Signs You’re Living Above Your Means

by Spero Financial

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Simply put, living above your means is when you spend more money than you earn. It could also mean you’re spending everything you earn, leaving nothing left over at the end of each month. Both spending habits often require relying on credit cards, loans, or savings accounts to cover bills and typical expenses.

Living above your means isn’t always obvious until you begin to look at your spending habits and monthly financial statements. However, it’s unsustainable for your financial health and often leaves you in a hole deeper than you ever intended.

Below we’ll look at a few signs that you may be living above your means and how to adjust your financial habits, so you don’t continue down that path.


1. You live paycheck to paycheck.

While living paycheck to paycheck isn’t always due to circumstances within our immediate control, there are situations where living paycheck to paycheck is a result of mismanaged money. If most or all of your income goes immediately to bills with nothing leftover, this may be an indicator to take a closer look at your finances and where your money is going each month.

By doing this, you can get a good picture of where your income is going, find places where you are able to cut back and set yourself up to no longer live paycheck to paycheck. It’s much easier to stay on track if you address the issue before it throws you off track, which is why the next sign is so important!

2. You’re not following a budget.

A budget is a wonderful tool that allows you to track your spending habits and then take that information to create a guide for yourself based on specific money goals. Creating and following a budget is a crucial step on the road to financial wellness - as it allows you to self-evaluate, ultimately answering the question of whether or not you are living above your means. Your budget is also a great playbook to live by that outlines specific parameters to follow financially.

We admit that creating a budget from scratch is not always easy, especially if you’ve never done it before! However, there are resources to help and even apps that will sync directly with your account to simplify the process— including the Your Spending tool in Spero’s Online Banking. If you’re looking to create a budget and need direction on next steps, schedule an appointment with one of our Certified Financial Counselors!

3. Your savings account isn’t growing.

If you have no money left over to put towards savings or you’re having to dip into your savings to make it through the month, that could be an indicator you are living above your means! While life happens and emergencies occur, if this is common and continues from month to month, that could be a sign you need to reevaluate where your money is going.

Again, an effective and sustainable budget will help you set up realistic savings goals but remember, it is important to also build a safety net you can fall back on, in case of emergency! If your monthly expenses require you to take money from your savings on a recurring basis, it is time to reevaluate your expenses and find the items you can cut out.

4. Overdraft fees are common.

While a one-off overdraft fee may not be cause for concern as mistakes happen, consistent overdraft fees are an indicator that you are living above your means! Overdraft fees occur because of making a transaction or purchase that is more than the amount available in your account. If overdraft fees are common for you, consider downloading your financial institution's mobile banking app to easily track the amount of money you have in your account. As an added layer of accountability, you can also opt-out of Overdraft Coverage - so if funds are not available in your account at the time of purchase, the transaction will be denied. You may also link accounts to cover the cost, meaning money would be pulled from your savings account to cover the purchase. While a fee is sometimes charged for this, it is often significantly less than an Overdraft fee.

5. Housing is a huge portion of your budget.

While housing is probably a large portion of your monthly budget, it may be a sign you are living above your means if your monthly housing cost goes above 30% of your total monthly income. While this percentage could be slightly different based on individual situations, it’s recommended to keep your housing expense under 30% as there are many other expenses to take into account.

Keep in mind that housing expenses go far beyond just the rent or mortgage payments, utilities, insurance, and other housing expenses should be considered when evaluating your total monthly housing cost.

While these signs aren’t always universal, they are great starting points when considering your finances! We realize these points can be overwhelming especially when you’re trying to evaluate your finances, cut down on excessive spending, create a budget, and so much more, all at the same time. That’s why we are here to help! We have financial education resources on our website that are available to you and free to use. We also have Certified Financial Counselors ready to sit down and discuss your individual situation. We are here to join you on your journey!

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