Everyone loves money, especially spending it! Getting new toys or new clothes which make you feel and look great is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Just because you get paid lots of money doesn’t mean you’re good with it. There are a lot of successful people who have big problems with money simply because they weren’t aware of the warning signs. In this day and age, it’s very important to be money conscious so here are five signs that you may have issues with money which can subsequently cause 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 everyone needs some financial protection 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 blow and you’ll be in a lot of trouble. You’ll have to apply for a short-term, high interest loan which will only magnify the issue – you can’t save any cash presently so how will you repay an added expense? Whilst it’s easy to neglect, having no savings is a recipe for disaster and you should take action 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 indicates a lack of care and appreciation for your hard-earned cash, and can obviously lead to financial problems in the near future. Try creating a budget and actively complying with it. This will support you in having a greater understanding of your finances so you can understand 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 appreciate spending money on yourself a lot more.
Making minimum repayments only
If you can only afford to make the minimum repayments on your loans, especially credit cards, then you’re heading for financial troubles. It can take many years, even decades, to erase a credit card debt by only making minimum repayments. Meanwhile, interest fees will be eating away all your prospective savings while you’re essentially just treading water. If this sounds familiar, it’s time to make a change and quickly. You need to get your priorities straight by creating a plan, sticking to a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The clearest sign of money problems is where your spending eclipses your income. Whether or not 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 find yourself in a bad habit of spending excessively, it can become addictive and cause even more issues, on top of potential financial difficulties. Certain people try to mask this problem by paying bills with their credit cards which simply makes the issue worse in the long run. Do you even know if your earnings is more than your spending? If you’re not sure, it’s definitely 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 search through 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 buying clothes just because they’re on sale may reveal that you have money problems. If this is the case, you may additionally be inclined to buy other items purely because they’re on sale too. Purchasing nonessential items under the impression that you’re saving money is something that needs to be addressed.
Despite how much you get paid, if you’re not good with money then now is the time to change your habits to avoid possible problems in the future. If any of these warning signs sound familiar to you, it may signify 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 pulled into the financial abyss. To find out what options you have, or to speak to someone about your finances, get in touch with Bankruptcy Experts Tennant Creek on 1300 795 575 or visit Bankrupt Tennant Creek