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10 Warning Signs You are Living Beyond Your Means
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10 Warning Signs You are Living Beyond Your Means

You must have already heard of the dangers of living beyond one’s means. What you may not really know is you could actually be one of those unenviable people living beyond their means. 

Why? Because people are by default inclined to think the best of themselves while being quick to notice the flaws in other people’s lifestyles. 

Living beyond your means is one of the surest ways to not just retire poor but to also live a low quality life, to never own what you desire and generally a ticket to never achieving your financial goals. 

They say there are generally two ways of progressing financially; by either earning more or spending less than you are earning. Most would agree that spending less matters more than earning more - with good reason.

What is Living Beyond Your Means?  

Someone is said to be living beyond their means if they are spending more money than they can afford to. 

Notice this is not simply spending more than you are earning - which while it is absolutely true that you would still be living beyond your means, spending more than you are earning is the most severe form of living beyond one’s means.  

For example, if you earn Ksh10,000 monthly and spend Ksh12,000 in a month, say from borrowing, you are living beyond your means.

However, you would still be living beyond your means if you spend exactly Ksh10,000 in a month but none of that money went to savings, added to your emergency fund or funded your most important obligations and was just blown on expenses. 

You would also be living beyond your means if after your monthly salary is allocated, you did not save the percentage you needed to save that month, did not repay your loan as planned and so on.

That is why living beyond your means is just as much about spending more money than you can afford to, as it is about spending more than you earn. 

10 Signs You are Living Beyond Your Means‍

With that in mind, it should be a little clearer how one may think they are actually spending their money smartly but are, in reality, living beyond their means unknowingly. 

Below, we explore 10 warning signs to look out for when managing money to make sure you are not living beyond your means and putting your most cherished financial goals at risk. 

1. You are Living Paycheque to Paycheque

This has to be the most obvious one, really stemming from the most natural understanding of living beyond one’s means. If you make a reasonable amount of money and spend everything you earn every month, then chances are you are living beyond your means. 

Do you always find yourself anticipating the next payday so much right from the middle of the month? Not because you have invested your money somewhere you cannot access but just because you have run out or are close to running out of cash? This alone should tell you that you are living beyond your means. 

Have you recently received a raise? Or, do you remember the time you received a pay rise, whether it is by changing jobs or being promoted at work? 

Did your situation change? If not, you may be living beyond your means if you failed to feel the positive effects of a bigger paycheque. That is if you did not channel all this additional income to savings and investments - even then, your quality of life should improve given the additional finances you have - not necessarily monetarily. 

It may be time to do some serious expenditure cuts.

Read Also: 15 Ways to Stop Living Paycheque to Paycheque

2. Fun Comes Before the Important Expenses

Do you find yourself having enough money to hang out with friends, show up for a night of clubbing or an impromptu road trip but have none for car repairs? 

This is one example of how money wastage can make you live beyond your means. The misprioritisation of one’s income by putting important expenses in the back seat for more emotionally gratifying ones, albeit short-lived. 

Try reevaluating the last few months of expenses and identify the money wasters that may be coming in the way of your building a robust emergency fund, expanding your portfolio and funding your longer-term lifestyle goals.

Read Also: Money, Wastage & Me: Regrets, Lessons From 10 Years of Employment

3. You Have Never Set Up an Emergency Fund

When it comes to emergencies such as illnesses, job loss, pay cuts, home and car repairs, funeral or emergency travel expenses, it is not about whether they will happen, but when.

Eventually one emergency is going to creep up on you and you are going to need an instant cash injection to get things going. If you do not have an emergency fund, you are going to be significantly derailed. 

Who is most likely to have not thought about this? Someone living beyond their means.

If you do not have an emergency fund - which is typically up to six months worth of living expenses, then there is a good chance you are living beyond your means. 

Do you find yourself having to take up credit to cover emergencies? It’s time to cut down on your expenses, do a complete financial self-audit and create that all-necessary financial cushion against emergencies.  

Read Also: Easy Steps to Create an Emergency Fund in 100 Days

4. You Save Less Than 5% of Your Monthly Income

Yes, remember we said living beyond your means doesn't only mean spending more money than you are earning?

How are you going to grow financially if you are just saving pocket change? Savings will typically be the building block for investments - so if you are not saving, you are probably also not investing. 

If you are earning a reasonable amount of money, saving less than 5% of your gross income means you are misdirecting your earnings to things that are not financially beneficial. 

You are also living beyond your means if your savings account is not growing meaning that at some point you stopped contributions, or worse if you have no savings at all. 

Each payday, the first thing you should do with your paycheque is to put aside more than just 5% of your income - pay yourself first. 

Read Also: Saving For Beginners: Follow the 50/30/20 Rule

5. Housing Takes up More Than 28% of Your Income

One of the biggest expenses for most people has to be the cost of housing, whether you are renting or servicing a mortgage. 

