Everyone loves money, especially spending it! Getting new toys or new clothes that make you look and feel good 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 heaps of money doesn’t suggest you’re good with it. There are lots of successful people who have big issues with money purely 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 could have issues with money which can eventually lead to serious financial troubles in the future.
A lot of us get complacent with our lifestyles – our car, our home, our work – and forget that things can actually go wrong and everyone needs some financial cushioning for rainy days. Without having any savings in the bank, what will cover 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 world of pain. You’ll need to take out a short-term, high interest loan which will just compound the problem – you can’t save any money presently so how will you pay off an extra expense? While it’s easy to overlook, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of 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 you receive, and where it goes when you spend it. If you have no idea where your money is being spent, it indicates a lack of care and appreciation for your hard-earned cash, and can clearly lead to financial problems down the track. Try creating a budget and actively complying with it. This will support you in having a better awareness of your finances so you can realise how much of your money is being wasted on needless 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, particularly credit cards, then you’re heading for financial troubles. 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 potential savings while you’re ultimately just treading water. If this seems familiar, it’s time to make a change and quickly. You ought to get your priorities right by making a plan, following a budget, and saving as much money as possible to pay off your outstanding debts.
Spending more than you earn
The biggest sign of money troubles is where your spending overtakes your earnings. Whether or not you have a comfortable savings account, you must always make sure that your earnings is higher than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending too much, it can become addictive and result in even more issues, on top of probable financial difficulties. Some people try to disguise this problem by paying bills with their credit cards which merely makes the problem worse in the long run. Do you even know if your income is more 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 simple way to check if you have money problems is to search through 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 purchasing clothes purely because they’re on sale may indicate that you have money issues. If this is the case, you may additionally be inclined to purchase other items just because they’re on sale too. Purchasing unnecessary items under the perception that you’re saving money is something that should be fixed.
Despite how much you get paid, if you’re not good with money then now is the time to change your habits to avoid potential complications 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 hit and you’ll be drawn into the financial abyss. To find out what options you have, or to talk with someone about your finances, contact Bankruptcy Experts Mildura on 1300 795 575 or visit http://www.bankruptcyexpertsmildura.com.au