Are you consistently falling behind on your bills? Or laying awake at night worrying about how you’ll afford your everyday expenses? Millions of people experience this same feeling each year in the U.S. It can be difficult managing your finances, especially if you have a family or you’re a single parent. One reason you could be struggling month-to-month is simply living beyond your financial means. Budgeting money is vitally important and helps to plan for both the short-term and the long-term. Here are some telltale signs that may prove you’re living beyond your means.
Your Credit Card Debt Is On the Rise
If you are someone who only pays the minimum amount due on your credit card balance every month, either because you can’t afford more, or you need to cover other expenses elsewhere (loans, other credit card debt, etc.), you are more than likely in over your head.
If possible, charge what you know you can pay off by the end of each month moving forward. If these expenses roll over to the next month you will be charged interest, making it even harder to pay the balance in full. Continuing to pile on top of this principal each month can dig yourself a hole that you may not be able to get out of for years.
Tip: Try using a credit card that gives you cashback or automatic savings benefits whenever you use it. These rewards can really add up over time, and depending on the card you use, make paying off your balance each month easier than ever!
Your Credit Score Is Below 650
Credit bureaus are continuously keeping track of your outstanding balances, payment history, and even your traffic tickets. Your cumulative credit score is compiled of all of these elements and determines your “creditworthiness.” Credit scores range from as low as 350 up to as high as 850. If you are consistently on-time with payments or pay off your outstanding balance early on a regular basis, you probably have exceptional creditworthiness.
If you’re unsure of what your credit score is, there are services such as TransUnion that will send you a copy of your credit report. A score that falls below 650 is considered low, and may make it difficult to get approved for a credit card or loan from a bank.
Tip: A big part of determining this score comes from your credit card balance, so if you aren’t able to make payments in full as previously mentioned, your credit score may be in jeopardy.
Your Bills Are Out of Hand
Although certain expenses are required each month (mortgage, gas and electric, car payment, insurance, etc.), there may be bills you are paying that could be cut out of your monthly budget. Things like cable television, frequent visits to your favorite restaurant, and any unnecessary subscriptions you may have can all be eliminated from your monthly expenses to save you hundreds of dollars. Every dollar helps when you are struggling to make ends meet each month so find as many ways to save as possible.
Tip: You may also consider options like a cheaper phone plan, less travel expenditures, and shopping for cheaper groceries to save money that could help you financially elsewhere.
You Aren’t Saving At Least 10% of Your Monthly Income
Not only should you be tracking your finances to help pay your monthly bills, but also have the foresight to look toward retirement as well. Spending more than you make each month won’t just leave you in debt, but prevent you from saving any money for you and your spouse for later in life. If you’re not saving at least 10% of your monthly gross income, you are probably mismanaging your hard-earned dollars. Not only can this be an emergency fund for your family, but without it, you are in danger of falling into a deep hole if some major expense were to come up. Make it a rule to put 10% of your gross pay in savings or an investment account each month to protect you and your loved ones’ future.
Tip: Don’t be afraid to ask friends and/or family about how they go about budgeting their expenses. Everyone at some point in their lives has struggled with money, so you shouldn’t be embarrassed to seek advice or admit that you need help financially.