Consumer Watch: Five ways you're living beyond your means

Five bad habits can keep people living stuck in the paycheck to paycheck cycle (KOKH).

Living beyond your means, can seem like different things depending on the person you are asking. Savings experts say living beyond your means isn't just about how much you're spending, but also how much you are able to save. It's important to take stock of your savings plans to see if you fall into the living paycheck to paycheck cycle.

When it comes right down to it if you don't have enough money to pay your monthly bills, you are living beyond your means. Even if you' re making all your bill, but are not saving because your account is empty by the next pay cycle, then you too fall into the category.

To break free, the savings experts at The Penny Hoarder say you have to figure out the problem. You do this by tracking all your spending, and then solve the problem by setting a budget or a spending plan.

“That is the key. You set that budget. You stick to it, no matter what, that budget is your boss for at least a little bit of time. After a while you can be a little more flexible with it, but when you are first trying to break out of that cycle, that budget has to be your boss,” says Justin Cupler, Savings Expert at The Penny Hoarder

It is going to be tough. If you find that your current income makes your budget unrealistic you can do two things: make more money, usually through another job, or cut back on your expenses.

“If you have a 10 gigabyte cellphone plan, but you only use one, and you can save 30 bucks a month by downgrading, just downgrade. Don’t worry about that extra 9 gigabytes that you never use,” says Cupler of finding even the smallest ways to save on your monthly budget.

Here are some of the ways Cupler says people tap themselves into live beyond their means.

1. Impulse buying: Last minute or emotional purchases tend put consumers in a tough spot financially, and could lead them to pushing off important bills in favor of buying that want. Instead think about what you want to purchase for a week before buying it. Consider how it will affect your monthly budget to make this out of the ordinary purchase.

2. Always using a credit card: Counting on plastic all the time mean you’ll likely think less about how much money you are spending. Remember that it is financially smart to pay off a credit debt in full every month so you don’t pay more in interest. Try making a point of using cash only, so you are forced to see your money go away with each purchase.

3. Trying to keep up with the joneses: Each family can have different incomes, financial responsibilities, and debt. Trying to “keep up” with people who vacation more often or live a lifestyle we perceive as better, could put us in financial problems and be unable to keep up with our financial responsibilities. Instead, budget your entertainment, and enjoy the fact that you can have fun while knowing you will not be living beyond your means.

4. Lacking a budget: Spending on the fly means a consumer doesn’t know how much money they have at any point in time. This could lead you to over spend, and miss important bills because you over spent on a particular day. Setting a budget is especially important if you and your partner share finances. This will help you both avoid and arguments or financial problems cause by someone overspending on a particular month.

5. FOMO: The fear or missing out, also known as FOMO, can often lead people to make poor financial decisions, even if they know those decisions are not good ahead of time. To avoid this, be honest with friends about the reason you cannot go out, so you don’t keep feeling pressured into spending. If you are the social type consider hosting more events in your home, like potlucks, because it is a budget friendly way to socialize.

It is important to remember that sticking this stringently to your budget is temporary. Once you pay off debt and develop good financial habits, you will have more freedom with your money while living within you means.

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