10 Signs of poor money management and how you can save more

Poor money management and living beyond your means are easy to do in a debt driven society. Spending has never been easier.

Cash is becoming more and more scarce as we continue to fund our lifestyles through credit. Not to mention the social pressures to “keep up with the Jones’s”.

Have you asked yourself if your money management is causing you to live beyond your means?

Here are 10 signs of poor money management

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1. You are not saving at least 10% of your after-tax income

According to 2017 survey by CareerBuilder, more than 1 in 4 U.S. workers do not set aside ANY savings each month.

As a guideline, you should aim to save at least 10-15% of our income but if you can’t save 10%, you may be living beyond your means.

2. You have no emergency fund/savings

Part of the reason you need to save at least 10% is to have cash in the event of an emergency. Putting emergencies on your credit card or taking out a loan perpetuates the paycheck to paycheck cycle.

Aim to have 3-6 months worth of your monthly expenses set aside for any emergency and any amounts above that as savings.

3. You are living paycheck to paycheck

According to 2017 survey by CareerBuilder, 78% of U.S. workers live paycheck to paycheck.

Many of these people believe they do not get paid enough to set money aside. However, the survey revealed that only about 50% of those living paycheck to paycheck were making less than $50,000.

More money is likely not the key to breaking the paycheck to paycheck cycle.

4. You borrow to pay bills

Taking on more debt to pay debt you already have is a big no-no.

Whether it be a loan from the bank, family or friends, it is a clear sign that you cannot afford your current lifestyle.

5. You cannot pay the full balance on your credit card(s)

While a tight month every here and there happens, you should not find yourself constantly unable to pay the full balance on your credit card(s).

Only covering the minimum payments will cause your monthly minimums to skyrocket as the average interest rate on a credit card is 19%.

If you live your life only paying the minimum payments you should reevaluate your current lifestyle.

6. You need your credit card to survive

Ask yourself: “Would you be able to live the way you do now without your credit card?”

If the answer to that is “no” then you are likely spending more than you can actually afford.

7. You take a loan out to vacation

We all want to enjoy life but if you find yourself taking a loan out to go on a vacation as you do not have the funds you may be living beyond your means.

8. You cannot afford the essentials

If you find yourself not being able to afford food there is no question that your money is being used inappropriately.

9. You spend more than 30% of your gross pay on your mortgage (or rent)

The rule of thumb is that your monthly mortgage (or rent) should not exceed 30% of your gross pay.

If you pay more than 30% of your gross pay, your home is likely too expensive for your current earnings.

10. You are afraid your friends will judge you

Social media can be the devil to your wallet. Ever find yourself buying items to please others or keep up with others?

Buying items to post a picture on Facebook, Snapchat, or Instagram can be a costly habit.

 

How to overcome living beyond your means and save more

Find yourself falling under any of these warning signs?

Here are some solutions to help you live within your means and improve your money management:

1. Know where your money is going

A budget is important and could do wonders for you, but personally, I don’t think it’s realistic for most of us.

According to a 2014 poll, only 30% of people are successful at budgeting.

That makes 70% unsuccessful…why?

Fluctuating bills, unexpected crises, major life changes – and the reality that most human brains are not primed to track 500 distinct transactions per month and tuck them into clear categories.

While I think budgets aren’t realistic for most of us, I still believe it is important to look at where your money is going.

Here’s the quickest and easiest way to get that done:

  1. Create a Mint account. It’s FREE and automatically categorizes all your expenses
  2. At least once a month, log into your Mint account and have a look at what you spent money on
  3. Make adjustments as needed. Maybe you’re doing great with your spending but most of the time, adding and categorizing does help with managing.

Once you have a good understanding of where your money is going, you can start making adjustments.

2. Pay yourself first

Start saving TODAY even if you don’t have much. Don’t wait around hoping you’ll have money left over at the end of the month. Paying yourself first means setting aside money when each paycheck rolls around and forcing yourself to live with the leftovers.

Set up automatic transfers on each payday to move money into your savings. The key here is to make sure you’re not living off of your credit card.

If you’re really struggling financially, here’s how you can save even if you’re living paycheck to paycheck.

3. Throw away the credit card and use cash

This one goes hand in hand with the last point. Using cash is the easiest way to only spend what you have. Limiting yourself to a specific amount of cash is an effective way to get your lifestyle in line with your finances.

Alternatively, you could also stick your credit cards in a jar of peanut butter and keep them for emergencies. Trust me, you won’t be inclined to dig them out of there.

4. Refinance student loans

Refinancing student loans isn’t right for everyone, but if you have a steady job, a high-interest rate on your loans, and don’t plan on using any federal benefits like income-based repayment – it may be right for you. Lendkey is a good option to look into.

It may allow you to save thousands of dollars, and cut down how long you are paying down your loans.

CLICK HERE to find out more about LendKey.

5. Let technology worry about saving and growing your savings

Think of all the purchases you make on a daily basis.

Imagine the spare change on everything you buy turning into savings.

You might not think of spare change as adding up to much but a little goes a long way.

I personally use and love Acorns.

Acorns will automatically round up your purchases, set that spare change aside AND invest it for you.

Every dollar is diversified across 7,000 stocks and bonds to improve returns and reduce risk.

It’s one of the easiest ways to save and invest money without having to worry about a thing.

You can sign up for Acorns for FREE here.

 

Do you have any other tips to overcome poor money management and save more?

Is poor money management causing you to live beyond your means? Here are 10 signs of poor money management and how to overcome them and save more.

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