5 Red flags that you are living beyond your means

A couple discussing their finances

5 Red flags that you are living beyond your means

Living beyond your means is pretty easy to do these days, especially since we live in a time when buying on credit has become the norm. Many companies in the country are now creating apps where people can access soft loans with low-interest rating caps. Many people have fallen victim to these mobile lending apps.

Early this month Safaricom released its financial report showing that in the last 10 months Kenyans have been able to borrow over 7billion on fuliza loans only.

But just because it seems normal and everyone else seems to be borrowing doesn’t mean you aren’t doing a disservice to your current and future well-being.

Here are eight red flags that you’re living a lifestyle you simply can’t afford.

  1. You let fear dictate your spending

We all know how terrible it feels to miss out of fun social events due to financial constraints. But don’t let your FOMO (fear of missing out) dictate your spending.

“This can be as innocent as going out to eat when you’ve already exhausted your restaurant fund for the month or as extreme as paying rent you can’t afford to keep up with your friends. The simple rule is to “Living Well, Spending Less”

While you don’t need to give up your entire social life, it is important to take a look at your motives for spending and find cheaper ways to get quality time with your pals.

  1. You are not saving

Everyone should save 10 to 15 percent of their total income. But if you can’t save at least 5 percent even while paying off debt this could be a sign that you’re living beyond your means.

Everyone should have a form of a saving account. Your savings may come in handy later on in life when you are in need. The saving culture should be taught to our children at a tender age

How to do this? Give up things in the short term to be successful in the long term. “If you cut back each month and don’t go out to eat, or to the movies, or whatever it takes for you to spend less, you will have more money to save.”

  1. You don’t have any money left by end month

People who live paycheck to paycheck often believe they can’t save money or spend less because their lifestyle has become a habit

Allow yourself to spend money only on the bare necessities for 30 days which include rent, bills and groceries and cut out everything else. No clothes shopping and no eating out. Nothing puts your finances in check more than a consumption detox.

  1. You never set a budget

Budgeting is important because it allows you to create a spending plan for your money. It also gives you control over your money and keeps you focused on your financial goals.

If you don’t budget it becomes difficult for you to keep track of you’re spending and you can end up spending more than you make and rely on debt to cover necessary expenses. Always set up a budget and follow it.

  1. You hide what you buy 

I hate to admit it but I’ve been guilty of this I have bought new shoes and bags and then hid them so my family wouldn’t know because I knew I didn’t need and couldn’t afford them.

If you have to hide or lie about your spending habits, it means you are spending over your limit.