Signs that you are living beyond your meansChen Wan Lim
In a society where access to easy and fast cash is easy and where plastic money is easily obtained, it is no wonder why so many young people are succumbing to bankruptcy and financial difficulty. According to the Prime Minister’s department, the majority of bankrupts are people aged between 35-44 (34%), followed by 45-54 (26%), 25-34 (20%), and 55 and above (11%). The top reason for bankruptcy in Malaysia is caused by vehicle loans (27.94%), followed by housing loans (21.36%), personal loans (20.41%) and business loans (11.71%). It’s time therefore, to do some self-reflecting and determine if you have these signs that you are living beyond your means:
You are living from paycheque to paycheque
If you are anxiously waiting for your month-end paycheque on the 15th of every month, then you might be treading dangerously on thin ice. Not properly allocating your income to last through the month is an early sign of improper financial management.
You can barely save a portion of your income
The general rule of thumb is to save at least 10% of your take home pay. But if you are unable to even save a portion of that recommended amount, then you are probably spending more than you are able to. In fact, you even might have high overhead and fix expenses which are not easy to reduce.
You have unpaid bills
Another sign that you are living above your means is that when you have unpaid bills stacking up. If you find it hard to settle your outstanding utility bills including your phone and internet bills, then you might be in some sort of a financial difficulty. Consider reducing your internet packing to a lower plan and to discontinue your cable TV subscription are the ways how to solve financial problems.
You are paying only the minimum balance required on your credit card
One of the most tell-tale sign that you are living way above your means is when you are unable to settle your credit card debts. If you find that you are only paying the minimum payment required month after month, then you are probably in serious financial health. Try evaluating your lifestyle and see which items you can cut or reduce to try to reduce your outstanding credit card balance.
You are counting every sen on essential items
When you are grocery shopping for food, toiletries and other essential items and you find the need to count every sen for toothpaste or a bag of rice, then you might not be prioritising how your money is spent. If you are concerned with fuel prices for your luxury car, then you might also not be cleverly managing your priorities. Look through your expenses and prioritise your necessities first.
You worry about emergencies
Accidents happen, pipes burst and car radiator leaks – those are facts of life. But if you are constantly worried that you might not be able to pay for emergencies because you do not have an emergency fund, then you might just be spending more than you are saving. Many experts suggest that having an emergency fund of between three to six months is recommended as the typical person would normally take that amount of time to get a new job should they lose their current position.
It is easy to live life to the fullest and to max out your credit cards for luxuries and vacations. However, anyone can easily fall into financial difficulty and bankruptcy and need to think about how to overcome financial problems. To avoid being a victim, start taking proactive steps now to regulate your personal finances.