8 Signs You Are Living Above Your Means

Living above your means may sometimes mean you are overspending, racking up debt, and making it hard to achieve financial freedom. If you want to know if you are in financial trouble and how you can stop living above your means, this post is for you.

What are the signs that you are living above your means?

1. Your monthly rent/mortgage costs more than 30% of your income.

If you live in places like the UK, the US, or any of these western countries where we pay our mortgage or rent monthly, your rent or mortgage should not be more than 30% of your income. If you earn 2000 pounds monthly, your monthly rent or mortgage should be 600 pounds. 

For those who earn £4000 monthly, your monthly rent/mortgage should not exceed £1200. If you share the home with a partner who earns an income, your rent/mortgage should not be more than 30% of your combined monthly income. 

How much you spend on rent or mortgage per month is a good way to check if you are living in a house above your means. I’ve created videos on my Youtube channel where I talk about the kind of house you should buy. Buying a home that is too big for you or that you cannot afford will cost you more than you should spend per month. 

Some people live in high brow areas like central London, which may require them to spend more than 30% of their monthly income on housing. However, you may want to consider moving outside of that neighborhood because it exceeds your income. 

If you have to remain in the neighborhood because it is close to work or close to the things you enjoy, you can move into a smaller space so that you are living within your means.

The amount of your income going to rent or mortgage is the first sign you should look out for when accessing whether you are living within or above your means. 

If you reside in African countries like Nigeria, where you have to pay your rent or mortgage annually, it should also not exceed 30% of your annual take-home income.

Driving a Car You Cannot Afford

Your car payment should not be more than 15% of your income. If you earn £2000 monthly, you should not be driving a car costing you more than a £350 lease payment per month. This figure applies to those making installment payments on their vehicle. If you spend more than 15% of your income on your car, it may mean that you are living above your means.

3. You Are Unable to Save

If you cannot save any amount because your income goes to bills and expenses every month, it is time to downsize your expenses. Look at your expenses one after the other and identify the things that need to go. 

Reviewing your expenses will tell you if you buy too much coffee, pay for subscriptions you do not need, have too many cable subscriptions, or need to review your phone contract. 

You may also need to check if you are in the right council tax band or if you need to change your electricity and gas provider. If you are still unable to save after checking your expenses, you should get a side hustle; or read this post where I talked about how to stop living paycheck to paycheck. 

You need to be able to save at least 5% of your income monthly for you to live a bulletproof life.

4. You need credit to survive.

Spending all you have and still having to borrow more indicates that you are living above your means. Having to depend on your credit card to meet your bills and maintain your lifestyle is also another indicator that you are living above your means. 

You do not have to use your credit card monthly or always augment your bills with a loan or overdraft. It is important that what you earn is enough for you, or you might need to review your whole lifestyle.

5. You are Spending to Impress

Living to pressurize and intimidate your friends to create a false impression that you are wealthy will only make you run into debt. Doing this means you are likely to buy a car you cannot afford and live in a house above your budget.

Spending to impress will leave you buying designer products you cannot afford. You may find yourself stunting on the gram and living a fake lifestyle. Check yourself and remember that contentment is the secret to financial freedom. It is the control of consumerism. 

If you have to spend to impress your friends or go into debt before they value you, maybe you need to change your circle.

6. Living Paycheck to Paycheck

If you look forward to payday-like your whole life depends on it; by the time it is five days to payday, you have just £10 left in your account, it is a sign that you are not financially healthy. You are probably not even saving or investing. You budget every penny that you earn and max it all. 

Living paycheck to paycheck is a sign that you are living above your means. Download a budgeting app, but if you prefer to write your budget, you can check out my budgeting book on amazon and start budgeting all over again. Prepare your budget in a way that makes sure you are not living paycheck to paycheck. Ensure that you have something left to save monthly.

7. You Have No Emergency Funds.

Having zero savings and no emergency funds set aside for an emergency that requires you to spend money urgently is a sign that you are living above your means. 

If something happens in your house or happens to your car that is not covered under insurance, you may be in trouble because you do not have emergency funds. Review your spending and start putting aside something for an emergency fund. 

Your emergency funds should be three to six months of the money you need to survive if things go south. One major benefit of an emergency fund is that it allows you to change jobs easily and climb higher in your career. It has an important role to play in your life and career.

8. You Cannot Make Pension Contributions.

If you cannot afford to leave that little 3 to 5% that your employer takes out of your salary every month to match your pension, it is a sign that you are living above your means. Instead of setting money asides for your pension, you acquire all your money because you need every penny to survive. 

Pension contributions are important; it is your way of taking care of your future self. When you are 65 or 70 years old and too tired to work, you will have to retire and live on your pension. If you are not making pension contributions because you cannot afford them, that is a sign that you are living above your means.

If any of these signs apply to you and you have done all you can but still cannot save, invest or contribute to a pension, you may want to consider changing jobs, or starting side hustles.

You can also join me at the Hey sis, where are you? 2022 seminar taking place in London on the 9th of July where I would be speaking about the “Lady and her finance“. Registration is absolutely free. I’ll be looking forward to seeing you.

Till next time,


Ronke O.

Published by ronkeodewumi

I am a Chartered Accountant (ACMA, CGMA) and seasoned Management Consultant with about 16 years of experience driving the delivery of strategic solutions to complex problems of global firms. Through my blog, youtube channel, social media, tailored courses and downloadable material, I share information, resources and tips to help you manage your money better, grow your business, progress in your career, thrive in difficult times and create a life that is safe from failure, while being the best version of yourself. You will also find here links to my youtube videos where I share more nuggets to help you achieve and live your dream life. I am based in London, United Kingdom and always happy to connect with you via email (ronkeodewumi@gmail.com), social media or my contact page here.

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