You may not know it, but you may have already started to live beyond your means. You always have that notion that you are earning something relative, that should be able to pay for the bills, buy food and purchase the things that you want. But this is you, already walking towards bankruptcy.
By Odinaka Mbonu
But if you are really not sure you are overspending, here are indications by experts that could tell you that you are not spending your money wisely.
Experts say there are tendencies you are over spending when at month end you have maxed out all your credit cards and your salary is all busted on those goodies you have been buying on credit prior to month end. Now, it’s time to borrow from close friends and family members for some extra cash- you know you have been “sucked” low once you’ve reached this level. On the other hand if friends and family members have either cut off the purse strings or refuse to take your calls, then they’re tired of lending you money. You’re probably just as tired of asking and guilty of over spending.
Experts also predict that if on a regular basis you observe that when you withdraw money intending to use it for a specific purpose and before the due date you notice the money has either “evaporated” from your wallet or reduced, unless you are being beset by a persistent pickpocket, it is likely you have lost a grip on your spending. Whenever you are in a position where you do not know where your money is going, whether it is a bank balance that seems to drastically drop over a matter of days, or cash you withdraw that seems to evaporate, you need to take a long, hard look on your spending.
If you are spending all your salary every month, it is a sign that you are living beyond your means, experts say. It could even be possible that you are spending part of your savings. Check your budget and calculate how much you spare for your savings account. If you realize it is less than five percent, better cut costs on different things especially on luxurious spending. You are equally expected to set aside at least 10-15 percent of your gross pay for retirement.
Equally, experts say you may soon run into financial crisis if you spend 25 percent your salary on outstanding debts. Spending more than 25 percent of your salary on debt means you are either cutting costs in other things or just spending more money. Unfortunately, the latter always happens.
Recognizing the difference between spending on needs and wants is equally vital in taking control of your spending. Experts say spending money on something you do not get any use out of, is the same as throwing money in the bin, but in fact most people do this on a regular basis without even knowing it. Most people have set up direct debits or standing orders long ago with good intentions, for example a gym membership, health plan, or cinema membership, but have never got to utilize these amenities to the full benefit. For example you might have gone to the gym for the first few months but then let it go by the wayside – but there’s still a regular amount coming out of your account every month to pay for these amenities you do not utilize, then evidently you are over spending.