Everyone loves money, especially spending it! Buying new toys or new clothes which make you look and feel great is important for your confidence and self-esteem. But how do you know if you’re good with money or not? Just because you get paid a lot of money doesn’t suggest you’re good with it. There are a lot of successful individuals who have serious problems with money just because they weren’t aware of the warning signs. Today, it’s critical to be money conscious so here are five signs that you could have problems with money which can ultimately bring about serious financial troubles down the track.
Most of us get complacent with our lifestyles – our car, our home, our profession – and forget that things can certainly go wrong and every person needs some financial insulation for rainy days. Without 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 lot of trouble. You’ll need to get a short-term, high interest loan which will only compound the problem – you can’t save any cash currently so how will you pay off an added expense? While it’s easy to neglect, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors strongly 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 signals a lack of care and appreciation for your hard-earned cash, and can surely cause financial issues down the track. Try creating a budget and actively following it. This will help you in having a better knowledge of your finances so you can comprehend how much of your money is being squandered on unnecessary 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 manage to make the minimum repayments on your loans, in particular credit cards, then you’re heading for financial problems. It can take years, even decades, to get rid of a credit card debt by only making minimum repayments. In the meantime, interest payments will be eating away all your potential savings while you’re ultimately just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The most evident sign of money problems is where your spending eclipses your income. Even when you have a comfortable savings account, you should always make sure that your earnings is higher than your expenses, it’s just basic maths really. If you get into a bad habit of spending far too much, it can come to be addictive and cause even more issues, on top of likely financial difficulties. Many people try to mask this problem by paying bills with their credit cards which merely makes the issue worse in the long run. Do you even know if your income is higher 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 practical way to assess if you have money issues is to search through your wardrobe. Do you have clothes that still have the tag on them? Everyone loves a sale, and it’s a great way to save money when cash is tight and you’re in need of something. But buying clothes purely because they’re on sale may suggest that you have money issues. If this is the case, you may also be inclined to buy other items simply because they’re on sale too. Buying nonessential items under the impression that you’re saving money is something that will need to be remedied.
Irrespective of how much you get paid, if you’re not good with money then now is the time to change your habits to prevent potential problems in the future. If any of these warning signs sound familiar to you, it may signify that you have problems with money and should seek advice before it’s too late. All it takes is one financial blow and you’ll be pulled into the financial abyss. To find out what options you have, or to talk with someone about your finances, reach out to Bankruptcy Experts Albury on 1300 795 575 or visit http://www.bankruptcyexpertsalbury.com.au