Everybody loves money, especially spending it! Getting new toys or new clothes that make you feel and look good 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 heaps of money doesn’t imply you’re good with it. There are plenty of successful individuals who have big problems with money just because they weren’t aware of the warning signs. Today, it’s critical to be money conscious so here are 5 signs that you may have problems with money which can inevitably trigger serious financial issues down the track.
Many of us get comfortable with our lifestyles – our car, our house, 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 events such as 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 have to apply for a short-term, high interest loan which will just magnify the issue – you can’t save any money now so how will you repay an additional expense? Even though 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 you receive, and where it goes when you spend it. If you have no idea where your money is being spent, it shows a lack of care and appreciation for your hard-earned cash, and can naturally cause financial complications before you know it. Try creating a budget and actively abiding by it. This will support you in having a greater understanding of your finances so you can understand how much of your money is being drained on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll value 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, especially credit cards, then you’re heading for financial troubles. It can take years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest rates will be eating away all your prospective savings while you’re basically just treading water. If this seems familiar, it’s time to make a change and quickly. You have to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to repay your pending debts.
Spending more than you earn
The clearest sign of money issues is where your spending eclipses your earnings. Even when you have a comfortable savings account, you should always ensure that your income is higher than your expenses, it’s just simple maths really. If you get into a bad habit of spending far too much, it can come to be addictive and create even more issues, in addition to likely financial difficulties. Many people attempt to disguise this problem by paying bills with their credit cards which simply makes the issue worse in the long run. Do you even know if your earnings is higher than your spending? If you’re not sure, it’s definitely a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t wear
A basic way to assess if you have money issues 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 a great way to save money when cash is tight and you’re in need of something. But purchasing clothes just because they’re on sale may signal that you have money problems. If this is the case, you may also be inclined to buy other items purely because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that will need to be addressed.
Despite how much you get paid, if you’re not good with money then now is the time to adjust your habits to avoid possible issues in the future. If any of these warning signs sound familiar to you, it may signal 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 drawn into the financial abyss. To find out what options you have, or to talk to someone about your finances, contact Bankruptcy Experts Cassowary Coast on 1300 795 575 or visit http://www.bankruptcyexpertscassowarycoast.com.au