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Are you living beyond your means? Is this why you have not achieved financial success?

Financial success is all about planning and good practices. One can never achieve this when living beyond their means. There is no point in struggling to sustain a lifestyle you cannot afford when you could be putting your money to good use so that one day you can afford that lifestyle.

How do you know you are living beyond your means?

Here are signs that you are living beyond your means.

1. Zero savings

One of the sure signs that you are living beyond your means is not having any money to save.

How much money do you have left over after paying rent, buying food etc? Financial experts say that you should save at least 5% of your salary every month.

Calculate what that is and see if you can afford to do this every month. If you cannot afford to save 5% of your salary then you are living beyond your means.

Savings are important because they help us prepare for the future. Whether it is an emergency fund that you can use for medical expenses or in case you lose your job, it is always good to have a little something stowed away.

2. You Don’t Have Any Money Left at the End of the Month

Forget the Njanuary blues, are you always broke at the end of the month and have to even borrow some money for transport?

If this is you then you are living beyond your means. No matter how little your salary is with proper planning it should last throughout the month.

If you want your salary to last the whole month, then you need to only spend money on the essentials. Pay rent, buy food, pay your water and electricity bill, set aside cash for transport etc. Instead of, spending it on expensive clothes and eating out.

This will ensure that you even save up something instead of living from pay check to pay check.

3. You are in debt

The easiest way to tell if you are living beyond your means is to see how much debt you are in. How many people do you owe money to? Be it ‘mama mboga,’ your colleague or friend.

If you have to borrow money in order to do something like go out on the weekend or buy clothes or even pay rent, then you are living beyond your means.

Clearly, you cannot afford whatever it is you want to buy if you have to borrow money to buy it. So you need to cut down on such expenses and pay off all the debt you owe.

With debt, you cannot save money and saving is an important part of financial success.

4. Almost half your income is spent on rent

How much rent do you pay? What percentage of your salary is that? According to financial experts, your rent should not be more than a third of what you are earning. So for example, if you earn 30K then your rent should not exceed 10K.

Most people want to live in posh estates and as such end up spending over half their salary on rent. This means there is very little left over or none at all when you factor in the other expenses like water electricity and transport.

5. You never know where your money goes

Are you one of those people who always wonder where their money went? If you can never account for your money then you are living beyond your means because you have no budget in place.

Without a budget, it is difficult to control spending and as such you will never be able to save or use your money sparingly.

One should always live below their means. Not within but below. This means even if you can afford to live in a house worth 30K a month if you do not absolutely have to, you can get a house for half that price and invest the rest.