Everybody loves money, especially spending it! Getting new toys or new clothes that 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 indicate you’re good with it. There are loads of successful people who have big issues with money solely because they weren’t familiar with the warning signs. Today, it’s paramount to be money conscious so here are 5 signs that you could have problems with money which can inevitably result in serious financial issues in the future.
Many of us get comfortable with our lifestyles – our car, our house, our jobs – and forget that things can actually go wrong and every person needs some financial insulation for rainy days. Without having any savings in the bank, what will protect 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 take out a short-term, high interest loan which will only magnify the problem – you can’t save any cash currently so how will you repay an added expense? Even though it’s easy to neglect, having no savings is a recipe for disaster and you should take action now before it’s too late. The majority of financial advisors 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 comes in, and where it goes when you spend it. If you don’t know where your money is being spent, it reveals a lack of care and appreciation for your hard-earned cash, and can clearly trigger financial problems before you know it. Try making a budget and actively adhering to it. This will aid you in having a greater awareness of your finances so you can comprehend how much of your money is being drained on unneeded 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 manage to make the minimum repayments on your loans, particularly credit cards, then you’re heading for financial problems. It can take years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest charges will be eating away all your potential savings while you’re essentially just treading water. If this seems familiar, it’s time to make a change and quickly. You have to get your priorities straight by creating a plan, adhering to a budget, and saving as much money as possible to repay your remaining debts.
Spending more than you earn
The biggest sign of money problems is where your spending overtakes your earnings. Even when you have a substantial savings account, you must always make sure 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 create even more issues, on top of probable financial difficulties. A number of people attempt to mask this problem by paying bills with their credit cards which basically makes the situation worse in the long run. Do you even know if your income is higher than your spending? If you’re unsure, it’s perhaps a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t wear
A simple way to assess if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s an excellent way to save money when cash is tight and you need something. But purchasing clothes solely because they’re on sale may illustrate that you have money troubles. If this is the case, you may similarly be inclined to purchase other items just because they’re on sale too. Purchasing unneeded items under the perception that you’re saving money is something that needs to be amended.
Despite how much you get paid, if you’re not good with money then now is the time to modify your habits to stay away from possible problems 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 sucked 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 Port Macquarie on 1300 795 575 or visit http://www.bankruptcyexpertsportmacquarie.com.au