North America is world famous as a consumer society. In Canada and the USA we love to shop – just drive by any mall and it is easy to see that the bigger and flashier the center – the more people it attracts.
For all intents and purposes shopping has become a social event. Restaurants, theaters and of course shops – with major retailers like Walmart, The Bay, Zellers among others, anchoring each corner.
In Asia and Europe people tend to spend time differently. Mostly due to the profusion of parks, rivers and streams that promote strolling and of course Bistro’s and Restaurants. But in North America we often have great distances between similar offerings. The creation of shopping malls, television marketing and the phenomenon of “cocooning” has created a lifestyle environment that all too often promotes spending beyond our means.
Here’s what to watch for so that you are not trapped into a vicious spending cycle that usually takes years to fix:
1/ Once a year check your credit rating. If it is below 650 points it is time to make adjustments. If it is lower than 600 points then urgent action is required.
2/ How much money are you saving? Remember that 10% of everything you earn is yours to keep . If you are saving less than 5% then you must change your the way you do things. You could be in serious trouble should you loose your job, be surprised by a sudden sickness or simply run out of time as retirement looms.
3/ Credit card balances should reduced to zero at the end of each month. If not you must at least take steps so that they are reducing each month.
4/ How much do you spend on your home? If it exceeds 28% of your monthly budget you are living beyond your means. Your home in itself is not a savings plan – it is at least a haven and your castle – regardless of its size.
5/. Monthly bills. Spread them out on your kitchen table and review each bill’s contents. Are you spending money on extras such as TV or Cell phone packages that you do need use or need? If so then you can have them removed and save money each month that can be used elsewhere.
6/ TDS – This is a key measuring tool used by your bank. Yet most people are unsure of what it is. It stands for “Total Debt Service” ratio. It measures your fixed expenses as a percentage against your gross income. If your ratio is 40% or higher you are courting disaster. Any negative event in your life could cause years of financial hardship.
For more information please follow the link provided:
5 Signs That You’re Living Beyond Your Means
E. & O. E.
MA Schneider Insurance Agencies
Mark A Schneider cfp clu cfsb
Chartered Financial Consultant
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