Everybody loves money, particularly spending it! Buying new toys or new clothes that 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 lots of money doesn’t imply you’re good with it. There are a lot of successful people who have significant problems with money purely because they weren’t familiar with the warning signs. Today, it’s important to be money conscious so here are 5 signs that you might have problems with money which can eventually lead to serious financial troubles down the track.
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can certainly go wrong and everyone needs some financial cushioning for rainy days. Without having any savings in the bank, what will protect 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 lot of trouble. You’ll need to apply for a short-term, high interest loan which will just intensify the problem – you can’t save any money now so how will you repay an additional expense? Although it’s easy to neglect, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors suggest 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 have no idea where your money is being spent, it suggests a lack of care and appreciation for your hard-earned cash, and can clearly trigger financial problems in the future. Try creating a budget and actively adhering to it. This will help you in having a greater awareness of your finances so you can understand how much of your money is being eaten away on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, mainly 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. In the meantime, interest payments will be eating away all your potential savings while you’re ultimately just treading water. If this seems familiar, it’s time to make a change and quickly. You have to get your priorities right by making a plan, following a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The clearest sign of money problems is where your spending overtakes your income. Whether or not you have a comfortable savings account, you must always ensure 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 become addictive and create even more issues, on top of potential financial difficulties. Many people try to disguise this problem by paying bills with their credit cards which merely makes the problem worse in the long run. Do you even know if your income is more than your spending? If you’re unsure, 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 practical 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? Everyone loves a sale, and it’s a nice way to save money when cash is tight and you need something. But purchasing clothes purely because they’re on sale may suggest that you have money problems. If this is the case, you may additionally 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 will need to be corrected.
Despite 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 potential 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 pulled into the financial abyss. To find out what options you have, or to speak to someone about your finances, reach out to Bankruptcy Experts Shellharbour on 1300 795 575 or visit http://www.bankruptcyexpertsshellharbour.com.au