Everyone loves money, particularly spending it! Getting new toys or new clothes which make you feel and look great is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Just because you get paid plenty of money doesn’t suggest you’re good with it. There are loads of successful people who have significant issues with money just because they weren’t familiar with the warning signs. Today, it’s imperative to be money conscious so here are five signs that you may have issues with money which can gradually trigger serious financial problems down the track.
You don’t have any savings
Most of us get comfortable with our lifestyles – our car, our house, our jobs – and forget that things can certainly go wrong and every person needs some financial cushioning for rainy days. Without any savings in the bank, what will protect you from incidents such as hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial hit and you’ll be in a lot of trouble. You’ll have to apply for a short-term, high interest loan which will just exacerbate the issue – you can’t save any money now so how will you repay an additional expense? While it’s easy to ignore, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors recommend having three to six months of living expenses in an emergency fund.
You don’t know where your money goes
Being good with money means that you know when and how much money comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it reveals a lack of care and respect for your hard-earned cash, and can definitely lead to financial issues down the track. Try making a budget and actively adhering to it. This will help you in having a greater awareness of your finances so you can comprehend how much of your money is being wasted on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a whole lot more.
Making minimum repayments only
If you can only afford to make the minimum repayments on your loans, specifically credit cards, then you’re heading for financial troubles. It can take many years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest payments will be eating away all your prospective savings while you’re essentially just treading water. If this sounds familiar, it’s time to make a change and quickly. You have to get your priorities straight by making a plan, adhering to a budget, and saving as much money as possible to repay your outstanding debts.
Spending more than you earn
The most evident sign of money problems is where your spending overtakes your earnings. Even when you have a substantial savings account, you must always make sure that your earnings is greater than your expenses, it’s just basic maths really. If you get into a bad habit of spending too much, it can come to be addictive and result in even more issues, on top of probable financial difficulties. Certain people try to mask this problem by paying bills with their credit cards which basically makes the problem worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re uncertain, it’s probably a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
A simple way to check if you have money problems is to look in your wardrobe. Do you have clothes that still have the tag on them? Almost everyone loves a sale, and it’s an excellent way to save money when cash is tight and you need something. But purchasing clothes purely because they’re on sale may reveal that you have money problems. If this is the case, you may also be inclined to purchase other items simply because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that must be addressed.
Irrespective of how much you get paid, if you’re not good with money then now is the time to adjust your habits to stay clear of possible complications in the future. If any of these warning signs sound familiar to you, it may reveal that you have problems with money and should seek advice before it’s too late. All it takes is one financial hit and you’ll be sucked into the financial abyss. To find out what options you have, or to talk to someone about your finances, contact Bankruptcy Experts Whitsundays on 1300 795 575 or visit https://www.bankruptcyexpertswhitsundays.com.au