Everybody loves money, particularly spending it! Buying new toys or new clothes that make you look and feel great 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 suggest you’re good with it. There are loads of successful individuals who have big problems with money simply because they weren’t aware of the warning signs. Today, it’s vital to be money conscious so here are 5 signs that you may have problems with money which can inevitably trigger serious financial problems in the future.
A lot of us get comfortable with our lifestyles – our car, our home, our jobs – and forget that things can actually go wrong and everybody needs some financial cushioning for rainy days. Without any savings in the bank, what will cover you from incidents such as 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 world of pain. You’ll need to take out a short-term, high interest loan which will only intensify the problem – you can’t save any money currently so how will you pay back an extra expense? Though it’s easy to overlook, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors suggest 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 don’t know where your money is being spent, it indicates a lack of care and appreciation for your hard-earned cash, and can naturally lead to financial problems in the future. Try creating a budget and actively complying with it. This will aid you in having a greater knowledge of your finances so you can recognise how much of your money is being squandered on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, in particular credit cards, then you’re heading for financial troubles. It can take years, even decades, to get rid of a credit card debt by only making minimum repayments. In the meantime, interest rates will be eating away all your potential savings while you’re basically just treading water. If this sounds familiar, it’s time to make a change and quickly. You should get your priorities right by creating a plan, adhering to a budget, and saving as much money as possible to repay your pending debts.
Spending more than you earn
The most evident sign of money troubles is where your spending surpasses your income. Even if you have a substantial savings account, you must always make sure that your earnings is more than your expenses, it’s just simple maths really. If you get into a bad habit of spending far too much, it can come to be addictive and lead to even more issues, on top of likely financial difficulties. A number of people attempt to mask this problem by paying bills with their credit cards which basically makes the problem worse in the long run. Do you even know if your income is higher than your spending? If you’re unsure, it’s certainly a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t use
A practical way to evaluate if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the tag on them? Everyone loves a sale, and it’s an excellent way to save money when cash is tight and you’re in need of something. But buying clothes simply because they’re on sale may indicate that you have money problems. If this is the case, you may similarly be inclined to buy other items purely because they’re on sale too. Purchasing unnecessary items under the impression that you’re saving money is something that must be remedied.
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 blow and you’ll be pulled into the financial abyss. To find out what options you have, or to speak with someone about your finances, reach out to Bankruptcy Experts Gosford on 1300 795 575 or visit http://www.bankruptcyexpertsgosford.com.au