You’ve read articles on how to save more money, but here is an article to determine whether you are living way beyond your means. My sister works for mmtcpa.ca and we talked about the signs a person is probably spending too much. If you’re planning on assessing your current status in terms of financial capability, here are some signs to watch out for that screams overspending:
- You are not saving at least 5% of your income.
This percentage is probably the smallest amount to consider when trying to save. Check your bank account balance and see if you are being thrift enough the past months; if you have less than the above percentage, then chances are you might be overspending.
- You have no fund ready in case of emergency.
You never know when an emergency fund is needed, accidents may happen, and even friends or loved ones may need financial help. This is why it is important that you be able to set aside money that can be spent for unforeseen events. Remember that this fund is better in the form of cash because having to pay via credit card will only add to your bills and payments that need to be settled. If you find yourself thinking about what to pay the veterinarian in an instance where your pet has an emergency, then yes you are overspending.
- You strive to make your salary reach month end.
A sign that you are not budgeting enough is when you do not have enough money to live comfortably until the next payday. As the month end nears, you find yourself having to eat less and cut down expenses because you’ve spent too much during the first days of receiving the salary.
- There’s always a balance to settle.
The best feeling in adult life is when you are able to pay your bills on time and everything is reset to zero. Look at your subscriptions and determine whether all of them are necessities. Check your credit statement and study every single purchase to have a general idea on where you might have to cut down your expenses.
- You’ve never had a budget plan.
Even if you are receiving a big amount as salary, it does not excuse you from not creating a budget plan. Not having a budget plan is an indication that you do not track your expenses and can only care less on how much you are able to save. Try sorting your cash into envelopes labeled with items you might be spending on, and only put the amount you are willing to spend for each item within the month. By doing so you can effectively keep track of your withdrawals and limit the instances of unnecessary purchasing.
If you are guilty of the above mentioned items, then it might be the right time to take a step back and see whether you are really living the life you want, or just being dictated by the people that surround you. In addition, the fear of missing out might cause you to spend more on events or dinner outs, but remember that great company does not require too much spending. Live life within your means and do not let bills drive you in working harder.