Everybody loves money, especially spending it! Buying new toys or new clothes that 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? Even if you get paid plenty of money doesn’t mean you’re good with it. There are lots of successful people who have huge problems with money just 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 issues with money which can eventually lead to serious financial issues in the future.
You don’t have any savings
Many 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 insulation for rainy days. Without having 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 hit and you’ll be in a lot of trouble. You’ll need to take out a short-term, high interest loan which will only compound the issue – you can’t save any money currently so how will you repay an additional expense? Though it’s easy to neglect, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors advise 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 signifies a lack of care and appreciation for your hard-earned cash, and can definitely bring about financial issues down the track. Try creating a budget and actively following it. This will support 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 appreciate 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, 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 rates will be eating away all your prospective 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 right by making a plan, adhering to a budget, and saving as much money as possible to repay your ongoing 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 should always make sure that your income is more than your expenses, it’s just basic maths really. If you get into a bad habit of spending excessively, it can become addictive and lead to even more issues, in addition to likely financial difficulties. A number of people try to disguise this problem by paying bills with their credit cards which basically makes the situation worse in the long-term. Do you even know if your income is higher than your spending? If you’re not sure, it’s definitely a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t wear
A practical way to evaluate if you have money issues is to search through your wardrobe. Do you have clothes that still have the tag on them? Everyone loves a sale, and it’s a nice way to save money when cash is tight and you’re in need of something. But purchasing clothes just because they’re on sale may reveal that you have money troubles. If this is the case, you may also be inclined to purchase other items just because they’re on sale too. Purchasing unneeded items under the impression that you’re saving money is something that should be addressed.
Regardless 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 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 blow and you’ll be pulled into the financial abyss. To find out what options you have, or to talk to someone about your finances, reach out to Bankruptcy Experts Parramatta on 1300 795 575 or visit http://www.bankruptcyexpertsparramatta.com.au