Living within your means is basically spending less than what you earn. It sounds simple but it’s not always easy to do. In fact, many Malaysians are spending more than what they can afford. According to a 2016 Manulife research, 68% of Malaysians are currently in debt which mostly due to daily living expenses. Here are 5 signs you are living beyond your means and some tips to help you get your finances back in order:
1. You struggle to pay your car loan
Most of your peers are driving around in dashing, new, imported cars. Naturally, you decided to get one, too. Unfortunately, paying off the monthly loan leaves nothing much for you to save or to enjoy the simple things in life.
What You Can Do: Sell off the car before its depreciation gets worse and buy a cheaper locally-made model or a second hand car that you can afford.
2. You don’t pay your credit card balance in full every month
Credit cards are great for racking up points and are a convenient way to pay the bills. However, if you carry a balance on your card from one month to the next, this is a sure sign that you are spending more than what you can afford.
What You Can Do: Focus on paying off more than the minimum payment every month until you have paid the credit card balance in full. After that, leave the card at home and start using cash instead. This will make you less prone to splurge unnecessarily.
3. You don’t have savings
You don’t have enough money to save every month, which means you also don’t have an emergency fund. Should anything unexpected happen, you have no savings to dip into, forcing you to use your credit card, get a personal loan or ask your friends and family to help out.
What You Can Do: Experts recommend that you save at least 5% of your income every month. You’ll have more money to save by reducing your monthly expenses whenever possible through eating at home more often or not going to the movies.
4. You live from pay check to pay check
You find yourself frequently running out of money before month end. No matter how much you earn, you feel like there’s never enough to cover your bills and buy the things that you want within that month.
What You Can Do: Put yourself through a week of spending detox. For one week, spend money only on the basic necessities — groceries, bills, transport — and nothing else. This means no online shopping, no clothes purchases, no eating out and no movies. Once you’ve managed a week, stretch it to a month. This will break your bad habit of over-spending, giving you room to breathe and save.
5. You don’t know where your money went
You pride yourself on not being a high spender. And yet, the money in your wallet or purse keeps ‘disappearing’ at a rapid rate. Where did it go? All those little expenses here and there do add up, especially when you don’t have a budget to guide you.
What You Can Do: If you’ve never set a budget before, start by keeping track of your daily expenses for a month. Once you have an idea of where your money is really going, you can then set a realistic budget that suits your spending patterns while allowing you to save and spend prudently.
If you recognise any or all of these signs in yourself, take a deep breath and start implementing the helpful tips. With a basic, workable budget, willingness to find ways to generate extra income and a lot of self-discipline to live frugally, you can find your way back to living within your means.
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