How to tell if you are Spending too much Money

Determining if you are spending too much money seems like a problem with a simple answer. If you do not have any money just prior to your next pay period, you are probably spending too much. However, there are many other factors which determine how you are doing at managing your money. A thorough assessment of your spending amount depends on your desired lifestyle, your future financial goals, and the budget you establish for yourself.

Desired Lifestyle

The first factor to consider when setting spending limits is the type of lifestyle you desire.  If your goal is to eat at fancy restaurants several times a week, your spending level will be much higher than if you prepare simple meals at home.  You have to truly assess the types of things that you plan on doing on a regular basis, and the costs associated with all of these events. Accuracy in this assessment is vital in helping you determine your spending level.

Financial Future

The next step in determining your spending levels is based on what your future financial goals are. If you plan on retiring at 40 and living in a beach house until old age, you will need to invest more money than if your goal is to merely retire at 65 and live in a condo. You need to determine where you plan on being in the future to decide what you need to do today in terms of minimizing spending and investing properly.


No one likes this part of the process, but you can finally get to this after completing the first two steps. With your desired lifestyle and financial future firmly in mind, lay out a monthly budget that encompasses all of your incomes and all of your expenditures. Make sure the expenditures accurately reflect the sort of lifestyle you plan on living, while also ensuring that you are saving the amount needed for your desired financial future.

Now that you have a budget, you can truly assess if you are spending too much or not. If you are staying within your target budget while enjoying the things you want and investing properly for the future, then you are spending just the right amount. If this is not the case, you need to re-evaluate your position using the three steps above. You may need to choose a less expensive lifestyle or a more realistic retirement age and retirement income in order to get everything in balance. Only by truly going through this process can you determine if you are spending too much or not.