Everyone loves money, particularly spending it! Getting new toys or new clothes which 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 mean 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 today’s world, it’s crucial to be money conscious so here are five signs that you might have issues with money which can ultimately trigger serious financial issues down the track.
Many of us get comfortable with our lifestyles – our car, our house, our work – and forget that things can certainly go wrong and every person needs some financial cushioning for rainy days. Without any savings in the bank, what will cover 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 get a short-term, high interest loan which will only exacerbate the issue – you can’t save any money currently so how will you repay an additional expense? Whilst it’s easy to ignore, having no savings is a recipe for disaster and you should take action now before it’s too late. The majority of 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 don’t know where your money is being spent, it suggests a lack of care and appreciation for your hard-earned cash, and can definitely bring about financial problems down the track. Try creating a budget and actively complying with it. This will assist you in having a better appreciation of your finances so you can recognise how much of your money is being squandered on needless 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, specifically credit cards, then you’re heading for financial problems. It can take many years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest charges will be eating away all your prospective 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, adhering to a budget, and saving as much money as possible to pay off your pending debts.
Spending more than you earn
The most evident sign of money problems is where your spending overtakes your income. Even if you have a healthy savings account, you must always ensure that your income is more than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending way too much, it can become addictive and cause even more issues, in addition to likely financial difficulties. Many people attempt to disguise this problem by paying bills with their credit cards which just makes the problem worse in the long-term. Do you even know if your earnings 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
A useful way to evaluate if you have money issues is to look in your wardrobe. Do you have clothes that still have the tag on them? Everybody loves a sale, and it’s a great way to save money when cash is tight and you need something. But buying clothes just because they’re on sale may signal that you have money issues. If this is the case, you may also be inclined to purchase other items purely because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that will need to be remedied.
Regardless of 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 possible problems in the future. If any of these warning signs sound familiar to you, it may signify 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 talk to someone about your finances, get in touch with Bankruptcy Experts Emerald on 1300 795 575 or visit http://www.bankruptcyexpertsemerald.com.au