Everybody loves money, especially spending it! Buying new toys or new clothes which make you feel and look good 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 mean you’re good with it. There are plenty of successful people who have serious issues with money purely because they weren’t familiar with the warning signs. Today, it’s imperative to be money conscious so here are 5 signs that you might have issues with money which can gradually bring about serious financial troubles down the track.
You don’t have any savings
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can in fact go wrong and everybody needs some financial protection for rainy days. Without any savings in the bank, what will cover you from incidents 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 get a short-term, high interest loan which will just exacerbate the problem – you can’t save any money currently so how will you pay back an extra expense? Even 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. Most 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 don’t know where your money is being spent, it illustrates a lack of care and appreciation for your hard-earned cash, and can definitely bring about financial problems in the future. Try creating a budget and actively abiding by it. This will aid you in having a better understanding of your finances so you can understand how much of your money is being wasted on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a great deal 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 problems. It can take years, even decades, to get rid of a credit card debt by only making minimum repayments. Meanwhile, interest rates will be eating away all your prospective 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 creating a plan, following a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The biggest sign of money troubles is where your spending overtakes your earnings. Even when you have a healthy savings account, you must always ensure that your income 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, in addition to likely financial difficulties. Many people try to mask this problem by paying bills with their credit cards which just makes the situation worse in the long run. Do you even know if your earnings is greater than your spending? If you’re not sure, it’s probably a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
A practical way to assess if you have money issues is to take a look in your wardrobe. Do you have clothes that still have the price tag on them? Everyone loves a sale, and it’s a nice way to save money when cash is tight and you’re in need of something. But buying clothes only because they’re on sale may reveal that you have money troubles. If this is the case, you may also be inclined to buy other items just because they’re on sale too. Buying unneeded items under the impression that you’re saving money is something that ought 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 prevent possible complications in the future. If any of these warning signs sound familiar to you, it may suggest 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 Taree on 1300 795 575 or visit http://www.bankruptcyexpertstaree.com.au