Everybody loves money, particularly spending it! Buying new toys or new clothes which make you feel and look great 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 lots of money doesn’t indicate you’re good with it. There are plenty of successful people who have significant problems with money solely because they weren’t aware of the warning signs. In this day and age, it’s necessary to be money conscious so here are five signs that you might have problems with money which can gradually trigger serious financial problems in the future.
Many of us get comfortable with our lifestyles – our car, our home, our work – and forget that things can certainly go wrong and every person needs some financial insulation for rainy days. Without having 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 blow and you’ll be in a world of pain. You’ll need to take out a short-term, high interest loan which will only exacerbate the issue – you can’t save any cash presently so how will you repay a further expense? While it’s easy to ignore, having no savings is a recipe for disaster and you should act now before it’s too late. Most financial advisors recommend 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 comes in, 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 obviously trigger financial complications in the near future. Try creating a budget and actively abiding by it. This will help you in having a greater knowledge of your finances so you can recognise how much of your money is being drained on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a whole lot more.
Making minimum repayments only
If you can only afford 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. In the meantime, interest payments 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 ought to get your priorities right by making a plan, sticking to a budget, and saving as much money as possible to pay off your ongoing debts.
Spending more than you earn
The clearest sign of money issues is where your spending surpasses your income. Even if you have a comfortable savings account, you should always make sure that your income is higher 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 lead to even more issues, in addition to likely financial difficulties. Some people try to mask this problem by paying bills with their credit cards which simply makes the problem worse in the long run. Do you even know if your earnings is greater than your spending? If you’re not sure, it’s certainly a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t use
A basic way to check if you have money problems is to look in 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 indicate that you have money issues. If this is the case, you may additionally be inclined to purchase other items simply because they’re on sale too. Purchasing nonessential items under the perception that you’re saving money is something that must 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 stay clear of potential issues in the future. If any of these warning signs sound familiar to you, it may reveal 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 with someone about your finances, get in touch with Bankruptcy Experts Northern Rivers on 1300 795 575 or visit http://www.bankruptcyexpertsnorthernrivers.com.au