Everybody loves money, particularly 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? Even if you get paid lots of money doesn’t mean you’re good with it. There are lots of successful individuals who have huge issues with money purely because they weren’t aware of the warning signs. In today’s world, it’s paramount to be money conscious so here are 5 signs that you might have problems with money which can gradually bring about 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 certainly go wrong and every person 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 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 compound the problem – you can’t save any cash currently so how will you pay back an extra expense? Even though 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 advise 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 you receive, and where it goes when you spend it. If you don’t know where your money is being spent, it reveals a lack of care and appreciation for your hard-earned cash, and can naturally bring about financial complications in the near future. Try creating a budget and actively adhering to it. This will support you in having a greater appreciation of your finances so you can understand how much of your money is being drained on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a lot more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, mainly credit cards, then you’re heading for financial troubles. It can take many years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest fees will be eating away all your prospective savings while you’re ultimately just treading water. If this sounds familiar, it’s time to make a change and quickly. You ought to get your priorities straight by making a plan, adhering to a budget, and saving as much money as possible to pay off your ongoing debts.
Spending more than you earn
The biggest sign of money troubles is where your spending surpasses your income. Regardless of whether you have a substantial savings account, you must always ensure that your earnings is greater than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending too much, it can become addictive and cause even more issues, on top of likely financial difficulties. A number of people try to mask this problem by paying bills with their credit cards which basically makes the issue worse in the long-term. Do you even know if your income is more than your spending? If you’re not sure, it’s perhaps a good time to find out and make some changes.
You have new clothes in your wardrobe that you don’t wear
A practical way to check if you have money problems 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 good 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 suggest that you have money troubles. If this is the case, you may additionally be inclined to purchase other items purely because they’re on sale too. Purchasing unneeded items under the perception that you’re saving money is something that must be addressed.
Irrespective 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 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 pulled into the financial abyss. To find out what options you have, or to talk with someone about your finances, get in touch with Bankruptcy Experts Alice Springs on 1300 795 575 or visit https://www.bankruptcyexpertsalicesprings.com.au