Do you spend the week before payday wondering where your money has gone?

Living payday to payday is a stressful experience. But it is also a key sign that you are living beyond your means. In this blog, we are exploring what this term means, why it is a harmful pattern and signs that you need to make a change.

What Does It Mean To Live Beyond Your Means?

Living beyond your means refers to a pattern of spending more than you earn. This can lead to borrowing money for the wrong reasons, building up debt, spending your emergency savings and falling into a debt cycle.

Like lifestyle creep, it is an unsustainable way to live, as it puts you on a path to high debt and potential bankruptcy. Not to mention, it is incredibly stressful to be in a debt cycle, which can impact your mental and even physical health.

However, unlike lifestyle creep, living beyond your means can happen without you earning more money. So long as you are spending more than you earn, you are living above your means.

7 Signs of Living Beyond Your Means

Unsure if you are falling into this pattern? Here are seven signs you are spending more than you can afford to.

1. Living Paycheck to Paycheck

Regularly spending your income before the next paycheck arrives is a clear sign you are overspending. This makes you unable to save and puts you at risk of relying on credit to cover emergencies.

2. Low Credit Score

If your credit score has dropped, it might be a sign that you are overspending. Credit scores can drop when you are not paying your minimum payments on time, negatively impacting your ability to take out future loans.

3. You Are Always In Your Overdraft

Consistently using your overdraft is another sign you are living beyond your means. This shows that you are unable to pay back the overdraft and, therefore, can’t build any savings or an emergency fund either.

4. Your Savings Are Shrinking

Likewise, if you have to dip into your savings to cover your monthly expenses because your income isn’t enough, it is a clear sign that your lifestyle might be too expensive.

5. You Can’t Stick To A Budget

Do you have trouble sticking to your budget? Or maybe you don’t see the point in making one? Either way, if you don’t track your expenses and consistently spend more than you should, you are likely living beyond your means.

6. You Only Make Minimum Credit Card Payments

Using credit cards for everyday expenses is not a bad thing, but if you can't pay off most of the balance each month, you might be overspending.

Instead of paying interest, consider cutting non-essential spending to pay down your debt.

7. You Don’t Have An Emergency Fund

Lacking cash for emergencies could mean you are overspending and hoping that nothing will go wrong. Life is unpredictable, though! Unexpected expenses can lead to a financial crisis, especially if you are already living above your means.

How Do You Fix Living Beyond Your Means?

You can only fix living beyond your means by making a meaningful change to your lifestyle.

Begin by making a habit of tracking your spending and identifying non-essential expenses to cut.

Next, create a budget that prioritizes savings and debt repayment so you can strengthen your personal finances and navigate emergency costs. If you have debt, focus on paying off high-interest debts and then building an emergency fund.

Continue learning about personal finance and developing a healthy relationship with money on the Cash Asap blog.