20 Warning Signs You’re Living Beyond Your Means

why is it important to live within your means

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None of us set out to be broke.

A car loan here, an unexpected emergency there, and a couple hundred swipes of the credit card later—we’re screwed.

And we have no idea how it happened so fast.

Here’s the thing:

You don’t have to be homeless to be broke. 

Broke is only being able to pay minimum payments on everything.

Broke is being in debt up to your eyeballs.

Broke is buying a brand-new car because you can “afford” the monthly payments but not having $1,000 in your emergency fund.

I didn’t realize that I was living beyond my means until I read this.

Thankfully for me, that realization came at just the right time.

This book gave me the wake-up call that I didn’t know I needed.

The first step is recognizing the problem. So let’s get started.

 1 | You Rely on Credit Cards for Vacations

Budget / Living Beyond Your Means / Frugal Living

At some point, I think we’ve all been guilty of relying on credit cards to cover the cost of a vacation.

The typical vacation costs $1,145 per person. A family of 4 would need $4,580.

Is it worth it?

47% of Americans don’t even have enough money to cover a $400 emergency.

So if you’re still paying off a trip several months after you’ve gotten home – you’re living beyond your means.

Keep this in mind:

If it will take you more time to pay it off than the use you’ll get out of it, then you really can’t afford it.

Instead, start saving money in a vacation sinking fund.


“Debt is the worst poverty.”

– Thomas Fuller


2 | You’re Not Saving While You Spend

Budget / Living Beyond Your Means / Frugal Living

There are things you still have to buy to live. And since you’re buying things you’d normally get anyway, you might as well save money.

For you, this might mean shopping around your grocery stores flyer.

Or buying a FoodSaver to preserve your food. 

For me, there are several things I always buy online because that’s how I get the best deal.

And when I combine that with a cash back program like Ebates, I know I’m getting the biggest bang for my buck.

I’m sure you’ve probably seen the commercials for Ebates, but in case you haven’t, here’s what you do:

You sign up for an Ebates account (it’s free) and use the search bar to find the retailer you want to shop with.

As you make purchases, you’ll get cash back.

Then, once you accumulate your earnings ($5.01 is the minimum payout) – Ebates will send you a check or deposit that money into your PayPal.

Note: the Ebates link above gives you a $10 bonus for signing up and shopping.


“It’s not how much you make, it’s how much you save.”

-Robert Kiyosaki


3 | You Have No Emergency Fund

Budget / Living Beyond Your Means / Frugal Living

If your first thought is, “Emergency fund? What’s that?” then it’s time to get acquainted.

Most financial experts recommend keeping an emergency fund large enough to cover 3-6 months of your expenses.

Personally, I recommend saving up enough money to cover at least 6-9 months of expenses.

After all, you can never have enough cushion. 

I had to learn this lesson the hard way. 

In the same year, I had to replace all four of my car’s tires ($750) and get a root canal ($1,257)

Guess who didn’t have an emergency fund? 

Even though it sucked, it taught me a valuable lesson about money:

It’s not a matter of IF emergencies will happen, but WHEN they’ll happen.

Try creating a goal to save $1,000 for your emergency fund, then once you’ve done that, shoot for saving 3-6 months worth of expenses.

You’ll be glad you did.


“Today, there are three kinds of people:  the have’s, the have-not’s, and the have-not-paid-for-what-they-have’s.”

-Earl Wilson


4 | You Count Your Chickens Before They Hatch

Budget / Living Beyond Your Means / Frugal Living

Do you plan your finances based on money you’ll probably have soon-ish or bonuses you should get?

This could leave you sh-t out of luck if something unexpected happens.

Jobs can be lost, raises and promotions can be delayed, and refund checks can be substantially lower than what you might’ve thought. 

If it’s not in your hand OR your bank account, then it’s not yours.

It’s really that simple. 

Only count your money when you have it.


“Debt can turn a free, happy person into a bitter human being.”

-Michael Mihalik


5 | You Don’t Have a Written Budget

Budget / Living Beyond Your Means / Frugal Living

Having a written budget is one of the most important steps towards financial freedom.

If you make budgeting a priority, you’ll have a much higher chance of winning with money.

I once heard someone say, “When you create a budget, you feel like you’re giving yourself a raise.”

I thought to myself, “How’s that possible?”

Here’s what I learned:

When you write your income and expenses down – you start to identify the small leaks in your spending.

For me, it was the $40 a week I was spending to eat out.

For you, it might be a daily coffee run, or a high cable bill.

Whatever it is, you can’t measure it unless you track it.

So make a budget and stick to it (because, after all, a script is no good if it isn’t followed.)


“A budget is telling your money where to go instead of wondering where it went.”

-John Maxwell


6 | You Pay Your Bills with Credit Cards

Budget / Living Beyond Your Means / Frugal Living

Do you “float” your lifestyle with credit cards?

Are you guilty of transferring balances from one card to another?

Do you use plastic to pay for basic necessities like groceries and utilities?

Many people are considering this the new norm.

Except it’s not.

People who win with money don’t use plastic to inflate their lifestyle.

