since learned that there are plenty of healthy meals and snacks that don’t take long to cook either. What would you rather do with $800 a month? 

3. You’ve missed a payment this year. 

Missing payments for essentials like rent/mortgage or credit cards bills is a sure sign that you’re not budgeting carefully. Stick to your budget and prioritize your spending so you don’t miss important payments.

4. You’ve paid overdraft fees this year. 

Paying overdraft fees because of insufficient funds is another warning sign that you need better oversight on your finances. Paying $10-$40 for overdraft fees, especially if you’re routinely paying these fees, can really add up. Unfortunately, many people who get overdraft fees aren’t reviewing their bank statements and don’t know how much they’re paying in fees.

5. You never save money.

If you always spend your extra money instead of saving it, you’ll always live paycheck to paycheck. As my dad always say, Life Will Happen! Your car will break down or your Air Conditioner will stop working on a Holiday (this happened to me twice!), or you’ll have another unexpected event that costs money. So, an emergency fund is absolutely essential, even if it’s just $500 to $1000 to start with. WIthout an emergency fund, you’ll have to borrow money to pay for these emergencies.

6. You buy everything you want, even when you can’t afford it. 

I am guilty of this too! Even though I write a great budget, sometimes I see something that I really want. Instead of budgeting for it and buying it next month. I just buy it. And my entire budget is thrown off and I’m playing catch up. I constantly have to remind myself that unless I can pay for it with cash, I shouldn’t buy it.

7. You struggle to pay off your credit card each month.

If you use a credit card instead of using cash, you should only use the credit card if you have money set asisde to pay it off. Otherwise, you’ll continue to rack up credit card debt that you can’t afford to pay off each month. And the cycle will continue where you use the credit card to buy  more”stuff” you can’t afford then pay off some of it so you can buy more.

8. You never save for retirement.

This goes back to #5, if you never save money, you’re probably not saving for retirement either. But saving for retirement right now is so important because waiting can cost you thousands of dollars. Starting early (when you’re in college or right after) and saving 15% of your income will start you on the right path for retirement.

 Readers, what are some other signs that you’re living beyond your means? Please comment below. 

About Monica Iannacone
Monica Iannacone
Monica Iannacone is a personal finance writer who received a B.S. in International Business and an MBA from Jacksonville University. She writes about Saving, Budgeting, and Frugal Living on her blog, www.MonicaOnMoney.com. When she's not writing, she enjoys yoga, surfing, and running on the beach. Follow her on Twitter @MonicaOnMoney or Like MonicaOnMoney on Facebook.

30 thoughts on “8 Warning SIgns That You’re Living Beyond Your Means

  1. :) Great post!!! I’m making up a budget now.

  2. :) Great post!!! I’m sitting down and making my budget now.

  3. I don’t have a budget but other than this do all the rest correctly J. Budgeting is just soooo tedious. A necessary step though if you are spending too much

  4. I have some plans for retirement but I’d like to focus more on this. However, paying off debt is our priority at the moment, so I’m falling down on point no. 8!

  5. I don’t think I’m doing any of these things right now so hopefully I’m in a good place! I’d like to save more for retirement, I don’t feel like I’m making that priority.

  6. Oooo. Good warnings. We are at about 15% of our income on eating out per month. Gotta get better at that!

  7. Phew, I have been guilty of quite some of these ‘sins’. Making huge adjustments and trying to be more responsible with our money. It’s not always easy, since we’re humans after all, but the past 2 years have been really a great example that you can still progress financially

  8. I’ve missed a payment, but not because I am living beyond my means. I do this thing where I transfer all of my money from my chequing account to a higher interest account as soon as it hits, because I want to be able to make money on it. I forgot that I had scheduled a payment to come from my chequing account, but lo and behold, it did, and it bounced. Bummer! But luckily my bank wrote off the fees.

  9. Monica,

    Great post Monica. This would also be a great Personal Finance 101 for teenagers and young adults. Keep up the good work!

  10. I definitely think overdraft fees is the biggest warning. Because if you dont have enough money in your bank to cover what you’re spending then you have a serious budget or spending problem.

  11. I’m still working on 6 (though it’s not really me, it’s that I have trouble saying “no” to my husband) and 8. We have a small retirement fund growing, but we really need to bump it up this coming year. I’d like to also cushion my savings by a few thousand dollars as well.

  12. Excellent tips, Monica! I think so many people, too, think that because they aren’t using credit but paying in cash and able to make their payments, that they’re doing okay. It’s important to realize that if you are guilty of even one of the above tips, you could be in trouble.

  13. Another big sign is if you are having trouble building up an emergency fund. It’s never easy to save no matter how much money you make, but if you realize that you are having trouble saving you can and should evaluate your spending and income and make adjustments accordingly.

    • Thanks for sharing, DC! I agree wthat not being able to save for an emergency fund is another warning sign. Especially these days where having an emergency fund is so critical.

  14. These tell-tale signs are easy to recognize but sometimes one has to see them written in black and white before realization kicks in. I hope this post is able to reach out to a lot, lot of people especially those who badly need reminding. The way you said it is so spot on!

  15. Very useful tips. Budget is really important in managing one’s money

  16. Phew, Monica! The old me would have been able to rattle off a few “yups” to the items on your list but not anymore. My husband and I have turned a corner, and we’ll never go back! We had to play round after round of slappyface with ourselves, but it finally worked!

    • I agree with you Tammy! I “old Monica” didn’t live beyond her means either. I was guilty of not having a budget and getting overdraft fees. Those fees are such a waste of money too! Mine were always $25 and that can easily add up if you’re not paying attention.

  17. I think the biggest warning sign that you are living beyond your means is badly needing pay day to come along each month. If you are properly saving and budgting your money, you don’t need to count down the days until pay day. The money is already there. I remember being in that situation and it’s so nice now to just sit and go “oh yeah, we get paid tomorrow”.

  18. It should be obvious when you cannot pay all your bills with your current income.

  19. These are great point to consider when you take a look in the mirror. I am very focused on paying down debt and saving in my various savings funds, however I am guilty of not strictly budgeting my spending. My goal is not just meet savings/debt repayment goals, but spending goals as well. Great post!

  20. Yes it’s kinda hard when there is not much coming in but it is a MUST to have one at the ready.

    You never know what might pop up!

    As you say: “Life Happens”

  21. Great list! Saving money in the emergency fund is crucial! For us the big benefit of having an emergency fund this year was to pay some unexpected vet bills! I wrote about that in my recent post: http://color-me-frugal.com/2013/11/04/save-money-by-asking-for-a-discount-the-veterinarians-office. You have to have some money set aside for emergencies, because something will ALWAYS come up!

  22. Great stuff Monica!

    My main focus right now is to build up that emergency fund! :)

    I’ll be sharing this! :)

    • Thanks Chris! Building up the emergency fund is so important and actually a lot of fun because you know the money will be there when you need it. There’s this great sense of stability too, Good Luck!

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