Five signs you're living above your means

Money has always been one of the shakiest areas for most people. Many of us have little understanding of basic financial principles and even high earners struggle to understand how to manage their money.

That doesn't sound like good news, but the fact that you're reading this article is a step in the right direction. We can all start somewhere and build our financial wisdom by recognising whether we're living within or above our means.

If you're living above your means, other areas of your finances will suffer. It's not always easy to tell when you're stretching your income beyond what it can handle, but these five signs will alert you:

Monthly bills stress you out

Granted, paying bills isn't usually an exciting thing for anyone. Either way, if your income can comfortably support your rent and other basic needs, then you shouldn't sweat like crazy whenever they're due.

For someone who has overestimated what their income can cover, due dates will feel like a nightmare. If this is you, it should tell you that it's time for an urgent change before you start sinking.

You have no rainy day or emergency savings

If you've done a bit of research on savings, you might have come across rainy day and emergency funds. These are small and large savings that should get you through difficult times like quick and unexpected bills, and a layoff in case it happens.

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When you're living above what you can manage, you will find that you're unable to save for either one of these things. And if you try to, you quickly dip into them to support other wants and needs.

You never stick to a budget

Having a budget is the easy part but actually sticking to it consistently is another story. It's easy to get excited by creating a budget, which is amazing however, it only becomes effective if you utilize it.

This is a sign that you're likely living above your means because you're probably overspending in areas that aren't a priority.

If you're having a hard time you might need to work on your discipline or come up with a better budget that is more manageable.

You have a paycheck-to-paycheck lifestyle

Living paycheck to paycheck is another sign that you're not planning your finances properly. This also applies to people who are earning a lot of money and still struggle those last few days before they get paid again.

Here there is barely any planning and lots of overspending. It's never too late to change because you can adjust by checking your lifestyle, avoiding things like emotional spending and putting other measures in place to be more secure.

You barely have anything for retirement

Thinking about retirement is one major sobering wake-up call we all need. According to statistics very few people will be able to afford retirement and more people will be forced to work until their last breath.

If you're one of those people who have little to nothing for retirement years, it's a warning sign.