4 signs you’re living beyond your means in South Africa

An alarming number of South Africans desperately need to start living within their means in light of the current economic reality, says Momentum Investments.

The latest Momentum Unisa Household Financial Wellness Index revealed that South Africans spend more than they earn monthly.

According to the index, almost 70% of financially distressed households find it difficult to cover monthly expenses and pay bills.

“Shockingly, even financially well households find it difficult to pay their bills and debt,” said the group.

Bertie Nel from Momentum said that growing inflation and increased interest rates put consumers under pressure and make achieving financial goals more difficult.

He said, however, during trying times such as now, it is more important that financial goals are kept front of mind.

Nel provided the following four indicators that you are living outside your means:

Your credit balances are increasing

Momentum noted that only paying the minimum payments due on your credit agreements and taking longer to pay off these agreements usually indicates a problem.

Nel said you should only buy what you can afford and avoid credit altogether.

“Don’t forget that rising interest rates will take a toll on your credit repayments, and you never know what may befall your financial situation.”

“You don’t want to be left with debt and no way to pay it off,” he added.

You don’t have money left at the end of the month

Not having sufficient money left at the end of the month is the first indicator of poo financial planning and indicates that you are living paycheck to paycheck.

Momentum said you need to constantly re-evaluate your budget and understand how the money coming in is distributed to aid your financial plan.

You don’t set a budget

A budget is the backbone of financial health, said Nel.

“Budgets should be divided into high-priority expenses, including rent or bonds, life insurance, and debt, and low-priority expenses, like entertainment and subscriptions,” he said.

You want to “keep up with the Joneses

If your buying choices are influenced (or even dictated by) your need and desire to fit in or “outshine” others, you are most likely living beyond your means, said Nel.

“You should only make purchases and enter contracts that suit your pocket, not your social media profile.”