Living Beyond Your Means Can Lead to Financial Ruin

Oct 14, 2021 | Budgeting | 0 comments

Emergencies happen. The COVID-19 pandemic, which had led to massive job losses in Singapore and all over the world is proof that, in a crisis, no job is really ever stable or secure. Anyone can lose their source of income in an instant.

Similarly, illnesses and injuries can occur that could lead to financial challenges. It can put you or your loved ones in a hospital, incur bills, and then render you or them unable to continue working.

Emergencies are life events that can push you to financial ruin.

1.  Emergency Fun:  A Necessity

That is why experts recommend that adults save up their own funds that they will specifically spend in case of emergencies. However, a previous report found that most Singaporeans do not have enough to maintain their current lifestyles beyond six months in case they encounter an emergency that leads to loss of income.

There are many factors that influence a person’s inability to save up and create an emergency fund. But, too many, it is only a matter of living within their means.

It is often said that shopping is the national past-time in Singapore, but overspending is unhealthy. People, especially young generations, are at risk of falling into debt because they are spending more money than they can afford. This leads to having no savings ready for an emergency.

2. Living Beyond Your Means

Paying off bills is not fun, but it is a normal part of life. However, it becomes a source of anxiety when it starts to become an insurmountable mountain of debts.

You are living beyond your means when it becomes a struggle to meet your monthly dues. Installment plans, whether through credit cards or buy now, pay later, makes it easier for more people to buy expensive goods such as a flat-screen TV or the newest iPhone. However, this does not exactly mean they can afford it. It is difficult to keep track of purchases that you have to pay off in increments. You may not realize it, but you may be going overboard with the spending.

Your expenditures have spiraled out of your control if you barely have to cover everything, including your household necessities. You can take out a fast cash loan in Singapore to pay off high-interest debts such as credit card bills or daily needs such as utility bills. However, doing so monthly is not sustainable. This type of loan should be taken out in case of emergency, or when you want to make a high-value purchase and you want to pay in cash. Borrowing money to pay off the amount you owe from another lender will put you in a debt spiral.

The reliance on credit cards and buy now, pay later services can push people to spend more than they can afford. Consumers should only use these financial products for purchases that they can pay off at the end of the month.

However, it is not just installment dues that you have to look out for. You may be spending more on bills that you do not actually need. For example, many households subscribe to multiple online subscription services such as Netflix, Spotify, or Disney+. While the fees for each service may be small and affordable, they can add up pretty quickly. Soon, you will be spending hundreds of dollars trying to have all these services that you do not use all the time.

3. Avoid Feeling Deprived

However, you do not need to deny yourself things that genuinely make you happy. You can still make purchases, but you need to control impulses. Instead of getting a new smartphone, for example, into your credit card, why not save up the money to buy it? Doing so gives you better control of your finances. You have to wait a little longer to get your hands on the product, but you will not go into debt for it.

It is also wise to regularly review your monthly expenses to see what services you continue to pay for but no longer need. You do not really need all streaming services every month. While each has its own original shows and movies, you can subscribe to the one that has the title that you currently want to watch and then switch to another service the month after.

Moreover, you should learn how to budget your own money. Knowing where your hard-earned income is going can be very empowering.

Many people do not have an emergency fund that they can use when they encounter a financial challenge in the future. Some cannot save up for an emergency fund because they are living beyond their means. Spending more money than you can afford is risky because it can put you into debt if not now then in the future. There are ways to cut back on unnecessary spending without depriving yourself of things that make you happy.

best,

– a contributed post

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