Everyone loves money, particularly spending it! Buying new toys or new clothes which make you feel and look great is important for your confidence and self-esteem. But how do you know if you’re good with money or not? Even if you get paid heaps of money doesn’t suggest you’re good with it. There are lots of successful individuals who have huge problems with money simply because they weren’t aware of the warning signs. Today, it’s essential to be money conscious so here are five signs that you may have problems with money which can ultimately bring about serious financial troubles in the future.
You don’t have any savings
A lot of us get complacent with our lifestyles – our car, our home, our work – and forget that things can in fact go wrong and everyone needs some financial insulation for rainy days. Without any savings in the bank, what will cover you from events like 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 world of pain. You’ll need to apply for a short-term, high interest loan which will just magnify the problem – you can’t save any cash currently so how will you pay off a further expense? Whilst it’s easy to neglect, having no savings is a recipe for disaster and you should act now before it’s too late. Most financial advisors strongly 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 indicates a lack of care and respect for your hard-earned cash, and can certainly lead to financial issues down the track. Try creating a budget and actively following 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 unneeded items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a great deal more.
Making minimum repayments only
If you can only afford to make the minimum repayments on your loans, mainly credit cards, then you’re heading for financial problems. It can take years, even decades, to clear a credit card debt by only making minimum repayments. In the meantime, interest payments will be eating away all your prospective savings while you’re virtually just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities right by creating a plan, sticking to a budget, and saving as much money as possible to pay off your ongoing debts.
Spending more than you earn
The most evident sign of money problems is where your spending surpasses your income. Even when you have a substantial savings account, you should always make sure that your earnings is more than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending way too much, it can become addictive and trigger even more issues, on top of likely financial difficulties. Some people attempt to mask this problem by paying bills with their credit cards which only makes the issue worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re unsure, it’s certainly a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t wear
A practical way to check if you have money issues is to search through your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s a good way to save money when cash is tight and you’re in need of something. But buying clothes just because they’re on sale may suggest that you have money problems. If this is the case, you may similarly be inclined to purchase other items just because they’re on sale too. Purchasing unneeded items under the perception that you’re saving money is something that ought to be addressed.
Regardless of how much you get paid, if you’re not good with money then now is the time to adjust your habits to steer clear of possible complications 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 hit and you’ll be pulled into the financial abyss. To find out what options you have, or to speak with someone about your finances, reach out to Bankruptcy Experts Dubbo on 1300 795 575 or visit http://www.bankruptcyexpertsdubbo.com.au