I credit a huge part of my financial success to this book. 

In the book, Author Erik Wecks says a wealthy man once told him, “I don’t borrow money – I lend it.”

The wealthy man knew that borrowing money was a bad idea because of interest.

Instead, he lent money to other people and charged them interest for it.

Stop the cycle.

It can lead you down a path of perpetual broke-ness and unhappiness.


“Debt is like any other trap, easy enough to get into, but hard enough to get out of.”

-Henry Wheeler Shaw


7 | More than 30% of Your Income Goes To Your House

Budget / Living Beyond Your Means / Frugal Living

Don’t we all want that nice house in that great neighborhood? Isn’t that a part of the American dream?

In 1960, the average house size was 1,289 square feet. Families were also larger back then (baby boomer generation)

Today, the average house size is 2,641 square feet. Families are smaller.

We all want more and more, until “more” because something we can’t afford.

Your house payment (including property taxes and insurance) should be no more than 25-30% of your take-home pay.

The same goes for renters.

Research shows that the average person can pay 30% or less of their take-home pay towards housing and still enjoy a reasonable standard of living.

Give your budget room to grow.

Are you planning on having kids?

Do you want to go back to school?

Will you change careers?

Are you getting married?

Think about these things before you spend too much on a house.


“If you think nobody cares if you’re alive, try missing a couple of car payments.”

-Earl Wilson


8 | You’re Considering a 30-year Fixed Mortgage

Budget / Living Beyond Your Means / Frugal Living

It’s never a good idea to base the amount you *think* you can afford on a 30-year fixed mortgage.

There are several reasons why this is a bad idea, but interest is the biggest.

In the long run, you’re paying the bank twice as much in interest payments.

Don’t do it just so you can have extra spending money in the short run.

If you can’t afford the payments on a 15-year mortgage, then you can’t afford the house.

9 | You Run Out of Money Before Your Next Paycheck

Budget / Living Beyond Your Means / Frugal Living

We all know someone like this. They have too much month left at the end of their money.

They pay overdraft fees.

They live paycheck to paycheck.

People who live this way usually think they can’t save money or cut expenses. They’ve become used to their habits.

If this is you, then I encourage you to take a hard look at your spending habits.

Create a bare-bones budget and make your lifestyle fit your paycheck.

If you’ve read about how I’m saving $15,000 this year, then you know I recently cut my cable package from $170/month to $8.25/month ($99/year) by switching to Amazon Instant Video.

I also bought a coffee maker so I could make coffee at home.

I then started meal prepping and freezing leftovers so I don’t eat out as much.

Every little bit helps.

Start small by trying to find at least 2-3 expenses to cut from your budget.


“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”

-Joe Biden


10 | Your Debt Has Remained the Same for the Past Year

Budget / Living Beyond Your Means / Frugal Living

Are you still facing that whopping credit card bill?

Haven’t made a dent in your student loans?

This is the point where you have to become sick and tired of being sick and tired.

There are two really popular debt payoff methods: the Debt Snowball and the Debt Avalanche.

If you need help picking a debt payoff plan, read this first:

Debt Snowball vs. Debt Avalanche – What’s the best one for you?

11 | You Have Little to Nothing Saved for Retirement

Budget / Living Beyond Your Means / Frugal Living

34% of young adults have nothing saved for retirement.

Of the ones who do have retirement savings, 21% have less than $10,000.

There’s no pension for our generation, millennials.

We have to save for our own retirement.

Don’t ignore the fact that someday, you might not be able to work. 

And besides, who wants to be 75 and still stuck at a 9-5?

Don’t worry, you’ve got this.

If you don’t know where to start, I recommend reading this.

(And in 30 years when you’ve saved over a million dollars in your retirement – don’t forget to come back and thank me.)


“The best time to start thinking about your retirement is before the boss does.”


12 | You’ve Considered Digging into Your 401(k)

Budget / Living Beyond Your Means / Frugal Living

Did you know if you google “401k” one of the most popular searches is “taking out of 401k for a house

Yikes. Why do people think that’s a good move?

Here’s the thing – if you withdraw money from your 401(k) account before you’re 59 1/2, you’ll have to pay an early withdrawal penalty plus income tax.

Don’t steal from your future self just to make current ends meet.

Emergencies happen, and that’s what your emergency fund is for.

Related: The 13 Steps I took to Pay off $76,000 in 19 Months

13 | You  Only Make Minimum Payments

Budget / Living Beyond Your Means / Frugal Living

It’s so easy to swipe a card and not realize how quickly the balance adds up.

I think we’ve all been there before.

And even though I’m past that part of my life, I’m thankful for the huge lesson it taught me about money:

I didn’t want to spend the rest of my life living that way.

Interest payments are the biggest problem when it comes to borrowing money.

After all, interest is what causes us to spend so much more in the long-run.

But if you can’t afford to pay off the balance completely, you still have options. Don’t just settle for a high APR.

If you have any kind of debt whatsoever (student loans, car payment, or credit cards) you should do what you can to lower your interest rate.

You’ll save thousands over the course of the loan just by doing this.

