Everyone loves money, particularly 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 a lot of money doesn’t suggest you’re good with it. There are loads of successful people who have significant problems with money simply because they weren’t aware of the warning signs. Today, it’s vital to be money conscious so here are five signs that you could have issues with money which can subsequently trigger 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 profession – and forget that things can certainly go wrong and every person 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 blow and you’ll be in a world of pain. You’ll have to apply for a short-term, high interest loan which will just magnify the problem – you can’t save any cash presently so how will you repay a further expense? Although it’s easy to ignore, having no savings is a recipe for disaster and you should take action 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 you receive, and where it goes when you spend it. If you have no idea where your money is being spent, it signals a lack of care and appreciation for your hard-earned cash, and can definitely trigger financial complications down the track. Try making a budget and actively complying with it. This will aid you in having a greater understanding of your finances so you can understand how much of your money is being drained on needless 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, in particular credit cards, then you’re heading for financial troubles. It can take years, even decades, to erase a credit card debt by only making minimum repayments. In the meantime, interest charges 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 need to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to pay off your remaining debts.
Spending more than you earn
The clearest sign of money problems is where your spending overtakes your earnings. Even when you have a substantial savings account, you should always make sure that your earnings is greater than your expenses, it’s just simple 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, in addition to likely financial difficulties. A number of 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 not sure, it’s definitely a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t use
A practical way to evaluate if you have money problems is to search through your wardrobe. Do you have clothes that still have the price tag on them? Everyone loves a sale, and it’s a great way to save money when cash is tight and you need something. But purchasing clothes purely because they’re on sale may signify that you have money troubles. If this is the case, you may similarly be inclined to buy other items simply because they’re on sale too. Purchasing nonessential items under the impression 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 modify your habits to steer clear of potential issues 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 sucked into the financial abyss. To find out what options you have, or to speak to someone about your finances, get in touch with Bankruptcy Experts Toowoomba on 1300 795 575 or visit Bankruptcy Experts Toowoomba