Everybody loves money, especially spending it! Getting new toys or new clothes which make you feel and look 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 plenty of money doesn’t mean you’re good with it. There are lots of successful people who have significant issues with money solely because they weren’t aware of the warning signs. In this day and age, it’s vital to be money conscious so here are 5 signs that you may have problems with money which can eventually result in serious financial issues down the track.
A lot of us get comfortable with our lifestyles – our car, our house, our profession – 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 such as 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 need to apply for a short-term, high interest loan which will only magnify the issue – you can’t save any cash currently so how will you pay off 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. Most 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 indicates a lack of care and respect for your hard-earned cash, and can surely cause financial problems down the track. Try creating a budget and actively adhering to it. This will assist you in having a better awareness of your finances so you can comprehend how much of your money is being eaten away on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll enjoy spending money on yourself a lot 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 erase a credit card debt by only making minimum repayments. Meanwhile, interest rates will be eating away all your prospective savings while you’re effectively just treading water. If this seems familiar, it’s time to make a change and quickly. You ought to get your priorities straight by creating 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 clearest sign of money issues is where your spending overtakes your income. Regardless of whether you have a comfortable savings account, you must always make sure that your income is higher 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, on top of probable financial difficulties. Many people attempt to mask this problem by paying bills with their credit cards which simply makes the issue worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re unsure, it’s definitely a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t use
A useful way to assess if you have money issues 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 nice way to save money when cash is tight and you need something. But purchasing clothes just because they’re on sale may signal that you have money problems. If this is the case, you may similarly be inclined to purchase other items simply because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that has 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 clear of possible complications 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 talk to someone about your finances, contact Bankruptcy Experts Maitland on 1300 795 575 or visit http://www.bankruptcyexpertsmaitland.com.au