We live in a society where consumerism is adorned, and having it automatically means flaunting it. Succumbing to these pressures causes us to make financial decisions that, in the short and long run, affect us adversely. Most times our extravagant lifestyles aren’t backed up by our bank accounts or our values.
If you’re worried you’re living above your means, chances are you probably are. Here are five signs that let you know if you need a course correction.

1. You spend to impress
It is very important to first analyze your motives before spending. If we spend on only necessities, and sometimes self indulge, we are unlikely to find ourselves in financial pits. On the other hand, if we allow society or friendships to influence/dictate our spending, we’ll find ourselves buying things we don’t need or even like just to be socially accepted.

If this spending pattern is left unchecked, the lengths you’d go to please others will always leave you wondering where all your money went.

2. You’re living paycheck to paycheck
There’s no doubt we all need/rely on our paychecks for survival. If you find yourself with no money at the end of the month, it simply means you’ve either spent all you’ve earned or as is becoming the norm now, you’ve spent more than you’ve earned.

Being in either category can be a hard pattern to break. The only way to avoid being in the same situation is by cutting down on your expenses, especially if you’re not getting a raise/generating a new income source anytime soon.

3. You’re not saving
Saving is key in attaining financial independence. If you can’t save up to 5% of your income, chances are early retirement won’t be an option for you, unless you’re fortunate enough to win the lottery or get adopted by a Lord.

Everyone ought to save 10-15% of their total income, it’s a healthy financial habit that should be practised religiously. If you divert funds used on “wants” and not “needs” to your savings, you’ll find yourself having enough to save and then some.

4. You have no emergency fund
Asides from saving, you should have money put aside specifically for emergencies. This fund serves as a precaution from borrowing or loaning when an unexpected expense arises, and without it, you’re likely to rack up debt. Many feel they don’t earn enough to save and build an emergency fund.

It’s a legitimate claim for some, but you can always start with a little which will eventually build up to something significant.

5. You borrow to support your lifestyle
If you find yourself borrowing even after your paycheck, you’re living above your means. When your paycheck doesn’t comfortably cater to the necessities and extras, you’re going overboard with your spending.

By tracking your expenses and creating a budget you stick to, your money will be managed more effectively. Ridding yourself of such expenses will eliminate the need to borrow or take out loans.

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