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Four signs you are living beyond your means

02 February 2023 Momentum

It was a Janu-worry like no other. The price of life leading up to the end of 2022 has outpaced our ability to keep up with it. An alarming number of South Africans are in desperate need to start living within their means within the parameters of the current economic reality.

Simply put, living within your means is spending less than you earn every month. While this may sound simple, the latest Momentum Unisa Household Financial Wellness Index revealed that South Africans are living beyond their means.

According to the index, almost 70% of financially destressed households find it difficult to cover monthly expenses and pay bills. Shockingly, even financially well households find it difficult to pay their bills and debt.

Bertie Nel from Momentum says, "Growing inflation and increased interest rates put us under pressure and make achieving our financial goals more difficult. However, it is even more important to keep your goals in mind during these difficult times."

According to him, here are four signs that one is living beyond their means.

1. You want to “keep up with the Joneses”
If your buying choices are influenced (or even dictated by) your need and desire to fit in or "outshine" others, you are most likely living beyond your means.
“Remember, your financial journey is unique,” says Bertie Nel. “You should only make purchases and enter contracts that suit your pocket, not your social media profile.”

2. Your credit balances are increasing
Only paying the minimum payments due on your credit agreements and taking longer to pay off these agreements usually indicates a problem. Bertie advises that you should only buy what you are can afford and avoid credit altogether.
“Don’t forget that rising interest rates are going to take a toll on your credit repayments, and you never know what may befall your own financial situation. You don’t want to be left with debt and no way to pay it off.”

3. You don’t have money left at the end of the month
Not having money left at the end of the month is the first symptom of bad financial planning and indicates you are living from paycheck to paycheck.
“You need to constantly re-evaluate your budget and understand how the money coming in is distributed to aid your financial plan.”

4. You don’t set a budget
Speaking of a budget, Bertie says your budget is the backbone of your financial health. Setting up a budget should always be a priority – especially in economically challenging times. Budgets should be divided into high-priority expenses, including rent or bonds, life insurance, and debt, and low-priority expenses, like entertainment and subscriptions.

If you tick these boxes, Bertie says that it is never too late to change how you spend your money. "A financial adviser can assist you with a financial plan that includes creating a budget. Consulting a financial adviser is free, so there’s no reason not to call one to assist you with a unique financial plan to help you on YOUR journey to success.”

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