Everybody loves money, particularly spending it! Getting new toys or new clothes that make you feel and look good 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 lots of money doesn’t imply you’re good with it. There are plenty of successful people who have huge issues with money just because they weren’t familiar with the warning signs. In this day and age, it’s essential to be money conscious so here are five signs that you may have problems with money which can eventually lead to serious financial issues in the future.
You don’t have any savings
Most of us get comfortable with our lifestyles – our car, our house, our profession – and forget that things can in fact go wrong and every person needs some financial insulation for rainy days. Without having any savings in the bank, what will protect you from incidents like hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial blow and you’ll be in a world of pain. You’ll have to take out a short-term, high interest loan which will just intensify the issue – you can’t save any money presently so how will you repay an extra expense? Though it’s easy to ignore, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors recommend having three to six months of living expenses in an emergency fund.
You have no idea 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 don’t know where your money is being spent, it signals a lack of care and appreciation for your hard-earned cash, and can naturally lead to financial complications down the track. Try making a budget and actively following it. This will aid you in having a greater awareness of your finances so you can realise how much of your money is being drained on unneeded 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, especially credit cards, then you’re heading for financial troubles. It can take years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest rates will be eating away all your prospective savings while you’re effectively just treading water. If this sounds familiar, it’s time to make a change and quickly. You ought to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to settle your ongoing debts.
Spending more than you earn
The clearest sign of money problems is where your spending eclipses your income. Even when you have a substantial savings account, you must always ensure that your earnings is greater than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending excessively, it can become addictive and create even more issues, in addition to probable financial difficulties. Many people try to mask this problem by paying bills with their credit cards which simply makes the situation worse in the long-term. Do you even know if your earnings is greater than your spending? If you’re not sure, it’s certainly a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t wear
A simple way to check if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the tag on them? Everyone loves a sale, and it’s a nice way to save money when cash is tight and you need something. But buying clothes only because they’re on sale may reveal that you have money issues. If this is the case, you may similarly be inclined to buy other items simply because they’re on sale too. Buying unnecessary items under the impression that you’re saving money is something that ought to be amended.
Despite how much you get paid, if you’re not good with money then now is the time to change your habits to stay clear of possible problems in the future. If any of these warning signs sound familiar to you, it may suggest 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 Frankston on 1300 795 575 or visit https://www.bankruptcyexpertsfrankston.com.au