We live in a world where people are exposed to the lives of the rich and famous on a continuing basis. It’s easy for people to become obsessed with having that type of lifestyle. However this is a pipe dream for almost everyone and even trying to acquire a relatively small number of luxury items can lead to big problems for some individuals.
People become over ambitious concerning what they can achieve financially. They are often spared on by the programs that they see on TV. However, many of these programs revolve around characters rather than real people and the homes they live in would actually be way beyond their means if they existed in reality. Canstar has created a tool which shows how much 24 separate characters earn and how this fits with the homes that they are living in. Using this tool helps you to see just how unrealistic their spending is. The sad thing is that out of control spending is not restricted to fiction. So, how can you tell if you are living beyond your means?
Savings are less than they should be
In an ideal world, you should try to save around 20% of your monthly income. However, saving between 10 and 15% is acceptable. Problems really start to arise when you are struggling to save even 5% of the money you have coming in each month. If this is the case, you are living beyond your means.
Credit is paying for things that you should not be buying
Credit is not necessarily a bad thing. After all, it’s the way that most people buy property and cars. However, if you use a credit card regularly, and do not pay it off in full at the end of the month, you need to reconsider your spending. Using credit in this way means that you are buying things that you cannot actually afford to purchase.
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There is no money for emergencies
It’s easy to be complacent about life but you never know when your circumstances might change. This is why it’s important to have at least six months spending money saved for emergency situations. This means that you should have six months worth of all the money that you need to survive, including expenses such as bills and food. If you cannot afford to save this amount of money at the moment, you should try to modify your spending. Doing so means that you can create an emergency fund which you can use should you ever become ill or lose your job.
There is no money left at the end of the month
If you are constantly having to borrow money to make ends meet at the end of the month, you are not budgeting effectively. This suggests that you are living a lifestyle which is beyond your means. You need to adapt your lifestyle so that your spending is realistic.
Start living within your means
If you believe that you are living beyond your means, there are changes that you can make which can benefit you.
Know how much income you have each month
This does not mean being vaguely aware of what money you have coming in. You need to sit down and work out your exact income each month. It’s only after you have done this that you can really understand, and adjust, spending habits.
Spend less than you have coming in
This may sound obvious but it’s amazing how many people do not actually do this. You need to work out a budget so that all of your bills and essential expenses are accounted for. As mentioned earlier in this article, this includes setting aside an amount for savings. Once the essential expenses are accounted for, you then need to list all of the ideal world items you are spending money on, such as eating out. It’s these items that can be cut back on, if your spending is going to exceed your income.
Do not try to live an unrealistic life
It can be very tempting to try and keep up with other people when it comes to spending money. You might see that your neighbours have a new car, and want to get one yourself. This is not a problem if you can afford to do so without living beyond your means. However, it’s never a good idea to try to keep up with other people, if it means that you have no savings and constantly rely on credit. The lifestyles that you see other people, such as TV characters, live may seem ideal but they are often unrealistic.
Try this tool from Canstar and see why this is the case
Brought to you by Canstar.