Living Beyond Your Means

Jenn had a great holiday, where money seemed to flow endlessly. Even though she spent far more than budgeted for holiday gifts (and a few treats for herself), everyone had a good time, so it was worth it! After all, how can one place a value on making profound memories? 

Back in reality, Jenn realised she barely had three digits left in her bank balance to pay off the fortnightly rent, but she had a security net: her credit card. She is ecstatic that she has the apartment to herself, but a thought passes her mind as she types in her credit card details… She drives to work anyway, why does she need to live so close to the station (where the rent is higher)? And she’s rarely at home, couldn’t she find a room mate to reduce the burden of rent? Jenn makes a mental note to consider these options. 

Jenn planned on budgeting more effectively after Christmas, but a few surprise events emerged. In addition to three female colleagues coming back to work with little baby bumps, two of Jenn’s closest friends announced their engagements. To show how much she cares about them, she goes online to shop for a meaningful, personal gift for each of them. 

But she was still days away from being paid and realised she was almost living on the breadline, after purchasing multiple luxe gifts. During lunch, Jenn calls up her newest client to follow up on payment. She has a side hustle business on the weekend – making wedding cakes! They deposit $500 for a naked two-tier wedding cake to be baked and decorated by Jenn all throughout the coming weekend.

Having some cash in her bank finally, she is reminded to finally find a comprehensive car insurance and health insurance for her dental extras. While that’s essential, there’s very little money left and she would rather spend it on her friends and having fun! Jenn calls up the bank to increase her credit card limit – there’s a slight urgency and agitation in her tone; there is still an approval period… 

Luckily, she can rely on her side hustle income to get her through until the end of the week. A few days later, it’s pay day for Jenn’s office job. Her credit card limit increase is approved, too. With some relief, she decides to deposit just the minimum monthly repayment fee for the credit card. She doesn’t budget her expenses, but she can feel that she now has sufficient funds to survive and potentially have fun. 

On Friday night, after shopping for the cake ingredients, she sits at home, on her meditation cushion, and turns on her premium monthly subscription of a meditation app. A voice comes through the peaceful sound of a creek and reassures Jenn that her money problems will eventually resolve by itself. 

Jenn is a hypothetical character whose life reflects much resemblance to us millennials’ lives. There are many signs that she is living beyond her means on a daily basis, and if you relate to more than three of the points below, you may consider taking steps to improve your financial situation.

  1. You are driving a car that you cannot afford – whether it be the car loan itself, or the insurances and annual checkups. These are regular anticipated expenses that should be factored into your budget.
  2. You prioritise fun over responsibilities. Everyone is secretly doing a mental calculation of their social expenses, so you do not have to feel embarrassed for saying no to certain outings. Learn to say no to social gatherings when you have to. You will reap long-term benefits by honouring your budget!
  3. You postpone arranging proper insurances. If you cannot afford comprehensive car insurance, you may meed to reconsider your travel options or sell your car for some extra money. By choosing to travel on public transport, you are not only saving your own money but also the environment. 
  4. You use your credit cards or borrow from the bank for emergency expenses. First of all, your living expenses should not be an emergency expense. Secondly, the rainy days should break a portion of your savings, not your payable interest-incurring loans.
  5. You don’t budget. You have a leather bound, initial’s-engraved bullet journal, but you don’t plan your finances. You simply spend as you go and ignore the guilt and worry with a happy-go-lucky attitude.
  6. You don’t have a retirement plan. It’s difficult to paint a picture that is decades away, but surely superannuation cannot be the only income that your future self lives on. Today is important, but your future will one day become a today, too.
  7. You pay your bills late. This is the utmost basic priority that you need to set aside as soon as you receive your wages. Don’t pay them with credit cards, don’t pay then late and don’t set yourself up for lower credit score!
  8. You worry what others will think of you. If you haven’t noticed yet, the rich and the poor ironically dress the opposite. The truly affluent people are not concerned with wearing the newest style (Mark Zuckerberg literally wears the same shirt!) nor showing off their luxury cars. So take the first step today, by thinking like the richest people in the world, and start building healthy financial habits that fulfil your goals and not to appease others!

Ultimately, we all need some guidance. I downloaded the Sugar Budget app to stay on top of my finances, practice budget management and keep myself accountable! If you want to use a manual budget, you can subscribe to The Sugar Hit and receive 3 complementary budget templates to get your journey started. 

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