• Fri. Jul 19th, 2024

Here Are 5 Signs You Are Living Beyond Your Means

Louise Villalobos

ByLouise Villalobos

Jan 24, 2024
Here Are 5 Signs You Are Living Beyond Your Means

If you spend more than you earn, don’t have enough savings, and your bills are piling up, you might want to pause and think. There is a high chance you are living beyond your means, and this never ends well.

In this article, we will take a look at signs that can help you realize that you are living beyond your means. Stay tuned to learn more.

Your Credit Rating is Below 600

Credit bureaus use your credit report, which contains your loan balances and repayment history, to give you a credit score. This rating indicates your creditworthiness, and most lenders consider it when determining whether they can grant you a loan.


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A credit score usually ranges from 300 to 850. When you have a rating of 680 or more, your creditworthiness is considered good; if it’s above 800, it is regarded as excellent. With these ratings, you are likely to secure a loan at reasonable interest rates. However, if your credit rating is below 600, you will struggle to find a lender willing to give you a loan at fair loan terms.

That said, having a poor credit score limits your access to funds, and this could prove to be costly when you need to handle an unexpected expense and don’t have cash in hand.

You Save Less Than 10%

Are you saving less than 10% of your monthly salary? If so, you are living dangerously. Lacking savings leaves you in huge danger that a health issue, a job loss, or an emergency will significantly disrupt your lifestyle.

If you are an American saving less than 10%, then you are not alone. In the United States, the savings rate has fallen steadily over the past few decades. Per a report from the Federal Research Bank of St. Louis, nearly 55% of American adults save less than 10% of their income monthly.

It is advisable to save at least 10% of your salary in a 401(k) to earn a yearly interest of 5%. So, for example, if you are 30 and save 10% of your $200,000 yearly income, you may have at least $950,000 by the time you reach 65.

The balance of Your Credit Card is Rising

If you fail to clear the balance on your credit card every month, then you are accumulating interest, which causes the amount owed to grow. As of January 2024, 22% of American credit card holders have balances, which attracts an annual interest rate of 21.1%.

It is recommended to spend what you can afford to pay in full every month. Further, if you have an outstanding balance, it is advisable to clear it before using your credit card.

More Than 30% of Your Salary Goes to Housing

Determine the percentage of your salary that goes to property taxes, mortgages, rent, and insurance. If it is above 30%, you are likely living beyond your means.

So why is spending below 30% of your salary on housing recommended? Well, financial advisors argue that committing 30% or less of your income to settle expenses related to housing will still allow you to live a good life.

Your Bills are Accumulating

Purchasing items on credit has become common in the United States. As of December 2023, American consumer debt had hit $17 trillion.

Instead of saving to buy whatever is on their wishlist, most Americans opt for hire purchase. What many may not know is that the $50 or $100 monthly installment shrinks their income. If they buy several items on hire purchase, they will be left with little money to cover essential expenses like water and electricity bills.

Besides acquiring items on hire purchase, another factor causing Americans’ monthly bills to increase is unnecessary subscriptions. Do you have to subscribe to Netflix when you are struggling financially? I guess not. So, assessing your monthly subscriptions and removing unnecessary ones is advisable.

Louise Villalobos

Louise Villalobos

Louise Villalobos is an adept writer, renowned for her compelling articles that illuminate and engage. Her prowess in breaking down intricate subjects provides readers with clarity and nuance. With a vast and varied portfolio, Louise has solidified her standing as a distinguished voice in contemporary journalism.