The best part? A lower interest rate usually comes with a lower monthly payment too.

This can as easy as calling your credit card company and negotiating a better rate, or you can use a company like SoFi.

SoFi will help you get a better, more affordable, interest rate.

I go into much more detail in my SoFi review, so if you’re interested in reading that, then click here.

Quick note: the SoFi link above gives you a $100 welcome bonus.

14 | You Go into Debt For Something You Could Do Yourself

Budget / Living Beyond Your Means / Frugal Living

Do you go into debt to pay someone for a job you could’ve done yourself?

Are you too busy to mow your lawn, clean your house, wash your car, or paint your nails?

Some expenses are unavoidable (like daycare and car repair) but a person who is in debt can’t afford to spend money on skills they already have.

Instead of paying someone else to do a job for you, try doing it yourself and putting that money something else.


“The quickest way to double your money is to fold it in half and put it in your back pocket.”

-Will Rogers


15 | You Spend Your Paycheck Right Away


Budget / Living Beyond Your Means / Frugal Living

The difference between someone who is smart with their money and someone who isn’t – is what they do with their paycheck once they get it.

If your first inclination is to spend your check on a WANT versus a NEED, then it’s a sign of a larger issue.

Shopping may bring short-term happiness, but in the long-term, it’s a fast way of staying broke.

I found that using the 24-hour rule (where you wait 24 hours before making a purchase) helped me truly decide if I really needed something.

16 | You Avoid Opening Bills

Budget / Living Beyond Your Means / Frugal Living

Let’s be honest, when you know you owe money – it can be really hard to face the bills. 

But when you’re trying to get your financial sh-t together, this is usually the first step.

So what I had to learn is that you have to face the financial facts if you’re trying to better your situation. 

Get a clear idea of how much you owe and to whom you owe. Then, add up what you have in savings.

Then with the help of a budget, you’ll be able to start your journey towards financial freedom.


“Frugality includes all other virtues.”



17 | You Hide What You Buy

Budget / Living Beyond Your Means / Frugal Living

If you feel like you should hide what you buy, I want you to ask yourself, “Why do I feel the need to do this?”

It’s probably because you feel guilty about your spending habits. 

Living within your means isn’t restrictive when you budget your money.

If there’s something you really want, then just make sure to budget for it. 

There’s no material object worth trading your peace of mind and financial happiness for.

18 | You Ask Someone to Hold Your Checks Until After Payday

Budget / Living Beyond Your Means / Frugal Living

This makes it clear to you (and everyone else) that you’re living beyond your means. 

And that’s not the kind of impression you want to make.

Again, this is what an emergency fund is for.

(Who knew that an emergency fund and budgeting could solve so many financial problems?)


“Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.”

-Benjamin Franklin


19 | Your Bare Essentials are Literally Bare

Budget / Living Beyond Your Means / Frugal Living

If you’re having to eat rice and beans every night just to afford the new iPhone, then I probably don’t have to tell you that you’re in over your head.

But, you’d be surprised at how many people skimp on basic essentials like food, shelter, and transportation just so they can make low value purchases.

Those are the people who go into debt to get a car when they can’t even afford to fill it up with gas.

What sense does that make?

Prioritize your spending with a budget.

(So if you haven’t realized yet, there’s really no way around an emergency fund and budget.)

20 | You’re Scared of Being Judged by Your Friends

Budget / Living Beyond Your Means / Frugal Living

Someone once told me that social media was the devil to their wallet.

I think they have a point.

Do you ever find yourself buying something because you saw it on social media and just had to have it?

Or worse, buying things because you felt pressured?

Don’t go broke for someone else’s approval.

If there’s one thing I learned about the Joneses – it’s that they’re broke too.

Be a role model for your own financial life. 

Thanks for reading.

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why is it important to live within your means

8 thoughts on “20 Warning Signs You’re Living Beyond Your Means”

  1. Excellent read! Really good ideas!😁 Unfortunately I could have used this a while ago, but, I guess it is never to late to start! Thanks so much

    • You’re welcome Elaine. I always say, “If I knew then what I know now…” but better late than never 🙂 Thanks girl!

  2. Great Article… Key takeaways : Emergency Fund and Budgeting…
    Thank you Adele

  3. I think you can never have enough emergency money. I always read to have a 1000.00 fund. I try to save as much as I can towards it but in the past year I have had a chimney fire. I had to get fixed or no heat for the winter and that was 3000.00 and then there was always something going wrong with my pickup and that was about another 3000.00. So beware of just a 1000.00 fund.

    • I very much agree. The more, the better. I remember when the 2008 recession hit, several financial experts were recommending an emergency fund to cover 10-12 months of expenses. That’s always been a personal goal of mine. Thanks for reading Sandy!

  4. Hi we have to set a budget and start saving money. And am trying to get a job so can get started to pay the bills as there is only one wage coming in. And to start to get out of debt.

    • That’s great Diane. I always tell people that everything starts with the budget. Before you can save money or pay off debt, you should know what’s coming in and going out each month. If you need help getting started with a budget, check out our budgeting guide:


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