How do you know if you are living beyond your means?
We all like to think that our budget keeps us within our means, but how do we know if we are really living like that? I will give you a few ways to know in no particular order.
1. Carrying a high credit card balance – If you carry a balance that cannot be paid off in the same month you are using your credit card as an emergency fund, terrible idea!
2. Not saving at least 5-10% - If you cannot save this minimum amount your budget is too tight and leaves no “wiggle room.”
3. No emergency fund – This plays directly into #2, if you cannot save 5-10%, how will you ever be able to create an emergency fund and pay off those credit cards?
4. No budget – If you have no budget and take spending day by day, there is a good chance you will overspend for that month which means… You are living beyond your means.
5. Swiping your credit card for day to day expenses – This could be a sign of trouble in your finances, BUT with the rewards credit cards are offering of 1.5% cashback and etc., this could be a good thing IF and ONLY IF the balance is paid off every month. These type of cards usually have a slightly higher interest rate to account for all the cash back.
We all like to think that our budget keeps us within our means, but how do we know if we are really living like that? I will give you a few ways to know in no particular order.
1. Carrying a high credit card balance – If you carry a balance that cannot be paid off in the same month you are using your credit card as an emergency fund, terrible idea!
2. Not saving at least 5-10% - If you cannot save this minimum amount your budget is too tight and leaves no “wiggle room.”
3. No emergency fund – This plays directly into #2, if you cannot save 5-10%, how will you ever be able to create an emergency fund and pay off those credit cards?
4. No budget – If you have no budget and take spending day by day, there is a good chance you will overspend for that month which means… You are living beyond your means.
5. Swiping your credit card for day to day expenses – This could be a sign of trouble in your finances, BUT with the rewards credit cards are offering of 1.5% cashback and etc., this could be a good thing IF and ONLY IF the balance is paid off every month. These type of cards usually have a slightly higher interest rate to account for all the cash back.