Everybody loves money, especially spending it! Buying new toys or new clothes which make you look and feel good 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 plenty of money doesn’t indicate you’re good with it. There are lots of successful individuals who have huge problems with money purely because they weren’t aware of the warning signs. In this day and age, it’s very 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.
A lot of us get comfortable with our lifestyles – our car, our house, our profession – and forget that things can actually go wrong and every person needs some financial insulation for rainy days. Without any savings in the bank, what will protect you from incidents 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 need to take out a short-term, high interest loan which will only magnify the problem – you can’t save any money now so how will you pay back an extra expense? Though it’s easy to overlook, having no savings is a recipe for disaster and you should take action now before it’s too late. The majority of financial advisors advise 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 illustrates a lack of care and appreciation for your hard-earned cash, and can naturally lead to financial issues down the track. Try making a budget and actively complying with it. This will aid you in having a better understanding of your finances so you can understand how much of your money is being squandered on unneeded items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, specifically credit cards, then you’re heading for financial troubles. It can take many years, even decades, to get rid of a credit card debt by only making minimum repayments. In the meantime, interest fees will be eating away all your potential savings while you’re essentially just treading water. If this sounds familiar, it’s time to make a change and quickly. You have to get your priorities right by making a plan, sticking to a budget, and saving as much money as possible to settle your outstanding 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 healthy savings account, you should always ensure that your income is greater than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending far too much, it can become addictive and bring about even more issues, on top of probable financial difficulties. A number of people try to mask this problem by paying bills with their credit cards which basically makes the issue worse in the long run. Do you even know if your income is more than your spending? If you’re not sure, it’s definitely a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t wear
An easy way to check if you have money issues 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 good way to save money when cash is tight and you need something. But purchasing clothes purely because they’re on sale may signal that you have money problems. If this is the case, you may also be inclined to purchase other items purely because they’re on sale too. Buying unneeded items under the impression that you’re saving money is something that will need to be amended.
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 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 drawn into the financial abyss. To find out what options you have, or to speak to someone about your finances, contact Bankruptcy Experts Shepparton on 1300 795 575 or visit http://www.bankruptcyexpertsshepparton.com.au