Everyone loves money, especially spending it! Buying 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? Just because you get paid a lot of money doesn’t suggest you’re good with it. There are lots of successful individuals who have huge issues with money solely because they weren’t aware of the warning signs. In this day and age, it’s crucial to be money conscious so here are 5 signs that you may have problems with money which can subsequently lead to serious financial troubles in the future.
You don’t have any savings
Most of us get complacent with our lifestyles – our car, our home, our profession – and forget that things can actually go wrong and everyone needs some financial protection for rainy days. Without any savings in the bank, what will protect 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 lot of trouble. You’ll have to take out a short-term, high interest loan which will only exacerbate the issue – you can’t save any cash currently so how will you repay an additional expense? Though it’s easy to ignore, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors strongly 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 you receive, and where it goes when you spend it. If you have no idea where your money is being spent, it illustrates a lack of care and respect for your hard-earned cash, and can obviously bring about financial problems down the track. Try making a budget and actively following it. This will help you in having a better knowledge of your finances so you can recognise how much of your money is being squandered on unneeded 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 many 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 potential savings while you’re virtually 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, following a budget, and saving as much money as possible to pay off your ongoing debts.
Spending more than you earn
The most evident sign of money troubles is where your spending surpasses your earnings. Even if you have a comfortable savings account, you must always ensure that your earnings is more than your expenses, it’s just basic maths really. If you get into a bad habit of spending way too much, it can become addictive and lead to even more issues, in addition to likely financial difficulties. Many people attempt to mask this problem by paying bills with their credit cards which only makes the problem worse in the long-term. Do you even know if your earnings is greater than your spending? If you’re uncertain, it’s probably 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 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 great way to save money when cash is tight and you need something. But buying clothes just because they’re on sale may illustrate that you have money problems. If this is the case, you may similarly be inclined to buy other items just because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that ought to be addressed.
Irrespective of how much you get paid, if you’re not good with money then now is the time to adjust your habits to stay away from potential issues in the future. If any of these warning signs sound familiar to you, it may indicate 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 talk with someone about your finances, get in touch with Bankruptcy Experts Wagga Wagga on 1300 795 575 or visit http://www.bankruptcyexpertsWaggaWagga.com.au