If you are looking to spend less, you are not alone. Many people spend cash they don’t have and perpetually live beyond their means.  Knowing what those indicators are can not only save you money, but stress when you find yourself strapped for cash in an emergency.

You do not have six months of income saved

If you ever needed motivation to spend less and save more money, just take your monthly income and multiply that by six.  Yes, that number you see is indeed correct.  Many people just do not have that money saved up, but you most definitely should. If you have stable employment, that would be the minimum you should have put away in an interest bearing account that you do not touch.

Unfortunately many people do not give enough credence to unexpected events like job loss, illness family emergencies etc.  If your employment is not as stable or you work for yourself, you should have at least 12 months income saved.  If you do not have these monies saved, you are definitely living beyond your means.

You put your vacation on a credit card

Everyone deserves a vacation from time to time but what you do not want to do is put the cost of it on a credit card.  There is a general rule of thumb with credit card purchases.  If it will take you longer to pay off the item than the use you will get from it, then you really cannot afford that item.  You need to do it the right way and save money for it.  Start a savings plan well before your vacation and do not forget to include all the extras like car rental, spending money, tips etc.  If you do use a credit card for purchase protection, make sure you pay it off right away before you get hit with interest.

Spend less on buying/leasing a car

Besides the purchase of a home, cars are the next most expensive thing people will buy in their lives.  When looking at cars, we tend to focus on the monthly payment when considering what car we can buy.  But that doesn’t necessarily mean you can afford the car.  Take a look at the length of the loan.  If the length is longer than three years and at that time you do not already own the car, the car is outside of your budget.

The same thing goes for refinancing a car.  If interest rates wind up going down, you can save money by refinancing the loan.  If you are refinancing just to lower your payments but you are also going to be extending the length of the loan, then you are not saving money.  You are just extending out your payments.

You are considering a home based on a  30-year fixed mortgage scenario

If you are basing the amount you can afford for a home on a  30-year fixed mortgage, you are probably taking on more than you can afford.  Although the monthly payment may be higher, you should consider looking at a shorter loan for a smaller house.  For example, if you are looking at a 15-year fixed mortgage at 4% for a home that is $250k,  you could save upwards of $97k in interest over the duration of the loan. Best part is you will be the proud owner of that home in under two decades.

Spend less and don’t rely on your overdraft

If using your overdraft protection is a part of your budgeting for every month, you are definitely living beyond your means.  No questions asked.

You have gone over your credit limit

Going over your credit limit is concerning not just for the fees you will be hit with but for your credit score.  Your score is largely based around your debt-to-utilization ratio (the difference between your available credit and how much you have used) and when you are carrying high balances, it tells lenders you are having money issues.  If you happen to be approved for any new lines of credit, those interest rates will now be super high.

Spend less and do things yourself

Yes it is great to have professionally manicured nails and a clean house that you didn’t have to clean, but luxuries like these when you really cannot afford them is just not a good idea.  Do these things yourself and save money.  You can use that money to pay down your debt or deposit it into a separate savings account.

You are not saving at least 5 percent of your income

5 percent would be the minimum you should be saving every paycheck. Ideally you want to be saving upwards of 20%.  But if you cannot do the minimum, you are surely living beyond your means.

You are taking out a loan on your 401(k) to pay your bills

Regardless of the interest being paid to yourself, you are still incurring debt. If you need to borrow from your savings to get by, you need to rethink your budgeting.

65 is not the magic number for retirement

In an ideal world, you would want to be able to retire financially before you are ready to retire from working mentally.  65 would be that ideal age.  Find out if you are on track with your finances to retire by 65.  If you are not currently meeting those numbers, it is time to save money.