Signs you’re living above your means

Do you get your paycheck and feel like it barely covers your expenses? If you’re struggling to make ends meet, you’re not alone. According to a survey conducted by CareerBuilder, more than 78% of American workers are living paycheck to paycheck.  Moreover,  the paycheck to paycheck cycle is one that affects all income levels, pointing to a larger issue of living beyond your means. 

The good news is you can break the paycheck to paycheck cycle. The first step is identifying how you got there in the first place so you can start to change financial habits and choices.

10 Signs You’re Living Beyond Your Means

Living beyond your means, also known as lifestyle creep, is especially common in the U.S. It’s further solidified by the constant ads from every screen you look at flashing ‘this is what you should have’. 

Changing mass marketing isn’t achievable for an individual, but changing your financial mindset and how you manage money is totally within your grasp. First, let’s identify the red flags. Below are ten signs you are living beyond your means and how you can change that behavior to break the paycheck to paycheck cycle.

1. Carrying a Balance On A Credit Card 

When you carry a balance on a credit card, it means you owe the creditor money. On top of this, you will also owe interest in the following month on your balance. Paying off your credit card balance in full every month is a good financial practice that will help keep you out of high-interest debt. 

2. Getting Hit with Late Fees

If you often pay late fees or late penalties on your accounts, this could be a sign you’re living beyond your means. Instead of accepting these late fees, work to find a system that helps ensure you can pay your bills and accounts on time. 

3. Not Keeping a Budget 

Speaking of systems, learning to keep a budget is an essential skill for managing your money and breaking the paycheck to paycheck cycle. A budget doesn’t need to be complicated either. It simply needs to track the money coming in and going out. By giving every dollar a job, you’ll be far less likely to overspend. 

4. Spending Your Paycheck Immediately 

A shopping spree on payday is never a good idea unless it’s in the budget. It’s a habit that can leave both you and your bank account drained. Instead, build a ‘fun money’ section into your budget so you can still spend, but within your means.

5. Finding Your Credit Card Bill Shocking 

If you open your credit card bill and the balance is shocking, this is a sign you’re not tracking your spending, which can keep the paycheck to paycheck cycle intact. The first thing to do is to review all your transactions to make sure there isn’t any fraud. Then take inventory of what purchases were necessities and which items brought you value. Any purchases outside of these categories can be cut to help free up your cash flow. 

6. Borrowing Money Regularly

If you find yourself asking family for money or using your credit card to pay for essentials, it’s a sign that you might be living beyond your means. It’s good to count on your family for emotional support, but you don’t want to always be asking for financial support. Credit cards will catch up to you, and they typically have high-interest rates. Unless you can pay off the balance in full, you don’t want to use them. You can combat borrowing money regularly by cutting a few regular expenses like subscriptions. 

7. Working Overtime to Make Ends Meet 

Picking up extra hours at work is a great way to increase your income. However, if you’re doing this just to pay your bills, it could be a sign you’re living beyond your means. You’re also throwing your work-life balance under the bus, which has repercussions for both your sanity and those around you. If you do need to pick up extra work, set a limit, and make sure those funds are going towards specific financial goals like paying down debt. Having a plan in place is key for avoiding the pressure of having to work extra just to pay the bills. 

8. Not Contributing to Your Retirement Plan 

Preparing for retirement is an endeavor that you should pursue your entire working career. If you cut your retirement contributions or opted not to contribute at all, you’re doing future you a disservice. While that extra cash might help you cover a few extra purchases each month, it is likely to do far better growing your investments. 

9. Worrying About Small Purchases 

A $20 purchase shouldn’t send you into a spiral of uncertainty. If you are unsure of how much you have in your accounts and are worried about an overdraft, this is a sign you may be living beyond your means. It’s always good practice to keep a small buffer in your accounts just in case you need to make a small purchase outside of your budget. It can also be helpful to keep your bank’s app on your phone, so you can always keep track of your available account balance. 

10. Waiting On Payday 

Waiting for payday to buy things isn’t always a bad sign. On one hand, it could mean you are sticking to your budget and not making the frivolous purchases you can’t afford. However, on the other hand, it could mean you are a few days late on rent because you’re living beyond your means. Sticking to your budget and keeping a small buffer in your accounts can help you avoid anxiously waiting on your paycheck.  

The Biggest Warning Sign of All: No Money in Savings 

Having an emergency fund for unexpected expenses is one of the most important short term financial goals you can work towards. Money in savings means you can break the paycheck to paycheck cycle. Savings can help you solidify your financial security and stop relying on credit cards and family.

Lasting Change Takes Time

If you want to make a lasting change with how you manage money, then taking the time to self reflect is essential. Work through the list one at a time. Then, be sure to follow up with the resources here so you can change those financial habits and stop living paycheck to paycheck.