Is that “Fear of Missing Out” mentality preventing you from living your best life? Chances are good that if you’re experiencing any of these things listed below, then you might be living above your means:
You’re Living Paycheck to Paycheck
If you find that you’re not able to save at the end of the month or you have nothing remaining once all of your bills are paid, then you might want to consider adjusting your expenses. Living paycheck to paycheck is certainly a reality for many of us, but it doesn’t have to be overly stressful if you have your spending in check. Try tracking your spending for a period of time (a week or a month) and see what you notice. Is there anything you can adjust? Are you impulsively spending in any particular area? Try to identify at least one to two areas you can scale back and immediately reallocate that money towards your savings goals.
You Can’t Contribute to Your Retirement
If you’re feeling financially stable and are able to enjoy some of the finer things in life then congratulations! This, my friend, is the name of the game! However, if you’re enjoying some of those more fun (read: less necessary) perks at the expense of funding your retirement, then you may want to revisit your priorities. Sure, it is incredibly important to be present and enjoy each and every day, but you do want to make sure you prioritize “future you” as much as “current you”. The best way to ensure that future you ends up happy, successful, and financially free is to take advantage of compound interest and start funding that retirement ASAP.
Take a moment to revisit that budget (or establish one!) and consider contributing to your retirement accounts a necessary, fixed expense each month. Build this monthly payment into your budget and see where you might need to cut back in order to prioritize this. It may feel uncomfortable at first, but believe us, it’s worth it.
Your Credit Card Balance Keeps Growing
As a general rule of thumb, it is always a good idea to pay off your credit card balance in full each month to avoid paying high interest rate fees and protect your credit score. While this is not always possible in every situation, it is important to recognize that your credit card is not meant to completely fund your lifestyle. If you’re constantly relying on your credit card and seem unable to chip away at your growing balance each month, it might be time to go back to the drawing board and reassess your spending priorities.
You’re Spending More than 30% of Your Monthly Income on Housing
It is typically wise to keep your total housing expenses (i.e. mortgage, utilities, HOA fees, etc.) at or below 30% of your total monthly income. Why? Because doing so allows you to achieve a more balanced lifestyle and leaves funds available for other areas of your life. While we fully realize that this recommendation might not be possible or realistic for some big city dwellers in more densely populated areas, we do think it is still a worthwhile goal to strive for financially. If you’re currently considering entering the home buying process, keep this goal in mind so that you can ultimately still meaningfully contribute to your other savings goals as well.
You Still Don’t Have an Emergency Fund
Life happens, and when it inevitably does, you’ll want to be prepared. Every woman should strive to set aside 3-6 months of income in an emergency fund in order to be protected should the worst or unexpected happen. If you’re currently without an emergency fund, you may want to adjust your spending behaviors so that you can start contributing to an emergency fund today.
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