With UEFA bringing in more stringent financial fair play rules, Southgate believes other clubs will be watching Villa's progress with interest.
"There has to be a reality with what can be done," he told the Birmingham Mail.
"Villa remain a fantastic club historically and the level of support they will get if they get it going again.
"The world has changed, Roman Abramovich has come in, Manchester City have come in and other clubs have come in with enormous wealth which makes it difficult for everyone else.
"Unless you have got the money a couple of the owners in the Premier League have got then you have to really assess how you spend.
"We're at a time where there's more money in the game than ever before and every club is in debt. There's something not quite right there."