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6 Signs You Are Living Above Your Means

Let’s face it. We live in a fast paced, consumer friendly, debt-driven society. Spending money has never been easier.

above your meansThat might be why more than 60% of Americans deal with credit card debt on a daily basis. Access to credit has never been more available to the general public. Unfortunately, it is a main reason why living paycheck-to-paycheck is an unfortunate reality for nearly half of Americans.

However, that reality doesn’t have to be inevitable. Your situation can improve with some quick refinements to your spending habits. I’ve done it before and so can you. You don’t have to live above your means.

It does come down to a simple choice. But first you must be able to recognize that you have a problem. With that in mind, here are a few warning signs that may indicate you are living above  your means.

Signs You Are Living Above Your Means

If you notice these things happening, you have spending issues to look at and resolve:

Sign #1: Your Cards Are Being Declined

Credit cards can create the illusion that you have enough money to purchase things. In reality, you actually can’t afford them. If your card gets declined, it might be a warning sign that your spending is out of control and you are living above your means.

Instead, try to use a cash allowance that you withdraw from the bank to make all discretionary purchases. This will help make sure you’re not spending money you don’t have. It may even make it harder to spend money which is a good thing.

It’s generally not a good practice to utilize your credit lines for every transaction anyway. Doing so will make you more susceptible to factors that can negatively impact your credit score, like missing a payment.

Related Content: Visa Debit Card Safety: What You Need to Know

Sign #2: Your Credit Score Is Low

Although there are numerous factors that make up your overall credit score, the two aspects with the most significant influence are your payment history and your credit utilization. Your payment history is a predictive assessment of risk based upon the historical timeliness and amount of previous payments. This speaks to your ability to make future payments. Credit utilization reveals to what extent you’re using your available credit.

You may think that putting $800 on a card with a $1,000 limit and paying it off accordingly is within good financial practice. However, this reports to your credit card company that you are using 80 percent of available credit. In most cases, you should aim to use less than 30% of your available credit. This helps avoid negative repercussions to your credit score. Having a credit score of 700 or above indicates good financial behavior and is ideal for lenders.

Sign #3: You’re Falling Short Each Month

Not only does coming up short on your bills feel bad, but asking others for help is downright embarrassing. To avoid this situation, get your finances in order by establishing a bill schedule and payment calendar. Create a budget that prioritizes necessities, like covering monthly bills, paying off debt, and setting aside savings each month. Also, trim out unnecessary spending.

Keeping track of your spending habits will keep you from living above your means. You’ll quickly identify the areas where you can scale back and create more room in your budget.

Related Content: The Ultimate Guide on How to Make the Best Monthly Budget

Sign #4: Your Housing Costs More Than 30% Of Your Paycheck

For many Americans, housing is their largest monthly expense. It’s normal to want to indulge in a lavish estate. But overspending on housing can put the rest of your finances in jeopardy.

Your housing costs are comprised of your mortgage payment/rent, property taxes, and homeowners’ insurance. These three things should not surpass 25% of your take home pay. Doing otherwise will put tremendous strain on your monthly budget.

Sign #5: You Don’t Have Any Retirement Savings

According to a 2019 GOBankingRates Retirement Savings survey, 46 percent of respondents claimed they had no money set aside for retirement. 64 percent stated they had less than $10,000 set aside. Those are some scary numbers.

It’s easy to want to spend all of the money you make. After all, we would all like to enjoy the full fruits of our labor. However, it’s important to realize that someday you won’t be able to work. You want to be prepared when it comes time to retire. Living above your means now can thwart that goal.

It is typically advised to set aside a minimum of 10% of each paycheck for emergency savings or retirement. To help with this, some mobile banking companies allow you to automatically set aside a portion of your paycheck to a retirement savings or emergency savings fund. This is a great step to help you build discipline.

Sign #6: You Don’t Have Any Emergency Savings

An alarming number of Americans do not have a financial cushion to support any unplanned expenses. In fact, about  75% percent of Americans had no money saved or not enough to cover 3 months of expenses.  That’s an even scarier percentage than the retirement numbers mentioned earlier.

These people choose to fund emergencies through credit cards, friends or family, or simply not cover it at all. This can be a risky situation to put yourself in. There’s no telling when one might face a job layoff or a medical problem.

The basic recommendation is to set aside 3-6 months of living expenses. This will help you manage through any difficult situation. You will only spend on the absolute necessities when the time comes.

Related Content: Emergency Fund Basics: The Step on Which All Other Success Is Built


In conclusion, you can’t afford to ignore these warning signs that you are living above your means. They are simple ones that you should easily pick up on. Ignoring the obvious won’t help solve your financial challenges.

It may be fun for a time to live above your means. It may give you a thrill to get all those things you’ve always wanted. But in the end, you are doing damage to your long-term financial success. It’s time to get a plan and get moving on a lifestyle that is reasonable and sustainable.

Questions for Discussion: What are some other signs you are living above your means? How can you have the discipline necessary to survive in our consumer driven culture? 

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  1. I’ve known too many people over the years who have had to put their new water heater or tires on a credit card (that they don’t pay off). It’s such a stressful way to live! And they end up paying way more.

    Having a simple emergency fund makes those unexpected expenses so much more manageable. They aren’t fun still, but they at least don’t cause a ton of anxiety because they’re paid for in cash. Makes all the difference.

  2. Hello Brian,
    In this consumer-driven world we live in, discipline is necessary. There are a lot of things we purchase that are unnecessary and are just a waste of money. Keep track of your finances. Budgeting is something my grandmother taught me. Thanks for sharing this informative post. Cheers!

  3. Hey Brian,

    Really enjoyed that blog post but what amazes me is that I’ve witnessed people who experience all six stages of living beyond their means, but don’t take it as a warning sign.

    When I challenged one on her spending habits and having to borrow from friends each month she simply commented “I have other friends I can borrow from too.”

    An education in the basics of budget and making sound financial decisions really does need to become part of every school curriculum.

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