Are You Spending Too Much?

Are you spending way over your head? How would you know if you are?

Here are four key indicators to help you find out. If one or more apply to you, reevaluate how you spend and work on improving your situation:

  • You are saving less than five percent of your gross income.
    A saving rate of five percent or below means that you’ll have real difficulty when an emergency crops up. Though we should save as much as we can, most financial advisors suggest saving 10 percent of your gross income.
  • Your credit card balances are rising.
    If you are only paying the minimum amount in your credit card balance, then you are most likely spending more than you should. You should try to charge only what you can pay off at the end of  each month.
  • More than 28 percent of your income goes to your house.
    If more than 28 percent of your income goest to your mortgage, property taxes and insurance, then you are likely spending too much. Historically, 28 percent is considered the rate at which the average person can get by with making mortgage payments and still enjoy a reasonable standard of living.

  • Your bills are spiraling out of control.
    Are you paying several installment bills? If your monthly income is being sliced into pieces to pay for dozens of unnecessary installment purchases, you are most likely spending beyond your means. Go through each bill and ask yourself whether each product or service is really necessary and make that change.

excerpt from Kerygma Magazine

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Garry Zaldy de Castro is an advocate, Financial Advisor, Certified Investment Solicitor (Mutual Fund Representative), blogger, IT practitioner, husband to Aileen and a dad to Jacob and JohnD. He started Financial Planning Philippines in 2008 just to share his financial learning to friends, relatives and anyone who wishes to be financially independent.

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