Find yourself emptying the coins from your pockets or rummaging through the coin box in your car for spare cash every other month? You may be living beyond your means when you constantly find yourself stressed out over money. It’s barely halfway through the month but you’re already stocking your kitchen with instant noodles. Sometimes overspending may also be a sign of underlying emotional stress which causes people to comfort themselves through ‘retail therapy’.
Our lifestyle choices dictate our spending habits. The way you choose to spend that extra dollar bill in your wallet is a choice. It would not make sense if you earn $2,000 a month, and spend as though you’re earning thrice your wage. Reality hurts, and yes it sucks. We would all love to spend every holidays overseas by the white sandy beaches of The Bahamas while sipping Piña colada – except we can’t, if we’re not financially there yet.
Chances are if you’re overspending – you know it. If you find yourself checking off most (if not all) the signs below, acknowledge this problem. It’s important to be honest and rectify the situation while it’s not too late.
Inherently, it’s not wrong to use a credit card when shopping but if you are unable to pay off the balance in full every month then that’s a sign of overspending. If you find yourself paying only the minimum while the interest charges are adding up, there’s a chance that you’ve been using your money in the wrong direction. Overspending using a credit card is spending money you don’t actually have that will leave you with an insurmountable debt later on. Paying only the minimum might tide you over for that month but it’ll eventually come back to bite you in your finances later on.
Bear in mind that the longer you drag out your repayment period, the more it accumulates and snowballs.
If there’s more in your closet than your bank account then that’s another sign of unhealthy spending. Deals and promotions definitely affect our choices as a consumer. When your favorite leather jacket is on sale, it’s hard to give it a miss. Marketers know this too well and it’s their job to make us purchase beyond logical reasoning. The reason? Depending on a myriad of factors, we buy on impulse based on our emotions.
Take this as an example. If you buy a $250 jacket at a swanky price of $150 even though you don’t need it, you are now programmed to think that you’ve saved $100. The reality is this – you did not save $100. You’ve just spent an additional $150 out of your monthly budget.
If you’ve been caught in a situation when you have to go through the anxiety of your card being declined, you know it’s time to relook at your spending. You definitely do not want to be in that awkward situation where everyone at the counter has to see the cashier rejecting your cards.
No one wants to live in debt. Living in debt not only jeopardizes the likelihood of you achieving your financial goals, it takes a toll on you mentally as well. If you’re earning an attractive salary but posses a higher debt to income ratio, then pause right now and think about this. Why did this happen, and how did it get to this stage? Identify what is motivating you to spend above your means. It’s more important to nip the problem at the bud rather than trying to treat the symptoms.
This is a giveaway. Having no savings at all is an unhealthy sign of overspending. It may be shocking, but the 2018 Malaysian Financial Literacy Survey showed that 59% of Malaysians do not save enough to even last them for more than 3 months, and 34% spend more or equivalent to their monthly salary.
You might think you’re unable to save because you’re not earning well or the cost of living is too high. But chances are you’re probably spending beyond your means. If you can’t “keep up with the Kardashians”, downsize your lifestyle until you are financially secure or capable enough to upgrade it. There’s no shame in living frugally or not being seen as ‘trendy’ on Instagram.
Which is more important? To be able sleep soundly at night, knowing that you are debt free and not worry about bills in case you get retrenched or live in fear in case you lose your job and have nothing to support you?
Have a good-paying job and solid income but find your monthly bills piling up? This is yet another sign that you’re living beyond your means. To help you allocate your funds for spending and saving from your paycheck every month, consider the JARS management method.
No matter how busy your lifestyle is, don’t forget to check your fridge too. Some people do not splurge on designer shoes or handbags but they choose to spend on groceries instead. If you happen to constantly find the food in your fridge has turned bad, that’s when you know that you have spent excessively on your groceries.
Plan your meals in advanced and list down all the ingredients you need so that you don’t buy unnecessarily. Here’s another tip: Don’t go to the supermarket hungry. You tend to buy more when you’re hungry.
Spending money without planning is dangerous. If you find yourself nodding to some of the signs above, then it’s time to make some changes. We know it’s hard to admit that we’re overspending but ignoring these signs will only make it worse.
In order to get your budget on track, you should be able to identify and distinguish between your needs and wants. The moment you realize that you have run out of money even before the end of the month, that is a clear sign of overspending. Note that this may lead you to borrow and end up living in debt just to survive until the next paycheck.
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