How to Stop Living Beyond Your Means
How to Stop Living Beyond Your Means
Are you living beyond your means? You might know without a doubt that you are, or maybe you’re 100% confident that you are not. But sometimes, the answer to that question isn’t so obvious.
And that’s when things can get dangerous. If you are living beyond your means but don’t know it, you could be heading down a path you don’t intend to be on.
For years, I lived outside of my means — without knowing it. I got by for awhile…And then I was forced to wake up.
If you have a sneaking suspicion you might be living beyond your means, or you already know you are and want to do something about it, then read on.
Signs you are living beyond your means
Again, sometimes it’s apparent that you’re operating outside of your means, and other times it’s not. Here are some signs you may be living beyond your means.
You’re having trouble paying all your recurring bills.
Each month you play the “Who’s Not Going to Get Paid?” game.
You are living paycheck to paycheck.
The money comes in, and it ALL goes right back out. You’re tapped out until you get paid again.
You juuuust make it each month.
The bills are paid, BUT…you’re left with $1.15 in your bank account.
You have no emergency fund.
Like a majority of Americans, the only way you would handle an emergency is to use a credit card or borrow from friends or family.
You have no plan for large purchases.
The only way you would handle a large purchase is to use a form of debt.
You think of purchases in terms of payments, not the full price.
Instead of thinking about a car costing $15,000, you think of it as costing $300 a month.
You use credit cards to “float you” until the next payday.
For the most part, things are under control, but occasionally you whip out the plastic to carry you through until your next paycheck.
You are not saving or investing.
Maybe you can handle your monthly obligations, but you’re not able to set aside anything for saving or investing.
You rely on credit cards every single month.
You’ve got things under control — with a little help from Visa.
You pay your credit card off each month but have no money left over.
Each month you put all your purchases on your credit cards, pay the balance in full, but because you have no money left over, you have to continue putting purchases on your card.
You can’t handle the unexpected.
When an unplanned expense pops up during the month, your whole “plan” is derailed.
Related Reading: How to Handle Unexpected Expenses
If one or more of these describes your situation, then you are likely living beyond your means. Oh, there’s one more sign: if you just have a feeling that you are living beyond your means, then you probably are. 🙂
Steps to stop living beyond your means
“Okay, that’s great, Alaya. I live beyond my means, NOW what?” you may be thinking. Well, assuming you want to STOP living outside of your means here’s what you can do.
Commit to start living within your means.
Okay, I know it almost seems silly to state this point, but it is 100% necessary. You will need to decide that your spending and your approach to your financial decisions as a whole are based on the fact that you are committed to living within your means.
Create some margin.
To break the habit of overextending yourself, you’ll need to get your spending and expenses to be less than your income. Now this, of course, is not something that will happen in a day or a week. It will take time, but the way to do it regardless of how long it takes is as follows:
Reduce what you have going out.
Comb through your expenses ruthlessly and see what can be reduced or eliminated. This includes looking at EVERYTHING: your recurring obligations, your discretionary spending, and everything in between. Look at your utilities, your housing, etc. Do you overspend in those categories? NOTHING is off-limits. See what changes you can make so your expenses as less than your income.
Related Reading: How to Squeeze $500 Out of Your Monthly Budget
Increase what you have coming in.
In addition to reducing your spending, seek ways to increase your income. This can either be done in a variety of ways ranging from temporary to permanent including selling unwanted items, taking on a part-time job or side hustle, or by seeking new employment.
Related Reading: 50+ Ways to Make More Money When You Work Full-Time
The ideal approach is to do a combination of reducing what you have going out and increasing what is coming in..
Start budgeting regularly.
Using a budget each month is the best way to keep your spending in check and to make sure you stay within the limits of your income.
Related Reading: How to Budget When It Feels Like You Have No Money
Prepare for emergencies.
If you don’t have a plan for emergencies, you will overextend yourself financially when something does come up. Start with a beginner emergency fund and work your way up to at least three months of expenses.
Related Reading: Why You Need A Beginner Emergency Fund
Pay Yourself First.
Saving needs to become a priority in order to create some real room between what you have coming and going out each month. Commit to saving at least 10% of your gross income.
So again, keep in mind that going from living beyond your means to a place where you are spending less than you make is not going to be an overnight process.
But being aware that you are operating outside of your means and deciding to change that is an essential first step. Commit to seeing the process through and use these tips to help you get on the path of living within your means.
Are you committed to living within your means? Which step do you need to work on?