There are a few giveaways that you're overspending
5. Your rent or mortgage exceeds 30% of after-tax income
The standard measure of housing affordability in the US is 30% of pretax income. For example, someone with an annual salary of $50,000 should ideally spend less than $1,250 a month on housing costs. But that doesn't factor in taxes. A more helpful way to gauge whether you're overspending on housing is to try and limit your monthly expenses to 30% of your after-tax income. This can be tough to manage in a high cost-of-living city, but it's a good benchmark to aim for. Use6. You buy things to keep up with or impress your friends
If you're buying a ticket to every festival or joining every happy hour because that's what your friends are doing, it may be a sign you're spending more than you can afford. Social media exacerbates the "Keeping up with the Joneses" affliction many of us suffer from. You probably don't know the financial situation of each of your friends and assuming you can afford something because they can — or worse, you're trying to impress them — isn't a sustainable strategy.and big expenses should always be a part of your budget.
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