The rule of thumb for the most optimal cost of housing is set at about 28% which is the highest amount you can pay for housing and still enjoy a decent lifestyle given an income level. 

So, for example, if you earn Ksh30,000 per month, you ideally should not live in a house whose rent is higher than Ksh8,400.

It is not unusual to find someone living in a classy apartment but have challenges fuelling their car or meeting some of their obligations solely based on the proportion of their income that goes to housing. 

If a big portion of your income goes to housing, you are definitely doing yourself a disservice. This is especially true for renters who are not building any equity on the property they occupy as compared to someone who is servicing a mortgage. 

Nevertheless, even if you are a mortgage holder, one should also have mortgage repayments that are reasonably within this range.

If your housing expenses are beyond 28% of your income, it is time to consider moving to a cheaper house or neighbourhood. Save that dough. 

Rent Also: Nairobi Rent Nightmare: Top Pocket-Friendly Estates to Consider

6. You are Not Saving For Retirement

As basic as the budget is to your financial wellbeing so is retirement savings. The earlier you start saving for retirement, the cheaper and easier it is for you to reach your ideal retirement goals. 

If you wait longer, it gets more expensive, since you have to contribute higher amounts monthly over a shorter period of time. That is the power of compound interest. 

If you are yet to start contributing to your retirement savings, have paused these contributions or are contributing just the bare minimum, you are most likely living beyond your means. 

Read Also: Planning for Retirement: Key Factors to Consider

7. You Don’t Know Where Your Money Goes

We already do know the budget is the backbone of your personal finances. Without a budget, you are most certainly doomed to fail. 

People who do not have a budget typically do not know where their money goes every month - they hope for the best - rather than plan for it.

A budget allows you to have a clear idea of where your money is going every month such that you can tell where to cut back, where to allocate more and keep track of your goals as well as have good estimates of when your goals are likely to be realised.

If you subconsciously know you are overspending and do not want to be responsible, you will always shun a budget since it reminds you of the bad decisions you are making. 

Change the course of your financial life by getting back to basics. Create a budget.

Read Also: 6 ‍Simple Steps to Create a Working Budget‍

8. You Don’t Have Insurance Even If You Can Afford it

Insurance is a necessary expense in the wealth building process. Just think about how far behind one-week’s hospitalisation can set you? Or a major surgery on you or your loved one if you had to pay it off-pocket.

What about having your brand new car totalled and you only paid for a third-party insurance cover?

You are living beyond your means if your income allows you to afford health and other essential insurance types but you find yourself unable to sign up for these income- and wealth-protecting products.

Read Also: If Hospital Bills Can Bankrupt Your Family, What Can You Do Now?

9. Bills? they Make You Worry

Do you find yourself paying your bills and expenses late? Does your landlord have to keep extending your payment deadlines or you’ve seen yourself trying to dodge the caretaker once every while?

You are most likely living beyond your means if you find yourself worrying about bills constantly. Whether it is rent or utilities such as electricity or other expenses such as loan repayments, contributions to your savings and investment accounts or school fees. 

You have to look at the root cause of the worry. Are your children better off at a cheaper public school? Should you move to a cheaper, smaller house or new neighbourhood that can free up some cash? Is it time for debt consolidation or a true paradigm shift to minimalism

Read Also: Spending 101: Skills to Keep Your Expenses in Check

10. You are Keeping Up With the Joneses 

Do you love the comparison game? One must-adhere-to rule in the Bible of personal finance goes Thou Shall Not Compare Thyself to Others. If you want to never achieve your most unique, cherished and personalised financial goals, try buying every latest shoe, car, furniture etc. your peers are buying. 

If you easily fall victim to FOMO - the fear of missing out, you are most likely living beyond your means. FOMO is an unreasonable fear that one might be missing out on very beneficial things their peers are engaged in whether socially or even financially - such as rushing to buy a plot in Nanyuki just because two of your close friends are, and not because that is what you want or you can even afford it. 

If you find yourself comparing what you have with others frequently, chances are that you are living beyond your means

Read Also: How the Fear of Missing Out (FOMO) Is Harming Your Financial Goal


With people’s ability to protect their income in the prevailing economic conditions deteriorating by the day, one cannot afford to live beyond their means.

Your ability to save and invest when you are living beyond your means is diminished considerably, if not completely wiped out. 

This is a very precarious situation that encourages unplanned borrowing with a high probability of defaulting and a gradual movement towards financial ill-health. 

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Eric Ndubi is the Managing Editor at Money254. He holds an MSc in Media and Communications from the London School of Economics and Political Science. Prior to leading Money254's editorial team, he worked as the Editor at, social media manager at Citizen TV and editorial manager at You can find him on twitter @Eric_Ndubi

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